The analysis by Cláudia Duarte and Sónia Félix, unveiled today by the Banco de Portugal (BdP) in its “Economy in a Picture” segment, reveals that nominal salaries for employees registered with Social Security increased by an average of 8.6% in 2023-24 and 7.7% in the first half of 2025.
However, quarterly salary growth this year shows “a high dispersion among workers.”
In the first half of 2025, a quarter of workers saw year-on-year increases of less than 2%, while another quarter experienced rises of 11% or more, with the median salary increase standing at 6%.
The authors note that the wage determination process for each worker “depends on multiple microeconomic factors” (including individual worker characteristics such as qualification levels and productivity) and macroeconomic ones, such as sectoral competitiveness, the current and expected evolution of inflation, and labor market conditions.
In its October Economic Bulletin, the BdP projects a “gradual reduction in domestic inflationary pressures originating from labor costs,” but notes that “this deceleration is slower than projected in the previous Bulletin.”
“Wages grew by 5.6% in the first half of 2025, following average increases of 8.4% in 2023-24, negotiated in a context of high inflation,” states the central bank.
Records from Social Security indicate that the most common salary variation range includes increases of up to 10% in the first half of 2025, with “half of the workers seeing a salary growth of at least 6%.”
The BdP’s forecast suggests “gradually more contained variations, compatible with an inflation rate close to the European Central Bank (ECB) target of 2%,” with real wage developments “aligned with productivity per worker and the announced updates to the National Minimum Wage” (5.7% in 2026 and 5.4% in 2027, after 6.1% in 2025).
“Thus, average wages are expected to grow by 5.1% in 2025, 4.1% in 2026, and 3.8% in 2027,” it specifies.
The BdP further mentions that wage increases in the public sector will be higher, reflecting the effects of the multiannual agreement for enhancing public administration employees, signed in November 2024, as well as the impact of career revisions and progression rules in the public sector.
