Minimum wage will increase to 557 euros in January

  • ECO News
  • 27 December 2016

The Portuguese government and social partners agreed to increase minimum wage by 27 euros. The Single Social Tax (TSU) will decrease 1.25 points starting on January 31.

The Portuguese government and social partners – which include union officials and employer representatives –, have reached an agreement: the monthly minimum wage will increase 27 euros to 557 euros, starting from January 1st. The Single Social Tax cut will increase to 1.25%.

Until December, monthly minimum wage in Portugal was 530 euros. The government programme predicted an increase of the minimum wage to 600 euros by 2019, but that issue was not inscribed in the document and “it was a way to overcome some constraints”, Carlos Silva from UGT (General Workers’ Union) explained. 557 euros will be the new goal for the minimum wage.

After the meeting between the government and partners, the agreement also mentioned the Single Social Tax (Taxa Social Única – TSU, a monthly payment made by companies per worker to Social Security), which will decrease 1.25 points starting on January 31. Until then, the 0.75% cut already taking place will remain as a provisionary measure, as well as the cut that will start in February since it is not clear when it will end. The final document will still be composed.

Vieira da Silva underlined that, at most, companies pay seven euros less with the 1.25% reduction in the TSU, which is an inferior number to the 27 euros increase starting in January – being that the 1.25% discount is only applicable to employees earning minimum wage.

Carlos Silva explained the UGT “has some reservations” concerning the decrease of 1.25 points in the TSU; although it is a “transitional and exceptional” measure, “in the summary statement of the document, the UGT accepts the agreement”, since it is more beneficial to employees. The agreement was reached with CIP and UGTCGTP (General Confederation of Portuguese Workers) didn’t sign the document.

“The support given to companies that have more workers earning minimum wage is temporary (…) a justifiable agreement was considered by the Government”, stated Vieira da Silva to journalist after the agreement. Both the PCP (Portuguese Communist Party) and the BE (Left Block), the two supporting political forces of Antonio Costa’s government, will take the discount on TSU to the Parliament.