The average net salary exercised in Portugal is almost stagnant (it increased by one euro in the first quarter), uncertainty is spreading, job creation is mainly concentrated in occupations with lower qualifications, the unemployment rate is rising sharply and this time not even graduates escape, according to new data from the National Institute of Statistics (INE) employment survey for the first three months of this year.
Despite the fact that the economy continues to grow, even surprisingly upwards, the crisis, which has been dragging on for more than a year, is having visible and very unfavorable consequences for a whole range of fundamental labor market indicators.
In a context of very high inflation, the government has decided to continue since October with mitigation measures, mainly targeting “the most vulnerable families” and with lower monthly incomes.
Measures in the field of personal income tax, VAT, subsidizing part of energy costs and housing costs, plus an increase in the minimum wage, part of social assistance (for the most disadvantaged), an extra increase for pensioners (not all) and a small increase for the civil service, to which was added an increase in the meal allowance.
In addition, several companies, including large groups, also in the private sector decided to update employee salaries extraordinarily to keep up with inflation.
But apparently all these and other possible measures are not enough to prevent a macroeconomic scenario that in practice is already a wage stagnation in net terms.
According to INE, the average salary that employees (private) take home at the end of the month has increased by one euro (0.1%) between the first quarter of 2022 and the same quarter of this year. Value: 1025 euros. A year ago that was 1024 euros.
For example, the series consulted by Dinheiro Vivo shows that the average net salary, as mentioned, has only increased by one euro (0.1%). The increase is the smallest since the first quarter of 2014 as the country attempted a “clean exit” from the troika and PSD-CDS government adjustment programme.
According to INE, this average net salary is the “income after deduction of income tax”. [IRS] and compulsory social security contributions by employees and employers”.
The explanation for this context of national wage strike is almost simple.
First, the economy as a whole creates few jobs and in the ranks where the number of jobs is increasing, this expansion is clearly concentrated in lower-skilled occupations, precisely those where the lowest wages predominate.
Total employment increased by only 0.5% in the first quarter compared to the same period in 2022, the same value as in the last quarter of last year. Both are the weakest brands since the beginning of 2021, the Portuguese economy was bound by numerous lockdowns and went through the deadliest phase of the covid-19 pandemic.
INE data shows that job destruction is very high in the most skilled professions, with a drop of more than 6% in the intellectual and scientific professions (doctors, teachers, researchers) and where the average net wage is €1420 per year month.
And they also show a drop of almost 20% in the employment of technical professions, whose average wage income is almost 1100 euros. Both are above average. These employment contracts must therefore drag down the aforementioned wage average.
To compensate (but little in national global terms) there was even quite noticeable job creation in lower-skilled occupations. Another 13% for employees in personal services, protection and security, and sales reps (earning an average of €775 net).
And an 18% increase in the employment of “unskilled workers”, where the net wage is 637 euros per month.
In addition, there is a group normally associated with above-average earnings, graduates, who also no longer escape the labor crisis.
Job losses in this group exceeded 6% and, although there are fewer unemployed with a degree, the unemployment rate in this group has increased by four-tenths to 5% of the labor force with a higher education.
The rate had been on a steady decline since mid-2021, about two years ago, but has now stopped.
The uncertainty is spreading
Another way to explain the net average wage squeeze in the economy is the clear and sharp rise in uncertainty. Precarious contracts are mainly associated with lower wages, also for graduates.
INE shows that in the first quarter of 2023 open-ended contracts fell for the first time since mid-2013. In fact, a long trend of nearly a decade was broken.
As mentioned, the uncertainty has spread considerably. Fixed-term contracts (fixed-term contracts and others such as seasonal work and incidental or incidental work increased by almost 8%, the highest rate in the past seven years. About 596,600 people were in these conditions in the first quarter, according to the institute.
But there are more precarious ones. There are “other types of contracts”, where “fake green receipts” fall, and they have been increasing continuously since the beginning of 2022. Thousand of these are precarious. Since the beginning of 2022, there have been more than 22,000.
These two groups result in a universe of 716.7 thousand people with precarious ties, 8% more than a year ago and now with a weight equal to 17% of the total.
Underemployment, which isn’t exactly an indicator of insecurity, is worse, because it measures a large part of the sclerosis of the labor market, the degree of “underemployment” of the labor force — the number of people who want to work more, but don’t have the opportunity have found, end up taking on an “underemployment” that lasts less than a normal part-time job and comes with a corresponding salary) is increasing a lot.
It was up more than 8%, the biggest jump since mid-2020, we were in the middle of a pandemic. There are now 156 thousand people in this situation of near unemployment.
unemployment is waking up
Portugal’s unemployment rate rose again in the first quarter and had stabilized at 7.2% of the active population in the first quarter of this year, according to INE. It is necessary to go back to late 2020, in the middle of the pandemic, to find a worse value (7.3% in the last quarter of that year).
According to the INE survey, the weight of unemployment increased by 0.7 percentage point (pp) in the first quarter compared to the previous quarter, repeating the previous deterioration. That is, in just two quarters, the unemployment rate has risen from 5.8% to the current 7.2%. A year ago, in the first quarter of 2022, the unemployment rate was 5.9%.
The total unemployed population is also increasing sharply. INE estimates that there were 380.3 thousand people out of work in the first quarter in Portugal, 23.3% more compared to the same quarter last year and 11% more compared to the fourth quarter of 2022.
According to INE, the youth unemployment rate (16 to 24 years old) was about 19.6% of the active population at these ages, one percentage point (pp) less than in the same quarter of the previous year. But it was the sixth largest in Europe.
In any case, the number of unemployed young people rose sharply in the first quarter compared to the same period last year. The aggravation was greater than 11%, with about 73,200 young people now unemployed (people under the age of 25).
Unemployment also spread across all age groups, but worsened more in the 35-44 age group, where it shot up by 47.1% compared to the first quarter of 2022.
Unemployment also spread across all levels of education. On an annual basis, it increased by a whopping 28.9% among people with basic education (up to the third cycle), plus 32.5% among the population with secondary education.
And even graduates couldn’t escape it: compared to early 2022, when the crisis started, there are now 2.7% more unemployed with a diploma.
Unemployment is growing more in the north and the Alentejo
The incidence of unemployment worsened more in the north of the country and in the Alentejo, in that order, but it is the Área Metropolitana de Lisboa (AML) that records the highest rate, INE shows.
In the north, the unemployment rate increased by 2.2 percentage points to 7.6% of the active population in the first quarter.
In Alentejo, the percentage increased from 5.1% in the first quarter of 2022 to 7.2% now (another 2.1 points).
In AML, the increase was 1.2 percentage points, bringing the unemployment rate in the Lisbon region to 8%, the highest in the country.
In the Center and Algarve regions, the increase in unemployment was less, rising by only two tenths to 5.6% and 7.2% respectively. In countercurrent are the islands, where the respective unemployment rates decreased.
Luís Reis Ribeiro is a journalist for Dinheiro Vivo
Source: DN
