The Portuguese government has confirmed an increase in the national minimum wage to €870 in 2025, a decision that is "absolutely a done deal," according to Maria do Rosário Palma Ramalho, the Minister of Labour. This increase is higher than the previously agreed figure of €855 and is part of ongoing efforts to boost wages and economic development.
While the minimum wage increase has been finalized, other aspects of the broader wage appreciation agreement, which the government is negotiating with business confederations and trade unions, are still under discussion. The government aims to have the agreement signed before 10 October, when the State Budget proposal for 2025 will be submitted to Parliament.
Although consultations with social partners are required under the Labour Code, the final decision on the minimum wage rests with the government, even in the absence of an agreement among the various parties.
Concerns were raised about whether minimum wage earners would start paying income tax (IRS) due to the increase. However, the Minister clarified that tax brackets will be updated to ensure that wage earners remain tax-neutral despite the raise.
Looking ahead, the government has not revealed specific plans for future minimum wage increases. However, a document presented to social partners suggests annual €50 increases, aiming for a minimum wage of €1,020 by 2028. This marks an upward revision of the government’s previous commitment to reach €1,000 by the end of the current legislature.
