The Governor of the Bank of Portugal (BdP) has highlighted a significant “net destruction of jobs” continuously occurring between October 2024 and March 2025, a situation not observed since the first quarter of 2013, according to Mário Centeno. The BdP’s calculations, based on Social Security microdata, reveal that the net hiring rate was -0.3 in March, contrasting with a rate of 1 in the same period the previous year.
This marks a deterioration from February, where the rate was -0.1, but shows an improvement compared to January’s -0.5. However, an official source from the regulator cautions that March’s figures are provisional and subject to significant revision, noting high seasonality in these series.
Economist João Cerejeira commented that the data is unsurprising given the “recent evolution of the Portuguese economy.” He explained that labor market changes often lag behind economic activity, branding Centeno’s caution as a “more careful alert.” He noted that after an “atypical economic growth” at the end of 2024, boosted by adjustments in IRS withholding rates that spurred family consumption, the trend reversed “completely in the first quarter of 2025,” leading to a sequential GDP decline.
Cerejeira pointed out that this is justified considering the vulnerability of sectors like automotive, textile, and footwear to international conditions and the rise in collective layoffs—the highest in the first quarter since 2014—though he emphasizes avoiding dramatism.
Ricardo Ferraz, a professor at ISEG and Universidade Lusófona, concurs, stating there is “no reason for alarm,” but suggests policymakers should “monitor the labor market’s evolution attentively.” He notes the dynamism of Portugal’s job market, subject to various fluctuations over time, involving both job creation and destruction.
Pedro Braz Teixeira remarked that the figures are “moderately negative” but “not very negative,” considering the minimal differences involved. “It’s a warning to be attentive, but not a red alert; it’s a yellow signal,” summarized the director of studies at the Competitiveness Forum.
Economists consulted remain confident that for now, there are no grounds for alarmism, and the focus should be on the economic activity’s trajectory.
“We are not yet talking about increased unemployment,” noted the professor from the University of Minho, indicating that this would only occur “if this economic slowdown is intense” and “persists over time.” Should unemployment rise alongside slower growth, he warned of greater concerns, including lower-than-anticipated tax revenues and increased expenditure due to minimum wage policies.
“It’s impossible to continue growing employment at previous rates if we face an economic slowdown, as we did in the first quarter,” he stated, pointing to domestic demand, through family consumption or public investment, as the primary growth driver this year.
Ferraz also highlighted that Portugal is “growing above the European average,” though external conditions are not favorable, as some institutions have revised their growth forecasts for the Portuguese economy downward.
In contrast to Cerejeira, Braz Teixeira emphasized that employment growth in Portugal largely depends on immigration, and recent “more stringent immigration hiring requirements” set by the government might increase unemployment rates.
Meanwhile, the University of Minho professor warned that “very liberal policies” during a phase of “growth moderation” could lead to increased unemployment.
