Wages are expected to increase, on average, 4% in the private sector this year, below the benchmark set in the Social consultation. Inflation, the risk of economic recession and talent shortages play a role.
Salaries for private sector workers are expected to grow by an average of 4% this year. The forecast is part of a report released this Monday, which was based on the responses of 431 organizations in Portugal and, if confirmed, means that the benchmark negotiated in the Social consultation between the government, three of the employers ‘ confederations and the UGT will not be met.
“For the private sector, there is an agreement that provides for a benchmark of 5% for wage increases during the year 2024. However, it is not binding. That is, private companies do not have to follow it, as is verified in the evidence of the WTW study, which covers data from small, medium and large companies in different market sectors and whose average reference increase is 4%“, is explained in a note sent to the newsrooms.
With regard specifically to executive functions, the planned remuneration increase is 3,8%. In comparison, an increase of 4.2% is anticipated in middle management.
Influencing the budgets of companies for salaries are, at the moment, inflation – 72,8% of employers in Portugal identify this factor – but also the need to retain talent, as a result of the shortage of qualified hands (44,8%) and the anticipation of an economic recession or the decrease in financial results (29,6%).
“Employers face difficult choices at a time when they are trying to control costs in an uncertain economic climate, but they are also struggling to keep their pay levels attractive. The pressure of inflation and a competitive labor market are or will put pressure on their salary budgets, so that they can retain and attract the best professionals”, evaluates the associate director of the consultancy WTW Portugal.
Sandra Bento adds that organizations that adopt a ” clearer rewards strategy and an understanding of what employees are really looking for will be the most successful.”
The reinforcement of the Income agreement that provides for the 5% benchmark does not count on the “yes” neither of CGTP, nor of the Portuguese Business Confederation (CIP), which considers that conditions are not being created for companies to support these wage increases, in a sustainable way.