This chapter examines the challenges and strategies for adapting service provision and infrastructure in the Azores in the context of demographic change, with a focus on key public services, including transport, healthcare, education, and childcare. The region faces unique constraints due to its geographic isolation and dispersion across nine islands. Population ageing is placing growing pressure on the healthcare system, while declining student numbers are resulting in rising per-student spending, underused educational facilities and prompting school consolidations. In response, the regional government has introduced a range of initiatives, including transport subsidies, the digitalisation of public services, and school network restructuring. However, transportation is particularly critical and remains heavily reliant on air travel and private vehicles, with limited intermodal integration and significant seasonal fluctuations driven by tourism.
Preparing for Demographic Change in the Azores, Portugal
Abstract
The Azores faces unique challenges in public service provision due to its geographic characteristics and changing demographics. Transportation in the Azores is critical due to the geographic dispersion of the islands, yet maintaining and improving transport infrastructure is challenging, given the seasonal fluctuations in demand, the high costs associated with inter-island travel, and the environmental economic and financial sustainability in particular of air travel in the context of reaching climate neutrality by 2050. The healthcare system in the Azores is facing increasing pressure, with only three islands having a hospital, a high reliance on inter-island transfers for specialised care, and a growing demand due to ageing. A shrinking young population is leading to under-utilised educational and childcare facilities, school consolidations, higher expenditure per student, and difficulties in renewing the teaching staff.
The goal of this chapter is to provide an analysis of the current state of service provision across four key services, namely transportation, healthcare, education, and childcare. It identifies key challenges and opportunities and proposes policy recommendations to enhance the resilience and effectiveness of public services in the context of demographic change.
The transportation services in the Azores are governed by the Regional Directorate for Mobility (Direção Regional da Mobilidade), which oversees the definition and implementation of regional policies related to air and maritime transport. Its objectives include improving the effectiveness and competitiveness of the regional transport system in terms of service frequency and pricing. Municipalities (concelhos) are also involved in the maintenance and development of local road networks and participate in the planning of public transportation services.
Current state of transportation and connectivity in the Azores: high reliance on flights and cars, strong digital infrastructure
An optimised and efficient transport network is essential for enhancing the region’s appeal as a place to live and work, thereby helping to mitigate youth outmigration and population decline. The Azores' unique geography, with its nine dispersed islands, presents significant challenges for both intra-island and inter-island transportation. Population ageing will also increase the demand for accessibility and connectivity, including with equitable mobility.
Ferries and flights: the rising role of air travel in inter-island transportation
Given its geography, inter-island transport is a cornerstone of the transportation system in the Azores. Air travel and ferries are the two modes of transportation for inter-island transportation. In 2019, both means of transportation were equivalent in terms of disembarked passengers. However, disembarked by ferries have remained flat since 2019 (Figure 5.1).
Inter-island flights for passenger, cargo and mail services between the different islands of the Azores are operated by the regional branch of the SATA group, SATA Air Açores. Azores Airlines, on the other hand, is the international branch of the group and operates the connections from the Azores to America and Europe. It started out as SATA International, a private company, but in 1980 it was taken over by the Azores administration. Azores Airlines has faced persistent financial difficulties, accumulating significant debt over the years, placing a growing burden and financial risks on the regional budget. To ensure the financial sustainability and shift the risk to the private sector, the Regional Government has attempted multiple times to privatise Azores Airlines, which have failed so far, with the Regional Government of the Azores cancelling tenders in 2018, 2020, and most recently in 2024. Despite these setbacks, the government remains committed to privatisation by 2025 (Aimée Turner, 2022[1]; TPN/Lusa, 2024[2]).
Yearly disembarked passengers in the ports and airports of the Azores, 2019 to 2023.
Source: Statistics Portugal (2025), Disembarked passengers (No.) in airports by Geographic localization, Type of traffic and Nature of traffic; Monthly, Airports and airfields survey, link; Statistics Portugal (2024), Movement of passengers (No.) by Geographic localization (NUTS - 2013) and Type of passengers movement; Annual, Maritime transport of passengers and goods survey, link.
Until 2015, air transport in the Azores was limited and monopolised by two state-owned airlines – TAP Air Portugal and SATA International – and connections were based on a system of Public Services Obligations (PSOs), for internal flights and for flights connecting with the mainland, following public tender procedures (Vieira et al., 2019[3]). Fares for flights between the mainland and the Azores were divided into a reduced fare for residents and a normal fare for all those who lived outside the Azores, including those residing in mainland Portugal. In 2015, the Azores liberalised part of its airspace regarding flights between the mainland and the Azores to boost tourism and economic development, which lowered prices and increased the number of flights, routes and airlines, bringing new dynamics to the Azores. New connections with North America and Europe rose, making the Azores less dependent on the mainland. Following the liberalisation, the number of disembarked passengers has more than doubled, from 813 000 passengers in 2013 to 2 million in 2023. This increase has been mostly driven by flights between the mainland and the Azores (territorial flights) which almost tripled (Figure 5.2). Internal and international flights also more than doubled. This substantial increase may be explained in part by the introduction of the “Azores Fare” in 2021, a special fare to passengers with tax residence in the Autonomous Region of the Azores. Air transport passengers vary widely across seasons, being more than 2.5 times higher in the summer than in the winter.
The ferry connections are operated by Atlânticoline. Routes between many islands are only seasonal. The regular lines only connect the Triangle Islands (Faial, Pico and São Jorge) on the one hand (blue and green lines), and Corvo and Flores on the other hand (pink line), but not the most populous islands of the archipelago. As for the seasonal lines, they mostly allow to meet the increased demand in summer driven by the influx of tourists and only operate from June to September.
Disembarked passengers by type of flights in the Azores’ airports, 2010 to 2023.
Note: Internal flights are flights within the mainland or within each autonomous region. Territorial flights are flights between the mainland and the autonomous regions, or between autonomous regions.
Source: Statistics Portugal (2025), Disembarked passengers (No.) in airports by Geographic localization, Type of traffic and Nature of traffic; Monthly, Airports and airfields survey, link
The Azores used to have a ferry connection from São Miguel to both the Triangle Islands and Santa Maria, but these connections were shut down in 2020. Ferry passenger transportation has increased in the Triangle Islands from 2019 to 2023, while in Graciosa, Terceira and Corvo it decreased to the benefit of internal flights (Figure 5.3).
Percentage change in maritime disembarked passengers from 2019 to 2023 by island.
Source: Statistics Portugal (2024), Movement of passengers (No.) by Geographic localization (NUTS - 2013) and Type of passengers movement; Annual, Maritime transport of passengers and goods survey, link.
Intra-island transportation: limited public transportation and high car dependency
The car remains the main mode of intra-island transportation. In the Azores, 71% of workers commute to work by car and 11.5% by public transport (Figure 5.4). Public transportation options tend to be sparse and inconsistent, particularly outside urban areas. Public transportation services vary across the nine islands, with each island managing its own bus system. In the Functional Urban Area (FUA) of Ponta Delgada (L. Dijkstra; H. Poelman; P. Veneri, 2019[4]), nearly 12% of the workers use public transportation to commute, which is close to the 11% average observed in European FUAs of similar size (between 100 000 and 150 000 inhabitants). On smaller islands, routes may run only once or twice a day, primarily to meet specific needs, such as school or work commutes. The islands’ rugged terrain adds to travel time and raises maintenance costs for public transport operators, making car dependency even more pronounced. As a result, both locals and tourists often turn to car rentals. However, rental options can be scarce and prices tend to rise during the summer months.
Share of workers using public transportation to work, 2021.
Source: OECD (2025), OECD Regions, cities and local statistics, OECD, Paris, http://oe.cd/geostats.
Digital connectivity: strong overall, yet marked by local gaps
High-quality digital connectivity is crucial, especially in the face of demographic changes. It facilitates remote work, which can help reduce outmigration and strengthens local labour markets. Additionally, it improves access to primary healthcare for vulnerable populations in remote areas where physical infrastructure and resources are limited.
Overall, the Azores is close to the national average in terms of average download speeds for both fixed and mobile devices (Figure 5.5). However, a closer look reveals disparities between islands and municipalities. For example, fixed download speeds in Lajes do Pico (Pico) and Calheta (Saõ Jorge) are nearly half the national average, suggesting that digital connectivity may limit the effectiveness of digital public services and new on-demand, digital-based mobility solutions (Figure 5.6).
Average download speed for fixed and mobile devices by region in Portugal, 2023
Source: OECD computations based on Ookla (2023), Speedtest by Ookla Global Fixed and Mobile Network Performance Maps was accessed in March 2023 from https://registry.opendata.aws/speedtest-global-performance . Speedtest® by Ookla® Global Fixed and Mobile Network Performance Maps. Based on analysis by Ookla of Speedtest Intelligence® data for 2022. Provided by Ookla and accessed in March 2023. Ookla trademarks used under license and reprinted with permission., Ookla.
Average download speed for fixed devices by municipality in the Azores, expressed in % deviation of the national average, 2023
Source: OECD computations based on Ookla (2023), Speedtest by Ookla Global Fixed and Mobile Network Performance Maps was accessed in March 2023 from https://registry.opendata.aws/speedtest-global-performance . Speedtest® by Ookla® Global Fixed and Mobile Network Performance Maps. Based on analysis by Ookla of Speedtest Intelligence® data for 2022. Provided by Ookla and accessed in March 2023. Ookla trademarks used under license and reprinted with permission., Ookla.
Policies and local initiatives focused on enhancing inter-island connectivity through air transport subsidies and digital infrastructure
To strengthen territorial cohesion and overcome its geographic dispersion, the Region has implemented a combination of transport subsidies and digital transformation initiatives.
Air transport at the heart of transportation policies
To offer reliable and affordable transportation across its nine islands and connections with mainland Portugal, the Azores imposes PSOs on specific air and maritime routes coupled with substantial subsidies. Internal flights are subsidised by the Regional Government. SATA Air Açores provides a special fare to passengers with tax residence in the Autonomous Region of the Azores for round trips between the islands of the archipelago of the Azores at the maximum price of 60 EUR, regardless of the airport of origin and destination (SATA, 2025[5]). Since the implementation of this “Azores Fare” in 2021, 1 million passengers have benefited from this measure. In March 2024, the European Commission also approved the Azores Transport Plan until 2030, which includes an initial investment of €53 million (Azores Government, 2024[6]). The Azores also provides a social mobility subsidy to guarantee that students and residents meeting the eligibility requirements are reimbursed of the difference between the amount paid for an airline ticket and a threshold set by law. This applies to airline tickets to/from the Azores and Mainland Portugal and to/from the Azores and Madeira.
To improve public transport accessibility for vulnerable groups, some municipalities have introduced on-demand mobility programmes. In Ponta Delgada, for instance, a free taxi service called Táxi+ helps older adults and people with disabilities get to medical appointments, treatments, or hospital stays. Ponta Delgada also benefits from a public mini-bus system, with regular shuttles connecting the different inner-city civil parishes of Ponta Delgada.
The Azores’ strong push to advance digital connectivity and services
The Region has implemented a series of strategic policies and initiatives aimed at enhancing digital connectivity across its nine islands. Digital connectivity in the Azores is undergoing a major upgrade. A new submarine optic fiber cable system, Anel CAM (Continente Açores Madeira), will significantly improve bandwidth and network resilience across the archipelago. Terrestrially, almost 90% of the islands are covered by optical fibre, reaching nearly every household. Mobile coverage is also advancing: 5G rollout is underway, with an obligation on private infrastructure providers to ensure at least 90% of parishes are covered by 2025.
Alongside infrastructure improvements, the Region has launched a broad agenda to digitalise public services and modernise government operations. The goal is to make administrative processes available online and more accessible. Key initiatives include the development of a unified digital identity system (Azor.ID), enabling citizens to access multiple services through a single authentication process, and LINKA.APR, an information systems architecture that will serve as a basis for supporting citizen and business services and the dematerialization of public services. To support this transformation, the region has consolidated a unified IT infrastructure across 150 government entities and 700 sites into the same domain. Two centralised data centres were also established in Terceira and in Ponta Delgada. Other initiatives include modernising public administration processes to boost efficiency and effectiveness, or literacy programmes in cybersecurity and privacy.
Challenges in transportation and connectivity driven by geographical, financial and environmental constraints
The geographic fragmentation and insularity of the Azores poses significant challenges to ensure reliable, affordable, and sustainable connectivity across the islands and with mainland Portugal.
Connectivity challenges due to geographical constraints and insularity
Dependence on maritime and air transport makes the region particularly vulnerable to weather-related disruptions and logistical bottlenecks. Strong winds, fog, and storms are common, often causing flight delays, cancellations, and overall travel uncertainty. For instance, flights cancellations are relatively frequent during winter on Flores and Corvo islands.
Maritime transport is equally affected. Strong Atlantic swells and storms can disrupt ferry schedules and port operations. A notable example is the extensive damage to the Port of Lajes das Flores - the island’s primary commercial port - caused by Hurricane Lorenzo in October 2019.
These connectivity challenges have far-reaching consequences. They not only affect the region’s attractiveness but also lead to a higher cost of living and limit access to essential goods and services for vulnerable groups such as older residents.
Public transportation gaps and inter-modal connectivity challenges due to seasonality
The existing public transport network fails to adequately meet the needs of both residents and visitors, resulting in low usage and heavy reliance on private vehicles. A major factor limiting the effectiveness of public transport is the absence of integrated strategic planning and intermunicipal coordination (Chapter 4). Fragmented governance and limited collaboration between municipalities contribute to inefficiencies. Additionally, spatial planning strategies aften overlook transport needs, leading to poor connectivity (Chapter 3).
Integrating and coordinating air, maritime and land transport remains a challenge. Passenger arrivals by air are more than 2.5 times higher in summer than in winter, yet public transport services do not sufficiently adapt to this seasonal surge (Figure 5.7). Lack of inter-modal connectivity is in part driven by a lack of coordination between municipalities, the regional government and the different transport companies (bus operators, Atlânticoline, and SATA).
Monthly disembarked passengers by type of flights in the Azores’ airports, 2023.
Note: Internal flights are flights within the mainland or within each autonomous region. Territorial flights are flights between the mainland and the autonomous regions, or between autonomous regions.
Source: Statistics Portugal (2025), Disembarked passengers (No.) in airports by Geographic localization, Type of traffic and Nature of traffic; Monthly, Airports and airfields survey, link
Increasing transport expenditure
Transport accounts for an increasing share of the Azorean regional government’s budget, putting additional strain on public finances. In 2001, less than 7% of the regional budget (2.1% of GDP) was allocated to transport and communication, but by 2021, this share had grown to over 15% (6% of GDP), before it dropped to around 10% (Figure 5.8). This recent decline may be attributed to the greater level of support subsidies provided by the regional government to the transport sector during the pandemic compared to other sectors. From 2020 to 2022, most of this spending went to SATA, highlighting the financial burden that subsidies for intra-regional flights place on regional resources. In contrast, maritime transport accounts for only 5% of transport and communication expenditure, consistent with its low adoption.
Share of regional government expenditure in transport and communication for the Azores, 2000 to 2023
Source: Serviço Regional Estatística (2015), Despesas Públicas (Classificação funcional), link.
Decarbonising transport in the Azores: the dual challenge of electrification and clean electricity generation.
The Azores’ transport system relies heavily on fossil fuels due to the archipelago's geographic dispersion, with diesel powering ferries, gasoline used for vehicles, and kerosene for planes. Similarly, electricity generation is still predominantly dependent on imported fuel oil, a particularly carbon-intensive energy source. In 2022, over 65% of the electricity generated in the Azores came from fossil fuels, while 35% came from renewable sources – 22% from geothermal energy, almost 8% from wind, 4% from hydropower, over 2% from biofuels and waste, and 0.5% from solar energy (Statistics Portugal, 2024[7]).
Without a cleaner power mix and strong power production growth combined with reduced energy use to meet the needs for transport electrification, electrification risks shifting emissions to electric power plants. Although electric motors are more energy-efficient than internal combustion engines, emissions can still be significant if electricity generation remains heavily reliant on fossil fuels. Expanding renewable electricity is therefore critical for effective transport decarbonisation. In parallel, locally sourced biofuels offer potential to decarbonise maritime and air transport, where full electrification remains challenging.
The Regional Government of the Azores is primarily responsible for education and childcare through the Regional Secretariat for Education, Culture and Sport and its Regional Directorate for Education and Educational Administration (DREAE) (Azores Government, 2025[8]). Its responsibilities include policy development and implementation, administration of public educational institutions and management of human resources as well as funding and financial support, including budgets for educational infrastructure and operations, financial assistance to families. Municipalities (concelhos) in the Azores support the regional government for the construction and maintenance of buildings for 1st cycle basic education and pre-school education (EC, 2024[9]).
Schools in the Azores are organised into Organic Units (OU), each with its own administrative and management body. These units include pre-schools and one or more cycles of education and have administrative, pedagogical, and financial autonomy. Each OU has a school fund, which is financed by the Region’s Plan and Budget, based on its type, size, and educational project.
The Regional Directorate for Vocational Training and Employment (DRQPE) oversees vocational education and lifelong learning programmes. It also implements policies connected to employment, labour and vocational training initiatives (Azores Government, 2025[10]).
In the Azores, the education system follows a structure similar to that of mainland Portugal, consisting of several stages: pre-school education (Educação Pré-escolar, Jardim de Infância JI), which is optional for children ages 3 to 6; basic education (Ensino Básico EB), which is divided into three cycles - 1st Cycle (EB1) for children aged 6 to 10, 2nd Cycle (EB2) for those aged 10 to 12 and 3rd Cycle (EB3) for those aged 12 to 15; secondary Education (Ensino Secundário ES), which covers grades 10 to 12 (ages 15 to 18) and offers multiple pathways, including academic, artistic, and vocational tracks.
The childcare system in the Azores is varied, offering a range of services and facilities to meet the needs of children and families. These include day nurseries (creche) which offer full-time care for children up to 3 years old, pre-school education establishments (Estabelecimento de Educação Pré-Escolar) which prepare children aged 3 to 6 for primary school, Leisure Activities Centres (Centro de Atividades de Tempos Livres, CATL) which provide care and activities outside school hours and during holidays, Play Libraries (Ludoteca) which provide supervised spaces for playing and learning, Nanny Services (Ama) which provide home-based childcare, Street Teams (Equipa de Rua) and Centres for Youth Development and Inclusion (Centro de Desenvolvimento e Inclusão Juvenil CDIJ) which provide support for vulnerable children and at-risk youth, and Holiday and Leisure Centers (Centro de Férias e Lazer), which provide activities during school breaks.
Current state of education and childcare services in the Azores: shrinking student population
The Azores has experienced a significant decline in its young population, with the number of residents aged 0–14 dropping by nearly 24% between 2010 and 2023 (Statistics Portugal, 2024[11]). Projections indicate a further decrease of around 33% from 2025 to 2060 (Eurostat, 2025[12]). This demographic shift is resulting in underutilised school facilities and risks raising education costs per student, which, in the absence of policy response, could go at the expense of quality.
School sizes vary across the islands, with smaller schools in rural areas typically providing only pre-school education and 1st cycle basic education, while larger schools may offer education up to the secondary level. Additionally, the Azores has a vocational training network consisting of 15 Escolas Profissionais (EP). The 2024/2025 academic year saw an increase in enrolments, with 946 new students (Presidência do Governo Regional, 2024[13]).
Pre-school to secondary education: a decline in student numbers and accessibility challenges on smaller islands.
In terms of childcare and education, larger islands offer a broad range of childcare services, while smaller islands face limitations. For example, Corvo and Flores lack leisure activity centres, and Santa Maria no longer has a pre-school (Table 5.1).
Distribution of schools and childcare facilities by type across the Azores
Source: Childcare locations shared by the Azores Regional Government, Estabelecimentos de Ensino da Região Autónoma dos Açores (RAA), Portal do Governo dos Açores, link.
As for the number of students, nearly all municipalities have seen a decline, with Velas (São Jorge) and Lajes das Flores (Flores) experiencing the most significant decreases (Figure 5.9). Between 2016 and 2022, three municipalities closed their only pre-school facility: Villa do Porto (Santa Maria), Nordeste (São Miguel) and Lajes do Pico.
Despite these declines in student populations, the number of teachers has remained relatively stable in the region. The Azores has not yet faced a reduction in its teaching workforce due to ageing, even though the working age population has slightly decreased in recent years. In fact, the Azores, along with Madeira, has the lowest student-to-teacher ratio across all Portuguese regions, with fewer than 18 students per teacher, in contrast to the Lisbon metropolitan region which has nearly 27 students per teacher (Figure 5.10).
Change in the number of pre-school, primary and secondary school students (ISCED 0-3) from 2016 to 2022 in Portuguese municipalities.
Source: Statistics Portugal (2024), Students enrolled in non-tertiary education (No.) by Geographic localization (NUTS - 2024), Education level and Nature of institution; Annual - Directorate-General for Education and Science Statistics, Statistics Portugal, link.
Pre-school, primary and secondary school students per teacher (ISCED 0-3) in 2016 and 2022 by Portuguese region.
Source: Statistics Portugal (2024), Students enrolled in non-tertiary education (No.) by Geographic localization (NUTS - 2024), Education level and Nature of institution; Annual - Directorate-General for Education and Science Statistics, Statistics Portugal, link; Statistics Portugal (2024), Teachers in non-tertiary education (No.) by Geographic localization (NUTS - 2024), Education level and Nature of institution; Annual - Directorate-General for Education and Science Statistics, Statistics Portugal, link.
Higher education: the leading role of the University of the Azores
The higher education system of the Azores is centred around the University of the Azores (Universidade do Açores), established in 1976, with 3 campuses. Ponta Delgada (São Miguel) is the main campus, hosting the university’s headquarters and offering 75% of the degrees in fields such as Science and Technology, Social Science and Humanities, Economics and Management, Geosciences, Mathematics, and Nursing. Angra do Heroísmo (Terceira) campus offers 25% of degrees, focusing on Agriculture and Environmental Sciences. Horta (Faial) campus is primarily dedicated to marine and oceanographic research, with no degree programmes.
As of 2023, the University of the Azores enrols 2 961 students (2 551 based in Ponta Delgada and 410 in Angra do Heroísmo). From 2016 to 2022, student numbers grew by 300 in Ponta Delgada but declined in Angra (Statistics Portugal, 2024[14]). The university employs 574 teaching staff, with 496 in Ponta Delgada and 78 in Angra do Heroísmo. The teaching staff in Angra halved between 2016 and 2022, while Ponta Delgada saw modest growth from 470 to 496 (Statistics Portugal, 2024[15]).
The University of the Azores recognises demographic change and ageing as key challenges in its strategic plan (University of the Azores, 2023[16]). To address these pressures, the University aims to align its curriculum with the region's development priorities, focusing on areas such as sustainability, marine sciences, and tourism. It also seeks to strengthen partnerships with national and international academic institutions through joint programmes and academic mobility initiatives, while fostering collaboration with regional institutions and businesses to offer students internship opportunities.
To overcome geographical barriers and support the lifelong learning across the islands, the University plans to expand its distance learning offers. Additionally, to attract and retain research talent, it intends to provide stable employment for professors and researchers, along with professional development opportunities. The University also aims to leverage available funding to create strategic positions in Engineering and Data Science.
Policies and local initiatives: school network consolidation and youth retention through incentive programmes
The regional government of the Azores is actively implementing school consolidation measures, mostly on the infrastructure, to mitigate the effects of demographic change. Each year, the school network is reviewed and consolidated by constructing larger, more modern schools with enhanced facilities and technological capabilities. Simultaneously, smaller schools with insufficient student populations are strategically closed to ensure the maintenance of educational quality. This consolidation aims to improve infrastructure, including better technical facilities and learning spaces, while also considering geographic distribution to ensure reasonable access across communities. To address the challenge of vacant school buildings, these are being repurposed into community cultural centres, music programs, social service delivery points, and youth activity spaces, helping to maintain community vitality while optimising existing infrastructure.
In response to challenges around childcare accessibility, the Regional Government of the Azores introduced free daycare for all children starting in January 2023 (Vice-Presidência do Governo Regional, 2022[17]). This initiative, benefiting nearly 2 900 children, aimed to alleviate financial burdens on families, combat poverty, and support household incomes.
With the Plan and Budget for 2024, the Regional Government of the Azores has also launched the “Mais Jovem” package, a series of measures designed to attract and retain talent in the Region through various incentives. These measures include providing two trips per academic year to young students travelling from their home island to pursue graduate or master's degree programmes in the Azores, Mainland Portugal, or Madeira; offering hiring incentives for young professionals, with increasing financial support based on qualifications to ensure job stability and fair wages; improving access to affordable housing by building and renovating public housing; and promoting vocational training (Azores Government, 2024[18]). Additionally, some municipalities have introduced incentives to encourage students to return to the Azores after completing higher education. For example, the municipality of Horta (Faial) launched the “Backhome – De Volta ao Faial” programme in 2024, which reimburses tuition fees (697 EUR) for each year of declared employment on the island. Residents under 35 are also exempt from paying Municipal Property Transfer Tax (IMT) on the acquisition of permanent housing up to 200 000 EUR (PA/TPN, 2024[19]; Horta Município, 2024[20]).
To address teacher shortages on smaller islands, the Regional government recently presented a targeted incentive programme for teachers serving on São Jorge, Graciosa, Santa Maria, Pico, Flores and Corvo islands, which include grants of 300 EUR per month and an annual return ticket, if teachers commit to stay at least 3 years (Novidades - The Islands and the Diaspora, 2025[21]).
To enhance accessibility to education services in the Azores, the Regional Government implemented a range of initiatives aimed at enhancing both digital infrastructure and digital literacy. These efforts include equipping schools with educational robots, 3D printers, interactive screens and specialised laboratory equipment, as well as the introduction of digital manuals to modernise learning resources. Training modules have been developed to strengthen digital skills among teachers and parents, and targeted actions have been taken to improve school connectivity across the region.
Challenges in education and childcare: increasing costs, accessibility challenges and skill gaps
The declining student population, combined with the Azores’ geographic dispersion presents important challenges for the provision of education and childcare services.
Increasing education expenditure per student and challenges in maintaining infrastructure
Despite the on-going initiatives promoted by the regional government of the Azores aimed at consolidating the school network, the Region continues to grapple with significant challenges in managing its education and childcare infrastructure. Addressing these issues demands substantial investment and strategic planning to ensure that smaller schools, once closed, are reused for other purposes.
Public spending on education has remained relatively stable, consistently accounting for around 20% of the regional government’s budget. However, the steady decline in student numbers has led to a sharp increase in per-student costs. Between 2015 and 2022, expenditure per student rose by 27%, from 5 300 EUR to 6 743EUR (constant prices, 2020).
Regional government expenditure in education per student, constant EUR, 2020 prices, 2015 to 2023.
Note: Only students enrolled in non-tertiary education are selected.
Source Serviço Regional Estatística (2015), Despesas Públicas (Classificação funcional), link; Statistics Portugal (2024), Students enrolled in non-tertiary education (No.) by Geographic localization (NUTS - 2024), Education level and Nature of institution; Annual - Directorate-General for Education and Science Statistics, Statistics Portugal, link.
Accessibility challenges on smaller islands
The archipelago’s geographic dispersion poses challenges in ensuring equitable access to education and childcare. Average travel times to schools remain short across all islands, around 4 minutes for basic education and just over 10 minutes for secondary education, indicating that school network consolidation has effectively preserved accessibility for most students. As for pre-schools, travel times show greater variability, with average travel times around 10 minutes but reaching 16 minutes in Pico, highlighting disparities between islands (Figure 5.12 and Figure 5.13). However, specialised educational and childcare facilities are unevenly distributed across islands, with smaller and more remote islands being particularly challenged. While islands such as São Miguel, Terceira, and Faial offer a more comprehensive range of facilities, others lack key institutions, such as pre-schools in Santa Maria or Holiday and Leisure Centres on all the smaller islands, limiting access to specialised support and activities.
Average driving time to closest childcare, by type of childcare, 2024
Source: OECD computations using r5 based on OSM road network and childcare locations.
Note: Flores and Corvo are excluded due to issues with the road network.
Average driving time to closest school, by type of school (basic and secondary education), 2024
Source: OECD computations using r5 based on OSM road network and Portal do Governo dos Açores (2017), Estabelecimentos de Ensino da Região Autónoma dos Açores (RAA), Portal do Governo dos Açores, link.
Note: Flores and Corvo are excluded due to issues with the road network.
Skill gaps, higher education and life-long learning: difficulties in retaining and attracting talents
Employers in the Azores, especially on smaller islands, are struggling to find qualified workers with the technical and professional skills needed in key sectors like tourism, information technology, education, and healthcare. This skill gap is worsened by a high early school leaving rate of nearly 23%, which is significantly above Portugal’s national average of 8% (European Commission, 2024[22]). 58% of people aged 25 to 64 in the Azores have at most lower secondary education, more than three times higher than the EU level. Additionally, the region has the country’s lowest share of tertiary educational attainment (OECD, 2023[23]) (Figure 5.14).
Share of population aged 25-64 by educational attainment level in Portuguese regions (2023)
Source: OECD (2025), OECD Regions, cities and local statistics, OECD, Paris, http://oe.cd/geostats.
Although the number of students is shrinking, the Azores also faces difficulties in attracting and retaining qualified teachers, especially on smaller islands. The University of the Azores also faces similar challenges in attracting qualified professors. As the region’s primary higher education institution, the University plays a crucial role in offering a broad range of academic disciplines, helping students pursue their studies without leaving the islands. Ensuring the University aligns its programmes with both student interests and regional labour market demands is vital but difficult, given its limited resources.
Strengthening collaboration between vocational schools and local businesses is essential to ensure that training programmes are closely tailored to labour market needs. Successful models from other countries offer useful examples. Germany’s dual system combines studying at a vocational school with practical work experience at a company, while initiatives such as the Technical Skills for Harmonised Offshore Renewable Energy project (T-Shore) project in Northern Europe foster regional partnerships between vocational schools, industries, and government to prepare workers for the offshore renewable energy sector. Similarly, France has established regional agreements (Pactes Régionaux d’Investissements dans les Compétences) to align training provision with regional labour market needs (OECD, 2024[24]).
The Autonomous Regions of the Azores and Madeira have their own regional health service (Serviços Regionais de Saúde, SRS), managed and funded by the respective regional governments. The Azores SRS is responsible for health, disease prevention, civil protection and firefighting, oncology, health inspection and sport. The Regional Directorate for Health, is responsible for implementing health policies, coordinating the healthcare system, managing public health initiatives across the different islands.
Medical emergencies may require inter-island transportation, which are supported by the Portuguese Air Force (FAP), the Regional Civil Protection and Fire Service of the Azores, the Aeromedical Evacuation Unit and the Regional Health Service. To address healthcare accessibility challenges on small islands, two seats are also reserved on commercial flights for medical transfers from islands without hospitals.
Current state of healthcare infrastructure in the Azores: a decentralized system under pressure
The geographic dispersion of the islands complicates access to healthcare, particularly for residents in remote areas and small islands, who do not have access to a hospital (Figure 5.15). Addressing these challenges necessitates innovative solutions including telemedicine and enhanced inter-island transportation for medical services.
Distribution of healthcare services across the Azores, 2024.
A decentralised healthcare network
The Azores' healthcare network is decentralised across its nine islands, ensuring primary, specialised and emergency care.
Health Extensions (Extensão de Saúde) are smaller units offering basic consultations, preventive care and diagnostics, supervised by health centres. They operate under the supervision of the Health Centres within the respective USI, and are usually staffed by GPs and nurses with limited specialised medical practitioners. The Azores consists of 97 health extension units across 7 islands with none in Corvo and Graciosa.
Health House (Casa de Saúde).focus on mental health and long-term care, with four facilities across São Miguel and Terceira.
Health Centres (Centro de Saúde) provide primary healthcare services, including general medicine, paediatrics, minor emergencies, and specialist visits. The 78 health centres are staffed with GPs, nurses, and administrative personnel (Diário da República, 2025[25]).
Hospitals provide secondary and tertiary care, addressing complex medical needs and specialised treatments. The primary public general hospitals include Hospital do Divino Espírito Santo (São Miguel), with a capacity of 449 hospital beds (Hospital do Divino Espírito Santo, 2025[26]), Hospital de Santo Espírito (Terceira) with 217 beds and Hospital da Horta (Faial) with 110 beds (Statistics Portugal, 2024[27]). In May 2024, Hospital do Divino Espírito Santo experienced a significant fire, temporarily closing key departments, forcing patient transfers to mainland Portugal and Madeira. In March 2021, the Azores also inaugurated their first private hospital, the Hospital Internacional dos Açores (HIA), located in Lagoa (São Miguel) and equipped with 96 beds (TPN/Lusa, 2021[28]).
Island Health Units (Unidades de Saúde de Ilha, USI) manage and coordinate healthcare services on each island, overseeing infrastructure, resources, and service delivery with financial and administrative autonomy (Diário da República, 2025[25]).
A lower density of healthcare professionals compared to the mainland
The Azores registers a lower density of healthcare professionals compared to mainland Portugal, with 1.5 general practitioners per 1 000 inhabitants (Figure 5.16). The same applies to specialised doctors, dentists and pharmacists, making access to healthcare more challenging. However, the number of nurses per inhabitant is higher than the national average, reflecting a greater reliance on primary care and community health services. The geographic isolation of the Azores makes it difficult to attract and retain doctors and specialists, particularly given the limited capacity to offer competitive salaries compared to the mainland or the private sector (Table 5.2).
Healthcare professional per inhabitant by specialty in Portuguese regions, 2022
Source: Statistics Portugal (2023), Medical doctors (No.) by Place of residence (NUTS - 2013), Sex and Type of medical doctor; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link; Statistics Portugal (2023), Specialist medical doctors (No.) by Place of residence (NUTS - 2013), Sex and Medical speciality, subspecialty or competence; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link; Statistics Portugal (2023), Dentist medical doctors (No.) by Place of residence (NUTS - 2013) and Sex; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link; Statistics Portugal (2023), Nurses (No.) by Work location (NUTS - 2013) and Sex; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link; Statistics Portugal (2023), Pharmacists (No.) by Work location (NUTS - 2013) and Sex; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link.
Number of healthcare professionals by category across islands, 2022
Source: Statistics Portugal (2023), Medical doctors (No.) by Place of residence (NUTS - 2013), Sex and Type of medical doctor; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link; Statistics Portugal (2023), Specialist medical doctors (No.) by Place of residence (NUTS - 2013), Sex and Medical speciality, subspecialty or competence; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link; Statistics Portugal (2023), Dentist medical doctors (No.) by Place of residence (NUTS - 2013) and Sex; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link; Statistics Portugal (2023), Nurses (No.) by Work location (NUTS - 2013) and Sex; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link; Statistics Portugal (2023), Pharmacists (No.) by Work location (NUTS - 2013) and Sex; Annual - Statistics Portugal, Health personnel statistics, Statistics Portugal, link.
Note: The number of nurses and doctors for Corvo have been corrected based on comments from local stakeholders.
Policies and local initiatives: enhancing accessibility by strengthening decentralisation and digital solutions
Through the Regional Health Plan, the Azores intends to enhance healthcare accessibility by promoting the decentralisation of the healthcare network, giving a more important role to the local Health Centres and reducing hospital-centric policies. To support this shift, the Regional Health Plan prioritises strengthening infrastructure and equipment across healthcare units, including the acquisition and installation of more advanced and efficient diagnostic technologies.
To enhance accessibility to healthcare services in the Azores, the Regional government also launched several digitalisation initiatives, including the creation of electronic health records for each citizen, improved interoperability of information systems to facilitate clinical information sharing among health professionals, the expansion of telemedicine to reach residents on the most isolated islands without hospitals, and the provision of essential hardware, software, and digital infrastructure. The Regional government has also implemented a comprehensive telemedicine programme, including a new operational manual for telemedicine that covers both medical consultations and multidisciplinary care. All hospitals and health units have been equipped with digital equipment for teleconsultations. These healthcare initiatives are part of a broader regional strategy to digitalise public services and improve digital connectivity.
The regional government of the Azores has also implemented a comprehensive elderly care programme that has already benefited over 450 seniors. This programme allows elderly individuals to remain in their homes while receiving care from hired domestic caregivers supported by a multidisciplinary team of healthcare professionals. This initiative has not only improved healthcare accessibility but also reduced unnecessary hospital visits.
Challenges in healthcare provision: managing rising demand, growing costs and workforce retention
From 2010 to 2023, the population in the Azores aged 65 and over has increased by 30% (Statistics Portugal, 2024[29]), and from 2025 to 2060, it is expected to further increase by 65% (Eurostat, 2025[12]). The steady increase of the old-age population is increasing the demand for specialised healthcare, such as geriatric and chronic disease treatment, as well as the reliance on long-term care services. Meanwhile, the shrinking working-age population is contributing to labour shortages in healthcare professions and adding pressure on healthcare service delivery.
Rising healthcare demand driven by ageing
The ageing population in the Azores and in other Portuguese regions has led to a notable increase in the prevalence of chronic diseases, including diabetes, hypertension, cardiovascular diseases and respiratory illnesses. As life expectancy increases, the healthcare system faces growing pressure to manage long-term conditions that require ongoing treatment and specialized care. Older adults are more likely to experience multiple chronic illnesses, compounding the demand for healthcare services and resources. From 2014 to 2019, in the Azores, the number of people suffering from cardiovascular diseases has almost doubled (Figure 5.17).
Chronic diseases per resident population in Portuguese regions, 2014 and 2019
Source: Statistics Portugal (2024), Resident population with 15 and more years old (No.) by Place of residence (NUTS - 2013), Sex, Urban areas typology and Type of chronic disease; Quinquennial - Statistics Portugal, National health survey (series 2014), Statistics Portugal, link.
The changing healthcare landscape resulting from demographic ageing is evident in the evolution of mortality patterns in the Azores. In 2021, neoplasms constituted the primary cause of mortality (30%), followed by circulatory system diseases (21%) and respiratory conditions (10%). This represents a notable shift from 2000, when neoplasms accounted for a significantly lower proportion of deaths (22%) (Figure 5.18).
Number of deaths by cause of death, Azores, 2000 and 2021.
Source: Statistics Portugal (2024), Deaths (No.) by Place of residence (NUTS - 2013), Sex, Age group and Death cause (European short-list); Annual - Statistics Portugal, Mortality by causes of death, Statistics Portugal, link.
In recent years, the strain on hospital beds has also increased in the archipelago. In particular, in São Miguel, the number of occupied hospital beds per inhabitant has increased by 10% from 2013 to 2022. In Portugal, the number of occupied hospital beds per inhabitant has decreased by almost 10% over the same period (Figure 5.19). This difference may be attributed to Portugal’s substantial investment in outpatient care, as it allocates the largest share of its health budget in the EU to outpatient care. In comparison, the Azores relies more heavily on hospital-based care, with 6.8 hospital beds per 1 000 inhabitants, nearly double the national average of 3.5 beds (OECD/European Observatory on Health Systems and Policies, 2023[30]). Additionally, the decline in occupied hospital beds in Portugal reflects a broader mental health reform, which led to shift toward community-based mental health care (OECD/European Observatory on Health Systems and Policies, 2021[31]).
Change in occupied hospital beds per capita across the Azores and in Portugal, 2013 to 2022.
Source: Statistics Portugal (2024), Beds (No.) of hospitals by Geographic localization (NUTS - 2013) and Modality; Annual - Statistics Portugal, Hospitals survey, Statistics Portugal, link.
Attracting and retaining qualified healthcare professionals
The Azores faces difficulties in attracting and retaining qualified healthcare professionals (doctors, nurses and other healthcare professionals), especially experienced doctors in remote areas and smaller islands. While the regional government has implemented incentive programmes, they still struggle to compete with the salaries of the private sector on the mainland, which can be up to three times higher than in the Azores. The 3 hospitals of the Region are also facing shortages of certain medical specialties, for example in anaesthesiology, general surgery, cardiology, gynaecology, obstetrics, internal medicine, or paediatrics. The changing needs in healthcare demand due to ageing also require more specialised doctors, in geriatric care, or certain chronic diseases.
Accessibility challenges due to insularity
Healthcare accessibility in the Azores faces unique challenges due to the geographic fragmentation of the archipelago. Intra-island accessibility is generally adequate, with pharmacies or health extension units accessible within a 5-minute drive and health centres within 11 minutes. Residents of São Miguel, Terceira and Faial benefit from relatively prompt hospital access (Figure 5.20). The primary challenge lies in the absence of specialised medical services on smaller islands. Residents of these islands often need to travel to larger islands, such as São Miguel, Terceira, or Faial, to get access to advanced healthcare services, such as surgeries, oncology or cardiology. This reliance on inter-island transportation for healthcare creates logistical difficulties, increases costs, and can delay timely medical interventions. The Portuguese Air Force needs to assist with inter-island patient evacuations using helicopters or military planes to transport patients to appropriate hospitals.
Average driving time to the closest healthcare facility, by type of facility
Source: OECD computations using r5 based on OSM road network and Portal do Governo dos Açores (2024), Casas de Saúde dos Açores, Portal do Governo dos Açores, link; Portal do Governo dos Açores (2024), Serviços de Saúde dos Açores, Portal do Governo dos Açores, link; Portal do Governo dos Açores (2015), Farmácias e Postos de Medicamentos dos Açores, Portal do Governo dos Açores, link.
Note: Flores and Corvo are excluded due to issues with the road network. These estimates assume no road traffic. The average driving time to a hospital in the Azores refers only to São Miguel, Terceira and Faial.
Growing health expenditure
Health has become the main component of regional expenditure in the Azores (Figure 5.21). Average health costs are significantly higher in Azores compared to mainland Portugal, and also vary across islands. These higher costs can be attributed among other factors to the cost of insularity, including for equipment, human resources, and inter-island transfers. Health expenditures have also increased rapidly in per capita terms, compared to other sectors. From 2010 to 2022, health expenditure per capita has increased by 44%, followed by economic affairs (33%) and social protection (19%). On the other hand, regional expenditure per capita has decreased by 15% in recreation, culture and religion and even 77% in housing and community services.
Region government expenditures by function for the Azores, 2000 to 2023.
Source: Serviço Regional Estatística (2015), Despesas Públicas (Classificação funcional), link.
The following policy recommendations are aimed to streamline transportation and improve connectivity, optimise service networks and retain and attract skilled labour while developing workforce skills.
Streamlining transportation and improving connectivity to promote regional integration and economic sustainability
Optimise transportation networks and enhance inter-modal connectivity
Developing a reliable and optimised transit system is essential to provide affordable connectivity across the islands, making the Azores more attractive especially to the young population that has limited access to cars. It would also improve labour market integration and boost tourism, supporting the region's economic sustainability and long-term viability. In the Azores regional programme for 2021-2027, a significant portion of funds are allocated to the development and strengthening of sustainable, climate-resilient, intelligent and intermodal national, regional and local mobility. To optimise transportation networks and enhance inter-modal connectivity, these funds should be targeted to the following key policy avenues:
The Azores should modernise and optimise public transport schedules and routes. Seasonal adjustments in the public transportation offer should be made to accommodate increased tourist demand during peak periods, ensuring a sufficient supply of transport options when visitors arrive on the different islands. In particular, bus connections or shuttles should operate more frequently in the summer between key transportation hubs such as ports and airports and major settlements on each island. For example, São Jorge airport would benefit from more regular connections to the towns of Velas and Calheta and their respective ports. Improving inter-modal connections between ferries, flights, and buses is crucial. Aligning timetables and facilitating transitions across modes of transport would enhance efficiency and accessibility, particularly in the central group of islands. However, given the region’s scattered geography, small population density, and difficult terrain, building an integrated transport system remains a major challenge. Public transport will likely remain unprofitable, requiring sustained public funding to ensure accessibility, quality, and long-term sustainability.
Developing a unified digital platform including all inter-island and intra-island transportation options could support this effort, by providing real-time schedules, ticketing, and routing, which would simplify mobility for users. For example, the Faroe Islands provide an integrated and cohesive transport system across its 18 islands including buses, ferries and tunnels under the management of Strandfaraskip Landsins, the national transport company. This integration provides coordinated schedules and a unified ticketing system, facilitating seamless travel for both residents and tourists across the archipelago (Strandfaraskip Landsins, 2025[32]).
Population projections should be integrated in the development of the public transport network in conjunction with regional and municipal spatial plans, to deliver public transport services where they will be the most needed and foreseeing that some areas will decline more rapidly than others.
These measures require enhanced inter-municipal cooperation and collaboration between regional and municipal governments. Regional authorities should provide technical assistance and financial support to municipalities for public transport planning, ensuring that local governments have the capacity to address mobility challenges effectively.
EU cohesion funds directed towards transportation investment should be prioritised for the modernisation of the public transportation system, focusing on improving reliability, accessibility, and use by both residents and tourists. Additionally, funding should be allocated based on performance metrics, ensuring that investment leads to measurable improvements in service quality and actual usage. Regular monitoring and evaluation should track the impact of these investments, allowing for data-driven adjustments to improve efficiency.
Public transportation and clean mobility also need to be better integrated into spatial planning, making development conditional on regular public transport services for both locals and visitors, and aligning transportation policies with broader economic, social and environmental goals. Transport planning should be incorporated into the Azores’ overall development strategy, considering the implications of demographic shifts and environmental changes.
Enhance connectivity and accessibility in rural areas and on smaller islands
Enhancing rural connectivity is critical in the context of population decline and ageing, as older residents may struggle with mobility and rely less on personal vehicles. Without proper transport, remote communities risk limited access to essential services, but population decline makes sustaining public transport in remote areas financially challenging. In addition to the substantial investments in connectivity and mobility, the Azores regional programme for 2021-2027 also allocates a significant share of EU funds to access to services, healthcare and education, resources that could be leveraged to support the following key avenues:
The Region must develop adaptive mobility solutions that respond to the needs of a smaller, older and more dispersed population. This can be achieved by further developing small-scale shuttles across the different islands, like the mini-bus system in Ponta Delgada, expanding on-demand transport services like the Taxi+ programme in Ponta Delgada, developing digital solutions, and promoting carpooling initiatives. To achieve this, the Region can leverage its strengths in digital connectivity and extensive digital infrastructure. Such solutions would ensure that old-age residents and workers in remote areas keep access to essential services, such as healthcare and employment centres. But it will require support from the regional and national government to implement, especially in covering operating costs.
Access to these adaptive mobility solutions should be prioritised for vulnerable groups, ensuring efficient and reliable transportation to healthcare facilities. These services can be particularly beneficial for the elderly, individuals with mobility issues, or patients requiring regular treatments.
A successful example of adaptive mobility initiative is Ireland’s Local Link Rural Transport Programme, which provides a network of demand-responsive transport routes across rural areas. It consists of 15 public transport communities, that are operated by local community, linking villages and towns to the wider transport network and to essential public services. This programme aims to foster social inclusion by linking to rural areas; to reduce carbon emissions by using low-carbon transport options and encouraging a shift away from private vehicles; to enhance multimodality by connecting to national bus and rail networks, and to be accessible to all by offering door-to-door pick-up services, including at night. This initiative was created by the Irish National Transport Authority, which partly funds the local networks, with local councils covering the rest of the costs, as well as passengers by paying fares, which are similar in price to public transportation. This programme combines scheduled and flexible services from home to the nearest hub, and bookings can be made by phone or email. Around 1.9 million journeys are currently made annually using Local Link. The success of this initiative was the result of involving local government representatives in the network design, to ensure that the service meets the needs of the local population.
Source: (Interreg Europe, 2024[33]), Demand-Responsive Transport - A Policy Brief from the Policy Learning Platform for a more connected Europe, Interreg Europe.
Improve the sustainability of transportation
Developing a low-carbon and energy-efficient transportation network will not only enhance connectivity, self-sufficiency and affordability, but can also position the Azores as a leader in sustainable island mobility, which can boost regional attractiveness and encourage investment. Energy, Climate Action and Sustainability are key priorities in the Azores regional programme for 2021-2027. Most of these funds are currently allocated to climate change adaptation, disaster risk prevention, resilience, as well as promoting access to water and sustainable water management, while only a small share is allocated to promoting renewable energy, promoting energy efficiency and reducing GHG emissions or developing smart energy systems, grids and storage. Current funds should be actively used to accelerate the deployment of clean energy infrastructure and technologies. Moreover, the Cohesion Policy mid-term review - which reinforces the importance of the energy transition and that decarbonisation efforts should be further accelerated, in particular in energy efficiency, renewable energy, hydrogen production and urban transport infrastructure - offers a timely opportunity to reallocate or increase this funding. Key avenues are:
Recognising that air transport has notably improved connectivity between the nine islands and remains essential for longer distances and challenging winter sea conditions, maritime transport subsidies should be enhanced for short inter-island connections where feasible, such as in the Triangle Islands or between closely situated islands like Pico and Faial, while maintaining necessary air transport support during periods of adverse weather. To be effective, these measures can be accompanied by adjustments to ferry schedules, by reopening regular ferry lines between some islands within the central group, and by aligning with other modes of transport to ensure an efficient intermodal network.
The promotion of active mobility on the different islands should also be prioritised. Building safe and scenic cycling paths in urban centres and tourist hubs can encourage greater adoption of cycling, while bicycle rental systems can support both residents and visitors.
Expanding EV infrastructure and micro-mobility solutions, including charging stations, and offering incentives for electric vehicle use, would contribute to reducing greenhouse gas emissions and modernising the transport network.
These measures need to go hand in hand with efforts to decarbonise the Azores’ energy system, leveraging the region’s unique renewable energy potential. The region must further expand renewable electricity production, especially geothermal, tidal and wind power. One key opportunity also lies in the production of green hydrogen, using electrolysers powered by curtailed wind energy. While the applications of hydrogen can be complex, it may offer strategic value as a fuel for ferries, or as backup energy. Given the importance of agriculture in the regional economy, this green hydrogen could also be converted into green ammonia, which can be used in the agricultural sector as fertiliser, reducing dependency on more conventional, carbon-intensive fertilisers. Additionally, biogas from agricultural waste could provide a renewable energy source for rural transport, heating or the industry, supporting both energy sustainability and the agricultural sector. By integrating these solutions, the Azores can advance transport decarbonisation while fostering a more self-sufficient and resilient energy system, that can also support high-skilled job creation and help retain and attract qualified talent in emerging green economy sectors. Developing the region's renewable energy capacity alongside its blue economy potential can create employment opportunities in technical, engineering and research roles that appeal to educated young professionals.
The remote archipelago of Orkney in Scotland offers an example of the development of green hydrogen in a rural and insular setting. Despite its remote location, Orkney has harnessed its abundant wind and tidal energy to produce green hydrogen through electrolysis.
Two initiatives – the Surf 'n' Turf and BIG HIT (Building Innovative Green Hydrogen systems in an Isolated Territory) projects – have been instrumental in this development. These projects consist in absorbing curtailed energy from two wind turbines and tidal turbines on the islands of Eday and Shapinsay to produce hydrogen using two proton exchange membrane (PEM) electrolysers with a combined capacity of 1.5 MW. These two electrolysers are expected to produce around 50 tonnes of hydrogen per year, that will then be used for heat and power for several harbour buildings in Kirkwall, the marina, and as fuel for ferries and vehicles in Orkney Islands Council’s fleet.
Building on these initiatives, Orkney has also been looking into the use of hydrogen as fuel in maritime transport on commercial ferries running between Kirkwall and Shapinsay through its HyDIME (Hydrogen Diesel Injection in a Marine Environment) project, as well as for medium-range small passenger aircrafts through its HyFlyer project with a first flight achieved in January 2023.
Source: (BIG HIT, 2021[34]), About the project, https://www.bighit.eu/about; (Clean Hydrogen Partnership, 2015[35]), “Building Innovative Green Hydrogen systems in an Isolated Territory: a pilot for Europe”, https://www.clean-hydrogen.europa.eu/projects-dashboard/projects-repository/big-hit_en; (EMEC, 2021[36]), HyDIME project, https://www.emec.org.uk/projects/hydrogen-projects/hydime/, (EMEC, 2021[37]), HyFlyer projects, https://www.emec.org.uk/projects/hydrogen-projects/hyflyer/
Optimising service networks and accessibility to strengthen resilience and ensure equitable service provision’
The sharp decrease in the young population together with the increase of the old-age population has created an imbalance in service demand. Educational facilities are underused, while healthcare services face growing pressure from chronic diseases in an ageing population. Geographic fragmentation exacerbates these challenges, with critical services unevenly distributed across islands. Fostering the resilience of the health systems and ensuring equal access to healthcare and to quality services in education and training are key priorities for the Azores regional programme 2021-2027, with a significant portion of funds having been allocated to these areas.
Better tailor service networks to future needs
To address the growing imbalance in service, the following policy avenues are key to ensure that the service network meets the future needs of local residents:
The regional government needs to better tailor services to future needs, by aligning the service network development with future demographic projections which should be integrated into regional and municipal spatial plans to guide infrastructure investments, ensuring that future services are available where they are most needed and avoiding development where access to services is costly.
Developing long-term fiscal projections based on demand and demographic projections is critical to help the Region anticipate future funding needs and allocate resources effectively across the different services.
The Azores should continue to regularly restructure and consolidate its school network when possible, ensuring that educational facilities are aligned with future demographic trends and integrated into regional spatial plans. This could involve expanding existing schools to accommodate multiple educational levels, or merging underutilised schools in municipalities experiencing population decline to enhance resource efficiency and improve access to high-quality facilities and teaching staff. However, especially in the smaller islands, such efforts must be balanced against the constraints imposed by the public service obligation principle. As a result, some educational infrastructure will unavoidably remain underused, and cost-efficiency criteria may not always be applicable.
Restructuring of service networks must go hand-in-hand with robust community engagement, alternative service delivery mechanisms such as distance learning capabilities, and coordination with transport and housing policies to ensure that educational consolidation supports rather than undermines community cohesion and regional development objectives.
School consolidation must be paired with robust transport solutions. Measures should be taken to repurpose former school buildings, preventing vacant or abandoned spaces that would negatively impact local attractiveness. These can be repurposed into community centres, vocational training centres, nursing homes, or multi-service facilities.
Addressing childcare shortages in underserved areas - especially on small islands and rural settlements - is crucial for supporting working families and regional attractiveness for young workers. Expanding access to childcare also has the potential to raise women’s labour supply and improve their career prospects, contributing to higher overall employment and productivity. This can be achieved by developing community-based childcare solutions, such as partnerships with local organisations or shared childcare cooperatives.
The healthcare network should also be regularly adapted to meet the growing demand for specialised care, especially for chronic disease, in particular on islands that record a higher share of old-age residents (São Jorge, Pico) or that are ageing more rapidly (Faial, Terceira, Santa Maria). The services provided in Health Centres across the Azores should be regularly reviewed and adjusted based on demographic trends, disease prevalence and evolving medical needs.
Stronger intermunicipal collaboration would enable shared facilities, pooled procurement, and joint recruitment and training programmes, ensuring better service delivery with fewer resources. For example, as the student population shrinks, consolidated schools could serve students from multiple municipalities, with formalised cost-sharing frameworks to distribute expenses equitably and sustain high-quality education.
Further expand service accessibility through digital solutions
To further expand service accessibility through digital solutions, key policy avenues are as follows:
Building upon previous advancements, the Regional Government should continue to further expand telemedicine infrastructure and capabilities where needed, especially on the smaller islands and in rural areas. For example, "virtual community rooms" could be established, equipped with technology that allows patients in remote villages to conduct self-checks (e.g., blood pressure, blood glucose) and have video consultations with healthcare professionals, as in the case of the Västerbotten Region in Sweden (WHO, 2023[38]). Additionally, integrated digital health solutions, such as wearables and remote monitoring systems, can significantly improve chronic disease monitoring and care, allowing for early intervention and reducing pressure on in-person healthcare services.
Beyond healthcare, digital solutions are also critical for education, upskilling, and lifelong learning. The Regional government has also made significant progress in this area, by enhancing school connectivity and introducing digital equipment in classrooms. Ensuring that all schools and training centres are equipped with modern digital learning tools is essential for equal access to education, particularly for students and professionals in smaller islands. Expanding the use of online courses and e-learning platforms will play a key role in lifelong learning, ensuring that all Azorean students and workers have continuous access to online trainings without having to leave the region.
Promote integrated service delivery through multi-level service centres
Maintaining access to essential services and managing costs in this context requires new approaches to service organisation. To address this:
The regional government should promote service delivery through multi-level service centres, by explicitly incorporating these facilities within the regional spatial plan (PROT-A) and establishing a spatial hierarchy of service provision. The regional spatial plan should delineate a tiered system of service nodes based on population distribution and accessibility, including a mapping of locations with information concerning service categories and projected capacities. This approach should be complemented by explicit cost-sharing principles between municipalities that account for population served, geographical distance, municipal fiscal capacity and utilisation rates. These integrated service hubs could include childcare, educational, healthcare, and community services, such as libraries or post offices, ensuring that rural and ageing communities have access to essential services without requiring long-distance travel, while reducing per capita costs. For example, the Estonian Ministry of Internal Affairs developed in 2015 a concept of a hierarchical network of service centres, taking into consideration the regulatory frameworks, economic viability and the frequency of visits and travel distances by public transportation (OECD, 2022[39]).
To overcome sectoral resistance and ensure effective coordination, implementation should include pilot projects that demonstrate concrete benefits, inter-departmental working groups to align sectoral interests, and clear governance frameworks that preserve service quality while improving efficiency and accessibility across the region.
Retaining and attracting skilled labour and developing the skills of the workforce to enhance regional competitiveness
Recruiting and retaining qualified professionals in healthcare, education and other specialised fields remains a challenge in the Azores. Low educational attainment and early school leaving contributes to skill mismatches and hinders economic development. The University of the Azores also struggles to attract students, fuelling brain drain and worsening labour shortages.
Attract and retain skilled labour
Addressing the issue of skilled labour retention is crucial, as ageing will increase the demand in certain sectors, such as healthcare or elderly care, further intensifying workforce shortages. Key policy avenues are as follows:
The Region should implement a more coherent and targeted incentive system that builds on and streamlines existing financial incentive initiatives at different governance levels - such as the regional financial incentives provided to teachers serving on smaller islands or the municipal property transfer tax exemption for young residents in Faial - particularly for teachers and healthcare workers serving in underserved and short-staffed areas. This includes integrating financial incentives, such as tax incentives and performance-based bonuses with the provision of affordable housing, childcare and mobility in a combined package. These incentives should be aligned across the different levels of government, and their impact should be monitored to ensure their efficiency over time. Examples from other regions illustrate the potential impact of these measures. For example, Scotland provides financial incentives to rural teachers. The preference-waiver-payment helps fill staff gaps in rural schools, by providing probationer teachers with a financial incentive in return for being open to where they are posted for probation year. Teachers employed in remote schools on a distant island also receive a Remote Schools Allowance and a Distant Islands Allowance (Teach in Scotland, 2024[40]).
The Region should also further develop exchange programmes for healthcare workers with mainland Portugal and other regions to help address short-term staffing shortages, especially in summer with the increased demand due to the inflow of tourists, while fostering professional development.
To ensure comprehensive support, the regional government should establish coordinating mechanisms that bring together public agencies, private employers and professional associations to create integrated packages for professionals and their families.
Build local capacity and skills
Building local capacity and skills is essential for the Azores to respond to the evolving needs of its labour market, particularly in the context of demographic change and an ageing population. Qualification and employment, in particular lifelong learning, upskilling, and equal access to quality education, are key priorities in the Azores regional programme 2021-2027, as a significant portion of funds, in particular through European Social Fund Plus (ESF+) and European Regional Development Fund (ERDF), have been allocated to this area. A large share of EU funds is also allocated to improving access to employment for the youth and to improve the employability of disadvantaged groups. To address the challenges related to demographic change, these funds should be targeted to the following key avenues:
Educational institutions and training centres should tailor their programmes to regional economic priorities and sectors impacted by demographic change or facing labour shortages, such as healthcare, tourism, agribusiness or technology. A good example is the recent initiative in Praia da Vitória, under the Azores 2030 plan, which launched training programmes for young adults in strategic sectors, including agriculture, cooking, and computer science. Closing the innovation gap and strengthening competitiveness, both key priorities in the cohesion policy mid-term review, could also be advanced by strategically supporting innovation in these sectors. The University of the Azores could expand its course offerings and further deepen collaborations with industry stakeholders to identify skill gaps, and further develop internship and apprenticeship programmes. A good example is the recent “Estágios profissionais” initiative, under the Azores 2030 plan, which aims at promoting rapid integration of qualified youth, both higher education and vocational qualification graduates, into the labour market through professional internships. It aims at addressing youth emigration and skills retention challenges in the Azores.
To address the growing need for healthcare workers, the national government could provide subsidies for tuition to the University of the Azores medical programme (Basic Cycle of Medicine) to make it more attractive. These national-level incentives should be contextualised and coordinated with regional policies aimed at attracting students and professionals, to avoid duplication and ensure a more coherent overall approach.
The Region should also strengthen existing vocational training and lifelong learning initiatives, which are critical, especially for older workers. By offering retraining and upskilling programmes to workers along their career aligned with the needs of the regional economy, the Azores can address skill shortages in high-demand sectors while offering more career prospects for school leavers and reducing school drop-out, helping older generations remain in the workforce longer and stay competitive. The Azores could draw inspiration from the models of Germany and France to build strong partnerships between vocational education providers and local businesses, promoting work-based learning, apprenticeships, and sector-specific training initiatives (OECD, 2024[24]). This approach would not only benefit individuals but also mitigate the economic impacts of an ageing population on the economy and the shortage of tertiary-educated workers.
Adapt healthcare training and support
As the population of the Azores continues to age, the region’s healthcare and social support systems must adapt to address the evolving needs of older residents. Ensuring equal access to healthcare, fostering the resilience of health systems, and promoting the transition from institutional care to family-centred and community-based care are key priorities in the Azores regional programme for 2021-2027. Ensuring quality care while managing growing demand requires the following actions:
Training programs should be adapted to areas of growing need related to the changing demographics, such as geriatrics, chronic disease management, and palliative care. This alignment would better prepare the workforce to meet the demands of an ageing population.
Awareness campaigns promoting preventive health measures, such as cancer screenings and diabetes monitoring, especially in municipalities with a higher share of old-age population, can reduce the burden of certain diseases. Moreover, introducing programmes for retired healthcare professionals to work part-time or in advisory roles can help address workforce shortages while utilising their valuable expertise.
Finally, family caregivers, who play a crucial role in elderly care, must receive stronger support, through financial assistance with targeted subsidies, leave options and flexible work arrangements, as well as logistical and psychological support. These efforts have the potential to reduce long-term healthcare costs but also to improve the quality of care, in particular for low-income populations who tend to be disproportionately affected by chronic illnesses.
Many EU member states offer leave arrangements for family caregivers. For instance, countries like Belgium, Denmark, and Finland provide long-term leave options, allowing family caregivers to take time off work to take care of their relatives. Some of these measures also include financial benefits to compensate for lost income during the caregiving period. Portugal currently provides carer’s with up to 15 days of unpaid leave per year to help a family member, while more extensive leave and financial benefits are available for caregivers of child dependents. The Statute of the Informal Caregiver (Law No. 100/2019) grants some rights, but elderly caregiving remains largely unsupported, leaving many caregivers without financial aid or flexible work arrangements.
Source: (Sören Hoyer and Nele Reich, 2016[41]), Leave and financial support for family caregivers in EU member states, Observatory for Sociopolitical Developments in Europe, https://beobachtungsstelle-gesellschaftspolitik.de/f/04d661be68.pdf; (Eurocarers, 2023[42]), Eurocarers country profiles - Portugal, Eurocarers, https://eurocarers.org/country-profiles/portugal/
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