Portugal ready to finance a minimum wage increase

The government is considering the possibility of covering part of the increase in the minimum wage through the state budget. This measure, which involves covering part of the single social tax (ISU), corresponding to the increase in charges linked to the 30 euro increase in the national minimum wage, will be financed by the state budget.

Portugal ready to finance a minimum wage increase

Emphasizing that this was neither a reduction nor an exemption from the single social tax (IST), the Minister of the Economy specified that this measure reflected an effort by the State budget. To support businesses and to mitigate the impact of the rise in the minimum wage, which will lead to an increase in employers' Social Security contributions.

We're not talking about an exemption or a reduction in the UST. What the government is going to do is quite different. This increase will be borne by the state budget, to support companies already hard hit by the COVID-19.

Another aim is to mitigate the impact of the increase in the minimum wage, which naturally generates an increase in social security contributions. The government is studying the possibility of covering the increased costs resulting from the UST that will have to be paid as a result of this increase in the minimum wage.

Pedro Siza Vieira spoke at the press conference where he presented the measures that make up the new business support packageapproved today by the Council of Ministers, following the impact of the pandemic and the measures needed to contain it, and which envisages both the extension of measures already launched and the launch of new support measures.

The national minimum wage will rise by 30 euros in January 2021, from the current 635 euros to 665 euros. To compensate for this increase, the government will also update public procurement and introduce a credit line for exporting companies worth 4,000 euros per worker.