In its October 2025 Economic Bulletin, released today, the central bank forecasts that after a 0.7% change in 2024, employment is expected to grow by 1.8% this year. This will be followed by a slowdown, with growth decreasing to 0.9% in 2026 and 0.5% in 2027.
“A slowdown in employment and stabilization of unemployment at low levels is projected,” summarizes the central bank. It notes that after an average growth of 1.3% in 2023 and 2024 and a 1.9% increase in the first half of 2025, “employment should continue to register increases within the projection horizon, albeit progressively smaller ones.”
Regarding unemployment, the central bank estimates that the rate will decrease from 6.4% in 2024 to 6.2% in 2025, followed by a slight increase to 6.3% the next year and remaining at the same percentage in 2027.
According to the central bank, the employment dynamics during the 2025-2027 period “reflect contained increases in the activity rate — which should be at historically high levels — and the working-age population.”
“Population growth will continue to be supported by the arrival of foreign labor, although with gradually smaller flows, after the peak observed in 2023,” it states.
“In this context of modest growths in the active population and employment, the unemployment rate will average 6.3%,” it adds.
According to the central bank, “in the first half of 2025, activity and employment in services grew more than in other sectors” and “this pattern reinforces the orientation of the Portuguese economy towards services, which accounted for about three-quarters of activity and employment in 2024 (around 70% and 54% in 2000, respectively).”
The process of tertiarisation, it indicates, is aligned with the development of most economies.
“Since services are typically less volatile than other activities (except in extreme situations, such as a pandemic), this factor makes the Portuguese economy more resilient to shocks,” it explains.
The central bank also projects “a gradual decrease in internal inflationary pressures stemming from labor costs.”
Salaries increased by 5.6% in the first half of 2025, following an average increase of 8.4% from 2023 to 2024 when inflation was at a high level.
However, the central bank notes, “this slowdown is progressing more slowly than projected in the previous bulletin.”
Based on Social Security records, the central bank reports that the most common salary changes “include increases of up to 10% in the first half of 2025.”
“Half of the workers experienced a salary increase of at least 6%. The projection points to more contained variations, compatible with inflation close to the ECB’s 2% target, with real wage development aligned with productivity per worker and the announced updates for the national minimum wage (5.7% in 2026 and 5.4% in 2027, after 6.1% in 2025). Thus, average remunerations are expected to grow by 5.1% in 2025, 4.1% in 2026, and 3.8% in 2027,” it reports.
In the public sector, salary increases “will be higher, reflecting the effect of the multi-year agreement for valuing public administration workers, signed in November 2024, as well as the impact of career revisions and advancement rules in the civil service,” it further explains.
