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this is the state (of the nation) that we have arrived at

The State of the Nation: Education, Employment and Skills in Portugal is an annual report by the José Neves Foundation, which aims to promote public discussion of weaknesses and opportunities in education and the skills development system in Portugal.

One of the objectives of the State of the Nation is to discover and disseminate knowledge about the state of play of education, employment and skills in Portugal.

Among the main conclusions of the 2022 edition of the report, which this year will be publicly released at the José Neves Foundation’s annual event, which takes place this Tuesday at 3 pm, is the evolution of wages, income and productivity.

Salaries of Portuguese with higher education fell by 11% in the last decade

Workers with higher and secondary education registered, on average, real losses in wages of 11% and 3% respectively in the last decade.

For younger people, the situation was similar, with even sharper salary drops in higher education (-15% among graduates, -12% among masters and -22% among doctorates).

Between 2011 and 2019, the average salary of the Portuguese increased only for workers with basic education, in the order of 5%, largely due to the increase in the minimum wage by decree-law and through collective bargaining.

More education continues to guarantee higher wages, but the gap has narrowed

Despite the average salary in 2019 being lower than that of 2011 in most education levels, the salary gains of the most qualified Portuguese compared to the less qualified are considerable.

In 2019, a degree resulted, on average, in a salary gain of 50% compared to secondary education. With the master’s degree, this gain rises to 59%. Salary bonuses are also seen in young adults (from 25 to 34 years old) and it is the master’s degrees that provide a higher salary return, with gains of 43% compared to secondary education and 15% compared to degrees.

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A higher level of education increases the likelihood of being employed and of reaching the two highest income levels. Compared to those with a maximum of secondary education, those with higher education are 16% more likely to be employed and 50% more likely to be among the 40% of the population with the highest income. The same values ​​for the comparison between secondary and basic education are 10% and 29% respectively.

Portugal is one of the EU countries with the lowest incomes

In 2020, the average annual net income (in purchasing power parity) in Portugal was 14,691 euros, the 8th lowest in the European Union. Portuguese people with primary and secondary education had an average income of €11,441 and €14,216 respectively (the 10th lowest among the 27 member countries). With higher education, the average income did not exceed 20,476 euros (the 9th lowest in the EU).

In 2020, the average income of Portuguese workers with higher education was lower than that of workers with secondary education in 12 EU countries (Italy, Ireland, Finland, France, Malta, Belgium, Netherlands, Sweden, Denmark, Germany, Austria, Luxembourg) and than less skilled workers in 4 EU countries (Finland, Netherlands, Denmark and Luxembourg).

Productivity is decreasing compared to the European average

There is a positive association between wages and country productivity and only a sustained increase in productivity will give rise to wage increases. Productivity in Portugal has lost ground compared to the European Union average, and even the increase in the qualifications of the younger generations has not reversed this trend. Portugal is among the group of EU countries with the lowest productivity.

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In 2019 it was the 6th country with the lowest productivity, just above countries like Romania, Poland, Latvia, Greece and Bulgaria. Since 2000, Portuguese productivity has never exceeded 70% of the European average, a value reached between 2006 and 2010 and in 2013. In 2019, before the onset of the pandemic crisis, Portuguese productivity was equivalent to 66% of EU workers.

There are several factors related to qualifications that contribute to productivity. Companies with a more skilled workforce are more productive, but the match between qualifications and occupations is also essential.

In addition to basic qualifications, companies’ commitment to training their workers can also increase productivity by 5%, but only 16% of Portuguese companies do so.

Young people are increasingly qualified, but the qualifications of workers under the age of 35 only contribute to productivity gains when young people account for more than 40% of the total number of company workers. If young people represent between 10% and 40% there is no improvement in productivity and if they are less than 10% the effect on productivity can be negative.

The qualifications of managers weigh practically as much on productivity as those of workers, but despite having been on the rise, Portugal continues to have the highest percentage of employers who have not finished secondary education. In 2021, this was the case for 47.5% of employers, practically triple the European average, which stood at 16.4%.

Covid-19 made it difficult for young people to enter the job market. Learning losses can be irreversible

During the pandemic, youth employment was the most affected and had not yet fully recovered in the last quarter of 2021, with losses of 27,500 jobs compared to the same quarter of 2019.

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In addition to the impact on young people already in the job market, the health crisis made it difficult for young people to enter the job market.

In 2021, only 74% of young people between the ages of 20 and 34 who had completed a level of education in the last 3 years were employed, a sharp drop compared to 2019 that interrupts the positive trend that had been occurring since 2012. it was more pronounced among those who finished higher education, despite the employment rate of these recent graduates continuing to be higher than those who finished secondary education.

In addition to penalizing young people’s entry into the labor market, the pandemic had implications for the acquisition and strengthening of skills at different stages of life, compromising the professional future of individuals and workers and also the country’s economic growth.

Distance learning led to learning losses and was an inducer of social inequalities, namely between public and private education. Access to higher education broke records during the pandemic, but it also increased the dropout rate and there is no evidence of the effect on the learning and skills of these students.

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