Vieira da Silva: increase in minimum wage does influence employment

  • ECO News
  • 31 December 2016

The minister of Labor Vieira da Silva states the TSU cut is temporary and doesn’t conflict with the agreement Left has with the government. The minister agrees minimum wage does influence employment.

During the second ECOtalks, the Labor minister Vieira da Silva stated minimum wage is not decisive for employment growth, although it influences it. “It is not minimum wage that determines employment growth, but I will not say it doesn’t influence it”, stated Vieira da Silva during the ECOtalks – an event organized by ECO, in Lisbon, in which guest speakers discuss current events concerning politics, finances and economy.

The minister highlighted the economy is creating employment and that it is happening “in a context of increase in minimum wage”. Vieira da Silva considers this is not an “unbalanced situation”, and stresses the ambition is to have minimum wage close to a “dignified” income and that is simultaneously “affordable for companies”.

In exchange for the minimum wage to increase from 530 to 557 euros in 2017, the Portuguese government promised to reduce the Single Social Tax (TSU – Taxa Social Única) to employers who withstand the increase, but Vieira da Silva does not perceive this measure as a way of “subsidization”. And he also points to its impact: the increase in minimum wage creates an additional 80 million euros in contributions, later to be “returned” in “around half of the value”.

Since the Portuguese Communist Party (PCP) and the Left Block (BE) don’t agree with the cut in the TSU and threaten to take it to Parliament, the Labor minister states he does not believe this reduction in the monthly payment made by companies per worker earning minimum wage conflicts with the agreement they made with the government.

“I don’t believe so. The government has not made any final and structural reduction in the Single Social Tax. This measure is temporary”, and “has happened before”, stated Vieira da Silva to journalists in the end of ECOtalks.

The Labor minister highlighted that the impact of this measure is reduced and widely compensated “by the positive effects of the increase in minimum wage, both socially and economically”.