Lisbon, Oct. 7, 2025 (Lusa) - The Bank of Portugal points to a slowdown in employment in the country and a stabilisation of the unemployment rate by 2027.
In the October 2025 Economic Bulletin, released on Tuesday, the central bank predicts that, after a 0.7% change in 2024, employment will grow by 1.8% this year, before slowing down to 0.9% in 2026 and 0.5% in 2027.
"Employment is projected to slow and the unemployment rate to stabilise at low levels," the Bank of Portugal said, noting that after growing by 1.3% on average in 2023 and 2024 and by 1.9% in the first half of 2025, "employment should continue to increase over the projection horizon, albeit progressively less."
Regarding unemployment, the Bank of Portugal estimates that the rate will decrease from 6.4% in 2024 to 6.2% in 2025, then rise to 6.3% the following year and remain at this level in 2027.
According to the central bank, the dynamics in employment over this period, from 2025 to 2027, reflect contained increases in the activity rate, which is expected to remain at historically high levels, and in the working-age population.
"Population growth will continue to be sustained by the entry of foreign labour into the country, albeit with gradually smaller flows, after the peak observed in 2023," it said.
'In this context of modest growth in the active population and employment, the unemployment rate will stand at 6.3% on average,' it adds.
According to the Bank of Portugal, “in the first half of 2025, activity and employment in services grew more than in other activities” and “this pattern reinforces the orientation of the Portuguese economy towards services, which will account for around three quarters of activity and employment in 2024 (around 70% and 54% in 2000, respectively)”.
The process of tertiarisation, he points out, is in line with the development of most economies.
"Given that services are typically less volatile than other activities (except for borderline situations, such as a pandemic), this factor makes the Portuguese economy more resistant to shocks," it explains.
The central bank also projects "a gradual decrease in domestic inflationary pressures stemming from labour costs".
Wages grew by 5.6% in the first half of 2025, following an average annual increase of 8.4% from 2023 to 2024, when inflation was at a high level.
However, says the Bank of Portugal, "this deceleration is slower than projected in the previous bulletin".
Based on social security records, the central bank notes that the most common wage changes “include increases of up to 10% in the first half of 2025”.
"Half of all workers had wage growth of at least 6 per cent. The projection points to gradually more contained variations, compatible with inflation close to the ECB's 2 per cent target, with real wages evolving in line with output per worker and with the updates announced for the national minimum wage (5.7% in 2026 and 5.4% in 2027, after 6.1% in 2025). As a result, average salaries should grow by 5.1% in 2025, 4.1% in 2026 and 3.8% in 2027," the central bank added.
In the public sector, wage rises "will be higher, reflecting the effect of the multi-annual agreement to increase the value of public administration workers, signed in November 2024, as well as the impact of career reviews and the rules for progression in the civil service," it explained.
PCT/ADB // ADB.
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