If attracting and retaining talent is “absolutely fundamental in the competitive and global world, Portugal has not done well in this area,” laments businessman Vasco de Mello, pointing to the country’s lack of growth as the original sin that has contributed to exacerbating the demographic crisis, which also hinders the ability to attract and retain talent. “In the past two decades conditions have not been created for growth and this is essential for wealth generation that determines whether people can achieve the standard of living they desire,” he explains to Dinheiro Vivo. The worst effect of this situation, as outlined in a diagnosis by the Associação Business Roundtable Portugal (ABRP), is the overwhelming pace of emigration, which in the last decade has robbed us of more than 700 thousand people, many of whom are young and qualified , who will earn a living and start a family.
It is the demographic winter that, with the rise in average life expectancy and this mass emigration, creates what Vasco de Mello and Nuno Amado consider “demographic hell”. With the study by the Association and Deloitte revealed to Dinheiro Vivo, ABRP’s businessmen and leaders are bringing not only problems, but also ways to find solutions that will enable them to break the cycle that has driven the country nearly 1 million people lost (see figures on the side).
“We are the 8th country in the world in terms of emigration and since there are no one-size-fits-all solutions, there are tools that companies and the state can use to stop this trend that is getting worse,” they guarantee, pointing out that half of the young people who complete their studies are very likely to leave the country and most do not want to return later.
“If they leave for better living conditions and better pay, can we provide something that will make them stay?” The question has a clear positive answer, even if there are several paths depending on the sector, region, company.
The vacancy suggestions of those responsible for ABRP have four levels of action: wages, which must be increased; purchasing power, which must be adapted to what a young person is looking for at the beginning of his life; taxation cannot penalize work and success; and the organization of work, which needs to be made more flexible to accommodate young people’s new approaches and aspirations.
Help young people out of their homes
“From the point of view of companies, a path of wage growth should be followed,” the businessmen explain, recalling that the minimum comfortable wage is based on less rigid boundaries than one might think. “If a young person who wants to have a suitable profession, leave home and live comfortably, earns a living in Trás-os-Montes, the value is around a thousand euros. If he is in Cascais, it rises to 1800. because housing and centrality have different costs.” And in this logic, there may even be incentives for companies to move to areas of lower pressure, for example.
The second sphere in which companies can act is to adopt a more flexible salary structure, guaranteeing young people employed in “mobility or residence support”, compensation supplements with a different tax and social security treatment and a period extended to several years, in a way that gives them time to settle down and achieve some career progression.” That also means companies can benefit from more favorable treatment in these supplements, Nuno Amado argues. Pointing to the need to accelerate the market, supply in order to guarantee housing for our young people.
Strengthening the IRS, making it as or more attractive than the Regressar program, is another effort due to the state. And then there’s what Nuno Amado calls the “fiscal tightening.” With lower productivity levels and smaller companies than those in countries such as Spain, France or Germany, raising wages to European levels is no easy task, but it is essential to stand shoulder to shoulder with our partners and competitors. And the tax effect further accentuates this difficulty. “In European countries with comparable house and supermarket costs, a basic salary of 2,000 euros/month in Portugal costs our entrepreneurs more than others and Portuguese workers receive less than those in other countries.”
These are dimensions that must change if we want to stop emigration, especially of qualified young people, argue those responsible for the ABRP. And they bring an important figure to the root of the discussion, whom they want to see in the public space, given the relevance of the topic to the future of the country.
“Each person, at the end of his studies, represents an investment of about 100,000 euros, made by the state and the family. 2 billion euros fly by.” Amado and Mello highlight the economic cost, but especially the social cost of this investment that is wasted every year, to suggest that the state not only allocate resources to certain groups in need, and also save a portion to respond to long-term strategic objectives. How to finance measures that can keep this talent here. “We understand that the budget balance is crucial, but at the moment state resources are available and their allocation is being discussed. And it is essential that this allocation is made to those who need it, but also leave some to determine criteria for retaining talent, especially young people.”
Lower the tax burden
Vasco de Mello emphasizes that the part in which companies can act is not enough and that the state must also provide answers to ensure that our young people stay. And that starts with reducing the tax disadvantage that Portugal has for other countries, whose companies benefit from greater competitiveness, not only because of the costs they incur, but also because of their ability to offer more attractive careers. “Career evolution is much faster and jobs are much more flexible in the countries where our qualified young people emigrate to, so we need to improve these aspects.” If?
“Taxes are not insignificant at all, even if wages are also an issue,” the businessmen admit, pointing out that nearly half of an average wage paid by companies does not end up in workers’ pockets. “This would not have such a negative effect on the state’s costs as more people would be working, living and contributing more efficiently in the country.”
As far as companies are concerned, reducing context costs is essential: less bureaucracy, more flexible licensing, etc. -, but also more flexibility and agility in companies, to build organizations that are less hierarchical, where it is possible to give young people more decision-making power and let them rotate through different functions and tasks, to face different situations and therefore to value themselves.
The diagnosis has been made, the paths indicated, but are the decision makers interested in following them? “There has been a dialogue, even if there is no sense of urgency,” admit those in charge of the Associação Business Roundtable Portugal, who warn of the urgency of bringing this debate to the table.
Source: DN
