OECD recommends Portugal reduce employer social security contributions

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The OECD today recommended that Portugal lower employers’ social security contributions for low-wage earners, in order to mitigate the impact of rising labor costs.

The measure is included in the report on Portugal’s economic performance in the face of current global and national challenges, in which the Organisation for Economic Co-operation and Development (OECD) recommends improving the country’s macroeconomic and fiscal policy, strengthening employment and productivity, the healthcare system and the transition to a green economy.

The Paris-based organization considers that the minimum wage as a proportion of the average wage is one of the highest in the OECD, and that the planned increases will further increase labor costs.

It also recommends “reducing employers’ social security contributions for low-paid workers to mitigate the impact of labor cost increases”.

Another of the recommendations addressed to the country is to better “balance protection between different types of contracts, pursue efforts to promote the use of permanent contracts” and adapt the supply and demand for qualifications to current and future labor market needs.

The OECD also wants Portugal to focus on strengthening active labor market policies aimed at small businesses, such as pre-selection programs for vacancies through public employment agencies.

The OECD would also like to see a reduction in barriers to entry to the labor market, continued efforts to prevent and combat corruption, and the establishment of a permanent register of lobbies.

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