Working in Portugal?
Working in Portugal
At a Glance:
- The majority of the Portuguese workforce is in the services sector.
- In general, the economy has been slowly recovering from the financial crisis, but is still quite vulnerable.
- All of your income will be taxed in the country, no matter where it was produced.
- In business, personal relationships are important for building trust between business partners.
Portugal: An Economic Overview
It is quite possible that, in the minds of people with little idea of what Portugal is all about these days, the country is mainly associated with its quality produce — olives, oranges, cherries, to name a few — its world-renowned wines, and with tourism. A lot has changed since the days when this was true. Today, Portugal has a highly diversified job market with a strong emphasis on services: 66% of the workforce produced three-quarters of the national GDP in this sector in 2016.
Although more traditional sectors such as agriculture, forestry, and fishing are still important in terms of employment — almost 7% of the workforce is employed in the primary sector — the significance of industry and services has long overshadowed them.
Investing in the Future
In recent years, the economy of the country has been massively diversified, opening up employment opportunities for locals and expats that go well beyond the “classic” options of working in Portugal’s automotive, textile, oil refining, or tourist sectors. Many companies specializing in research and modern technologies are now based in Portugal’s industry cluster areas, which can be found in many of the large cities around the country. Not only Lisbon and Porto are notable in this respect, but also cities such as Braga, Évora (which is the future hub for companies in Portugal’s up-and-coming aerospace sector, if everything works out according to plan), and, in the case of the textile industry, the northern part of the country in general.
Some of the hopeful new sectors that are gaining foot in Portugal include the ever-expanding and improving ICT sector, green energies — the companies working in Portugal’s renewable energies sector are among the world leaders in their niche — biotechnology, and the aforementioned aerospace industry.
A Vulnerable Economy
The country has had to face a number of challenges with which it is still trying to cope. These challenges do not only make working in Portugal a rather risky, if not unattractive, option for the average expat, but have put a lot of strain both on the Portuguese economy and its society. Since the financial bailout of 2011, the Portuguese economy has been slowly recovering, although it is still vulnerable. In 2017, the IMF (International Monetary Fund) predicted a growth rate of 2.5% and an unemployment rate of under 10%.
The immense importance of public consumption for many companies working in Portugal has been problematic in view of the steadily declining overall consumption in the inherently quite limited local market. This has obviously also put a strain on tax earnings, seeing how people working in Portugal became more and more reluctant to actually spend their hard-earned money. After all, the per capita GDP of Portugal is among the lowest in the EU, just above Greece — a fact that is not balanced out by similarly low costs of living.
Employment in Portugal can be difficult to find, however over the past few years there has been a slow and steady increase in job opportunities. The unemployment rate in 2017 was 8.5%. This figure is not made up of seasonal or low-skilled workers who are out of a job — a university degree is not a guarantee for employment, as many graduates have had to find out the hard way.
A Period of Growth
The export of goods and services has gained in importance in the past years, with more and more companies setting up shop in Portugal, but producing for foreign markets. The country’s most important trade partners are the EU, USA, and many former colonies with close economic ties to Portugal. Tourism is the sector which thrives the most in Portugal, and other sectors are growing, such as exports. Affordable prices for traveling to this popular tourist country ensure that the hospitality sector stays profitable.
Foreign investment, although still far below the pre-crisis figures, is another important stepping stone on Portugal’s hard way to economic recuperation. However, many foreign investors have shifted their interest away from Portugal in favor of Central and Eastern European countries, as well as Asia. Although the economy is slowly growing again, it is still very unstable. It might not be a good time for expats to devise plans of working in Portugal on their own.
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