Average salary decreases 4% in real terms by 2022

The average wage rose by 3.6% in 2022 and reached 1,411 euros, but taking into account the effect of inflation, there was a 4% real decrease in earnings.

The average monthly total gross remuneration per Portuguese worker increased 3.6% in nominal terms, but fell 4.0% in real terms, in 2022 compared to 2021, adding up to 1,411 euros ,the National Statistics Institute (INE)announced this Thursday.

By 2021, total compensation had increased in both terms: 3.5% in nominal terms and 2.2% in real terms.

Last year, regular monthly gross pay – which excludes vacation and Christmas subsidies and is therefore less seasonal – was 1,140 euros, registering a nominal increase of 3.1% and a real decrease of 4.4% (in 2021, it had increased by 3.1% and 1.8%, unadjusted and adjusted for inflation, respectively).

Also in 2022, monthly basic gross pay stood at 1,070 euros and recorded a nominal increase of 3.0% and a real decrease of 4.5% (in 2021, it had increased by 3.0% and 1.7%, in nominal and real terms, respectively).

Note that in 2022, the Consumer Price Index (CPI) had a positive variation of 7.8% and had been 1.3% in 2021.

According to INE, last year the total remuneration ranged from 3,151 euros in the ‘electricity, gas, steam, hot and cold water, and cold air’ activities to 885 euros in the ‘agriculture, livestock, hunting, forestry, and fishing’ activities.

Compared to 2021, the largest relative increase occurred in ‘Professional, scientific, technical and similar activities’ and the smallest in ‘Public administration and defense; compulsory social security’.

In real terms, total compensation decreased in all activities, between 0.9% and 6.7%.

In 2022, total compensation ranged from 941 euros in firms with one to four employees to 1,706 euros in firms with 250 to 499 employees.

The INE notes that “these company size ranges were, respectively, also those with the largest (6.3%) and smallest (1.1%) annual increase.

In real terms, total compensation decreased regardless of the bracket considered, between 1.5% in smaller companies (one to four employees) and 6.3% in companies with 250 to 499 employees.

Public administration vs private sector

In 2022, total compensation in the Public Administration (PA) increased by 2.0%, from 1,914 euros in 2021 to 1,951 euros a year later, with this increase being higher than the one recorded the previous year (0.8%), but lower than that observed in the private sector of the economy (4.6%; from 1,245 to 1,302 euros).

However, considering the effect of inflation, in real terms, total PA compensation decreased by 5.6% between 2021 and 2022, having decreased by 0.5% between 2020 and 2021.

In the private sector, on the other hand, the real annual decrease was “less attenuated” (3.1%), after a 3.0% real increase in 2021.

Looking only at the last quarter of 2022, we see that the average monthly total gross compensation per employee (per job) increased by 4.2% compared to the same period in 2021, to €1,575.

The regular component and the base component of that remuneration increased by 4.3% and 4.4%, standing at 1,150 and 1,080 euros, respectively.

However, in real terms, taking the CPI variation as a reference, the average monthly total gross remuneration decreased 5.2%, the regular component went down 5.1% and the basic component went down 5.0%.

Results cover 4.5 million jobs

According to INE, these results cover 4.5 million jobs, corresponding to Social Security beneficiaries and Caixa Geral de Aposentações subscribers, 4.8% more than in the same period of 2021.

Compared to December 2021, the largest increases in total compensation were observed in ‘accommodation, restaurants and similar’ activities, in firms with one to four employees (6.1%), in the private sector (5.4%) and in ‘knowledge-intensive high-tech services’ firms (6.9%).

“There were no negative changes in total compensation, with the smallest year-on-year changes observed in ‘public administration and defense; mandatory social security’ activities, in companies with 250 to 499 workers (1.1%), in the general government sector (2.0%) and in ‘other knowledge-intensive services’ companies (2.5%),” INE details.

An analysis of remuneration by institutional sector shows that in public administration there was a year-on-year increase of 2.0% in total remuneration in the fourth quarter, which reached 2,198 euros (2,154 euros in December 2021). In this period, the regular component increased by 2.1%, from 1,564 euros to 1,597 euros, and base pay rose by 2.2%, from 1,474 euros to 1,507 euros.

In real terms in general government, total, regular, and basic pay decreased by 7.2%, 7.1%, and 7.0%, respectively.

According to INE, in the private sector “salaries increased more significantly” in the last quarter of last year: Total remuneration rose by 5.4% year-on-year, from 1,378 euros in December 2021 to 1,452 euros a year later.

The regular component also increased, by 5.4%, rising from 1,007 to 1,062 euros, and the basic pay rose by 5.5%, from 943 to 995 euros.

Considering inflation, the institute notes that “the year-on-year decreases observed in the three types of remuneration were less pronounced in the private sector than in the public sector: 4.1% in total and regular remuneration and 4.0% in basic remuneration.

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