Portugal’s productivity gap with EU widens, report says

Portugal’s productivity per hour worked fell to 66.9% of the European Union average in 2025, below the level recorded in 2000, according to a new analysis by Business Roundtable Portugal. It suggests the country’s recent economic and jobs growth has not translated into stronger efficiency or higher value creation.

The business group said Portugal ranked 24th among the EU’s 27 member states on this measure in 2025, down from 17th place in 2000. Its report, “Comparar para Crescer”, said the country posted cumulative GDP growth of 26%, above the EU average of 19.3%, while the employment rate rose from 63.4% in 2013 to 79.6% last year, also above the EU average.

But the report argues that growth relied mainly on adding more workers rather than increasing output per worker. Of the roughly 684,357 jobs created between 2011 and 2024, more than 60% were in lower value-added sectors such as administrative activities, hospitality, agriculture and fisheries, with average annual gross value added of €31,700.

By contrast, the 81,000 new jobs created in information and communication technologies generated gross value added of €61,800, which the association described as an example of job growth that also lifts productivity.

Business Roundtable Portugal also warned that rising minimum wages, without matching gains in productivity and broader wage growth, are compressing pay scales and making it harder for companies to retain skilled young workers. It said the share of employees earning the national minimum wage rose from 5% to 21% between 2002 and 2024.

The report also pointed to the small size of most Portuguese companies and weak investment as barriers to productivity growth. It said microenterprises, which make up more than 93% of the business base, generate €26,000 in gross value added per worker, compared with €63,000 at large companies, while total investment in 2025 stood at 20.7% of GDP, below the EU average of 21.3%.

Originally published at Eco.pt