Productivity and the wage policy that matters

Over the last decade, the average salary in our country has grown by around 44%. This evolution, although notable and generally positive, has not always been reflected in a real increase in purchasing power and has hidden a less pleasant aspect: that the rise in wages is not matched by an increase in productivity.

This is why the Minister of Labor, in analyzing the results published by INE, highlighted the concern with “real productivity gains”, placing them as a necessary condition for maintaining an upward and sustainable salary trajectory. In fact, the principle could not be more correct. It just hasn’t been put into practice by the State.

What reality has shown is that successive governments promote an income policy at the expense of companies. On the one hand, pushing the minimum wage to increasingly demanding levels that place it above 80% of the median salary. On the other hand, doing so without any indexation to economic growth, productivity or sectoral performance, which puts the subsistence of smaller-scale businesses that are more unprotected in relation to rising labor costs at risk.

This discrepancy between salary and performance is not only a threat to the particular context of our business fabric – made up, in its overwhelming majority, of SMEs – but also causes other structural imbalances in the national economy. Firstly, the risk of persistent inflation, with the need to reflect the increase in salary expenses in the prices charged.

In addition, the loss of competitiveness of our exports and a greater appetite on the domestic market for imported goods. Without forgetting, the disincentive to investment and modernization: with tighter margins, companies have less capital to invest in qualifying their human resources and improving products or services.

There is no question of the need to pay better salaries in Portugal and make them converge with the European average. What is fundamental is that this path is supported by consistent levels of productivity and solid and lasting economic growth. This is the income policy that interests the country’s future and the one that should guide the Government’s action until the end of the legislature.