Between 2018 and 2021, there was rapid growth in the real value of average and median wages in Portugal, as measured in this study by the evolution of average and median gross monthly earnings and average gross monthly remuneration per worker. This growth was uneven across the economic fabric, being considerably more pronounced in sectors of economic activity that generally practice lower average wages. This suggests the preponderance of successive increases in the national minimum wage (SMN) in explaining this trend.
However, the growth in the real value of average and median wages occurred very late, considering that the recovery from the economic and financial crisis of the early 2010s took place from 2014 onwards. In reality, the increase in the real value of average and median wages between 2014 and 2021 almost always occurred at a rate considerably lower than the growth of GDP. And even the real increase that has occurred since 2018 is already suffering strong erosion, caused by the inflationary surge that began in 2021.
A more detailed analysis of a wage indicator – the average gross monthly earnings – reveals other nuances of this trend. Firstly, the occurrence of a flattening process in the lower half of the earnings distribution, accompanied by a reduction in inequality between the upper and lower parts of that distribution. Contributing to this process are the increase in the minimum wage, but also the reduction in the educational qualification premium. In the case of the minimum wage, it was found that it has direct effects on increasing average wages at the base of the distribution (bite effect), but also indirect effects in intermediate latitudes (spillover effect).
Secondly, the study examined the coexistence of a global trend of reduced wage inequality between women and men with the persistence of inequality to the detriment of women when comparing workers with similar profiles. At this level, the intersectionality of gender and nationality inequalities was also analyzed. Thirdly, the study identified the trend of precarious employment relationships for salaried workers over the last decade and observed the persistence of significant wage penalties for workers with non-permanent contracts – particularly those over 45. Finally, the differentiated valuation of educational qualifications across various sectors of activity was measured.
Keywords: wages and earnings; national minimum wage; inflation; inequalities; educational qualification bonus; precarious employment; gender; nationality.
Authors: Frederico Cantante and Pedro Estêvão.
