Minimum wage in Portugal: the government plans to increase the minimum wage by 30 euros in 2021

The Portugese Government's proposal is to increase the national minimum wage per month to 665 euros in 2021.

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Portugal minimum wage 2021 / Photo by Markus Spiske on Unsplash
21 December 2020, Redaction

What is the minimum wage in Portugal? Mimimum wage in Portugal stood at 635 euros in 2020, and the good news is that it is set to rise in 2021, however, it is significantly lower than other European countries. The national minimum wage in Portugal (SMN) will rise to 665 euros per month before tax in 2021 and is based on 14 payments. To accompany this decision to increase minimum wage by 30 euros next year, the Government also plan to create support aimed at compensating companies for the increase in the Single Social Tax (TSU), resulting from the increase in the guaranteed minimum wage, which may reach 74 million euros. The measure was confirmed and communicated by the Executive to trade unions and employers at a social consultation meeting at the beginning of December 2020.

The update to the minimum wage in Portugal, should be accompanied by a series of support measures for employers, including possible tax measures. There will be no direct discounts on the TSU, but rather a "non-refundable" support that will offset this increase in charges, since the increase of 30 euros will have a different impact on each of the companies, hitting the sectors most affected by the COVID-19 crisis.

"The government will create a mechanism to deliver non-refundable funds to companies which represent a value identical or close to that which is the greatest burden during the year 2021 with the TSU resulting from this increase in the minimum wage," explained the Minister of Economy Pedro Siza Vieira, cited by the Portuguese national press. "It will be aimed at companies with workers on the minimum wage," he said, adding that "the exact amount and timing of payment is not yet defined" - the government's expectation is that it will be possible to pay the full support during the first quarter of 2021.

Portugal’s minimum wage is updated annually considering the cost of living, national productivity, and the government’s budget and income policy. While the minimum wage in Portugal is based on a salary per month calculation, the minimum national wage per hour would stand at 4.85 euros in 2021. The Portuguese government also maintains the objective of gradually increasing the national minimum wage to 750 euros per month by 2023.

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