&NewLine;<p>The Portuguese government recently announced an increase in the Portuguese minimum wage &lpar;national minimum wage SMN&rpar; to 870 euros gross per month over 14 months&comma; effective from January 2025&period; <strong>This increase corresponds to 1,015 euros over 12 months</strong>&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<p>This decision is part of a gradual upward trajectory aiming to reach 1020 euros by 2028&period; This measure&comma; although welcomed by workers&comma; raises questions about its economic implications and its role in combating inflation&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<h2 class="wp-block-heading">Raising Portugal's minimum wage: an economic and social challenge</h2>&NewLine;&NewLine;&NewLine;&NewLine;<h3 class="wp-block-heading">The positive impacts of this measure</h3>&NewLine;&NewLine;&NewLine;&NewLine;<ol class="wp-block-list">&NewLine;<li><strong>Improved purchasing power</strong> &colon;</li>&NewLine;</ol>&NewLine;&NewLine;&NewLine;&NewLine;<p>By increasing the <a href="https://www.gov.pt/" target="_blank" data-type="link" data-id="https://www.gov.pt/" rel="noreferrer noopener">SMN</a>The government seeks to protect the most vulnerable workers from the erosion of their purchasing power due to inflation&period; This enables many households to maintain their consumption levels&comma; thus stimulating the&rsquo&semi;domestic economy&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<ol class="wp-block-list">&NewLine;<li><strong>Reducing inequality</strong> &colon;</li>&NewLine;</ol>&NewLine;&NewLine;&NewLine;&NewLine;<p> An increase in the SMN can reduce wage disparities and contribute to greater social cohesion, thus avoiding social tensions and conflicts;</p>&NewLine;&NewLine;&NewLine;&NewLine;<ol class="wp-block-list">&NewLine;<li><strong>Multiplier effect on the economy</strong> &colon;</li>&NewLine;</ol>&NewLine;&NewLine;&NewLine;&NewLine;<p> By boosting workers' incomes, this measure could generate an increase in aggregate demand, creating a virtuous circle for the economy in the short term;</p>&NewLine;&NewLine;&NewLine;&NewLine;<h3 class="wp-block-heading">The limits and risks of such a policy</h3>&NewLine;&NewLine;&NewLine;&NewLine;<p>Despite these advantages&comma; increasing the SMN is not without risks&period; Indeed&comma; it could lead to unexpected consequences&comma; particularly in times of inflation&period;</p>&NewLine;&NewLine;&NewLine;&NewLine;<ol class="wp-block-list">&NewLine;<li><strong>Second-round effect</strong> &colon;</li>&NewLine;</ol>&NewLine;&NewLine;&NewLine;&NewLine;<p> When wages rise to compensate for high inflation, companies may have to pass on these higher costs in their selling prices, which could fuel a wage-price loop, further exacerbating inflation;</p>&NewLine;&NewLine;&NewLine;&NewLine;<ol class="wp-block-list">&NewLine;<li><strong>Impact on company competitiveness</strong> &colon;</li>&NewLine;</ol>&NewLine;&NewLine;&NewLine;&NewLine;<p> If wage increases are not accompanied by a rise in productivity, they risk undermining the competitiveness of Portuguese companies, particularly on international markets. This could result in job losses or the relocation of activities;</p>&NewLine;&NewLine;&NewLine;&NewLine;<ol class="wp-block-list">&NewLine;<li><strong>Pressure on SMEs</strong> &colon;</li>&NewLine;</ol>&NewLine;&NewLine;&NewLine;&NewLine;<p> Small and medium-sized businesses, which often have limited margins, could be hardest hit. Some may not be able to bear the increased costs, which could lead to closures or job cuts;</p>&NewLine;&NewLine;&NewLine;&NewLine;<h2 class="wp-block-heading">Raising wages &colon; a solution to inflation &quest;</h2>&NewLine;&NewLine;&NewLine;&NewLine;<p>Wage increases can play a role in combating the effects of inflation by supporting household purchasing power&period; However&comma; they must be accompanied by complementary measures to prevent them from contributing to an inflationary spiral&period; These measures&comma; include &colon;</p>&NewLine;&NewLine;&NewLine;&NewLine;<ul class="wp-block-list">&NewLine;<li><strong>Targeted subsidies</strong> Subsidies for low-income workers can supplement wage increases while limiting costs for companies&period;</li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Reduced payroll taxes</strong> A reduction in contributions can increase workers' net income without weighing directly on employers&period;</li>&NewLine;&NewLine;&NewLine;&NewLine;<li><strong>Investments in productivity</strong> Training workers and encouraging innovation can help companies absorb the costs of rising wages while remaining competitive&period;<br></li>&NewLine;</ul>&NewLine;&NewLine;&NewLine;&NewLine;<p>The increase in Portugal's minimum wage reflects a determination <a href="https://vivreauportugalconsulting.com/le-portugal-lance-stayaway/" data-type="post" data-id="7513">government</a> to meet the immediate needs of workers while pursuing a strategy of reducing inequalities&period; However&comma; its success will largely depend on the ability to put in place complementary policies that support both households and businesses&period; The aim is to strike a balance between social justice and economic viability&comma; thus avoiding this measure becoming a mere palliative in the face of inflation&period;</p>&NewLine;
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