“The effectiveness of the Portuguese social protection system in mitigating poverty risks and reducing income inequalities has deteriorated. In 2023, the impact of social transfers - with the exception of pensions - on poverty reduction decreased by 3.9 percentage points, remaining at 19.8% against 34.7% in the European Union, which indicates a 'critical situation'”, says the community executive.

In a report on employment in the European Union (EU), which is part of the second part of the autumn package of the European Semester and which was released today, the institution justifies that “the decrease in the effectiveness of social benefits reflects the fact that, while prices and nominal wages have grown rapidly in recent years, social benefits have not increased at the same pace”.

Furthermore, according to Brussels, inequalities also deteriorated in 2023, while the percentage of people at risk of poverty or social exclusion remained stable in that year and is within the average, being “particularly high in the outermost regions of the Azores and Madeira”.

With regard to employment, the European Commission argues in this report that “the Portuguese labour market continues to be resilient”.

“In a context of economic growth above the EU average, the employment rate improved from 77.1% in 2022 to 78.0% in 2023, supported by net migration”, highlights the institution.

Even so, Brussels warns that the unemployment rate in Portugal increased slightly (0.3 percentage points) in 2023, to 6.5%, and that “the segmentation of the labor market persists, reflected in the high percentages of young people on temporary contracts ”, which was 42.9% last year, compared to 34.3% in the EU.

“Potential risks”

What is certain is that, despite the warnings, “Portugal does not appear to face potential risks for upward social convergence”, assures the institution in the report.

In the EU as a whole, the employment rate reached a record 75.3% in 2023 and rose again to 75.8% in the second quarter of 2024.

The goal is to reach 78%, as stipulated in the Action Plan on the European Pillar of Social Rights, approved at the Porto Social Summit in May 2021.

At the same time, last year the EU unemployment rate declined to an all-time low of 6.1% in 2023, a trend that has continued into this year 2024.

The European Semester is an annual exercise in coordinating the EU's economic and social policies, in which Member States align their budgets with the objectives and rules agreed at community level.

Created after the previous financial crisis, this instrument aims to ensure sustainable economic growth, job creation, macroeconomic stability and sound public finances across the EU.

The European Semester calendar follows a recurring cycle, starting with the presentation of economic and social priorities by the European Commission and ending when EU Member States present their draft budget plans, a period that now ends to begin a new round.