Risk of poverty increased in Portugal in 2020

Portugal was one of nine European countries that, in a pandemic year, registered a higher risk of poverty among citizens aged 18 years 64 years old compared to 2019, according to estimates released on Monday by Eurostat.

The data made available by the Statistics Office shows that only in nine EU’s countries, including Portugal, the risk of poverty indicators increased, when compared to 2019. The most significant increases were recorded in Spain, Italy, Slovenia and Greece. The indicator in question remained at stable levels in the rest of the countries.

It should be noted that the year 2020 was marked by the health crisis and its impact on the economies, in the wake of the restrictions that were imposed around the world to mitigate the effects of Covid-19. As a result, unemployment increased and many sectors of activity had to temporarily close their doors, which also affected workers’ incomes.

At the EU level, the average labour income for the population between 18 and 64 years old fell by 7% compared to 2019, Eurostat advances this Monday. “The losses in employment income were largely due to the unprecedented rise in the number of workers absent from work or working reduced hours,” the Statistics Office explains, referring to schemes equivalent to Portugal’s simplified lay-off, which have allowed employers to suspend work contracts or reduce hours.

The positive side of measures like this is that they have guaranteed workers their wages, softening the impact of the pandemic on incomes. “These temporary schemes played an important role in the stabilization of wages and household income, in particular for those with lower income,” Eurostat underlines, highlighting the progressive nature of these supports.

In Portugal, besides the simplified lay-off, the progressive recovery support also allows employers to cut the normal working period, without implying salary cuts, as Social Security transfers an aid for this purpose.