Wages in Portugal: evolution patterns, inflation and inequalities
Between 2018 and 2021, there was rapid growth in the real value of average and median wages in Portugal, as measured in this study by the evolution of average and median gross monthly earnings and average gross monthly earnings per employee. This growth was uneven across the economic fabric, and was much more pronounced in the sectors of economic activity which, in general, have lower average salaries. This suggests the preponderance of successive increases in the national minimum wage (SMN) in explaining this trend.
However, the growth in the real value of average and median wages occurred very late, if we consider that the recovery from the economic and financial crisis of the early 2010s began in 2014. In fact, the increase in the real value of average and median salaries between 2014 and 2021 was almost always at a much slower rate than the evolution of GDP. And even the real appreciation that has occurred since 2018 is already suffering a strong erosion, caused by the inflationary surge that began in 2021.
A more detailed analysis of a salary indicator - average gross monthly earnings - reveals other nuances of this trend. Firstly, a process of flattening of the lower half of the earnings distribution, accompanied by a reduction in inequality between the upper and lower parts of this distribution. The increase in the minimum wage is contributing to this process, as is the reduction in the educational attainment premium. In the case of the SMN, it was found that it has direct effects on the increase in average salaries at the bottom of the distribution (bite effect), but also indirect effects at intermediate latitudes (spillover effect).
Secondly, the coexistence of an overall downward trend in inequality of earnings between women and men with the persistence of inequality to the detriment of women when comparing workers with similar profiles. At this level, the intersectionality of gender and nationality inequalities was also analyzed. Thirdly, we identified the trend towards precarious employment relationships for employees over the last decade and observed the persistence of a strong wage penalty for workers with non-permanent contracts - particularly from the age of 45 onwards. Finally, the differentiated valuation of schooling in the various sectors of activity was measured.
Keywords: wages and earnings; national minimum wage; inflation; inequalities; education premium; precariousness; gender; nationality.
Authors: Frederico Cantante e Pedro Estêvão.
