Portugal’s minority Socialist government approved a 40-euro ($45) increase in the monthly minimum wage to 705 euros for 2022, Labour Minister Ana Mendes Godinho said, the biggest rise ever as the country heads towards an election on Jan. 30.
European Commission data show the minimum wage, paid to around 800,000 people or about 16% of all Portuguese workers, would still be Western Europe’s lowest.
The hike, part of a parliament-approved plan to raise the minimum salary to 750 euros by 2023, takes effect on Jan. 1.
“This is the biggest absolute increase in the minimum wage ever,” said Mendes Godinho, adding the Socialist administration had raised it by 200 euros since taking over in 2015.
Given “the adverse conditions due to the coronavirus pandemic” and addressing employers’ concerns, the government will give an annual extraordinary subsidy of 56 to 112 euros per worker to each company that is currently paying salaries between 665 euros and 705 euros, she said.
Portugal’s unemployment rate dropped to 6.1% in the third quarter, below pre-pandemic levels, but unions have warned the decline was driven by low wages and precarious contracts that do not protect workers.
Portugal’s election was triggered by the rejection of the government budget’s bill by parliament in October, a move that effectively ended the relative political stability the country has enjoyed in the last six years.
The Socialists lead in opinion polls with support of between 38.5% and 39%, far ahead of the main opposition Social Democrats on 24.6%-28.1%, but short of a parliamentary majority.
Analysts say the political impasse could continue after the election.