Portugal is close to full employment, but the economy’s productivity continues to lag behind the European Union, SIC Notícias reports.

A study by the Business Roundtable Portugal Association concludes that Portugal’s productivity remains below 2000 levels.

According to the Compare to Grow Snapshot, labour productivity per hour worked, measured in purchasing power parity, was only 66.9 percent of the EU average, below the relative level recorded in 2000, when it stood at 67.6 percent.

“In relative terms, Portugal’s position in the ranking of productivity per hour worked has deteriorated markedly since 2000, falling from 17th to 24th place among the 27 member states of the European Union,” the report reads.

Record employment

This is despite the fact that the Portuguese economy has seen record employment figures, with more than five million people employed, representing an employment rate of 79.6 percent, described in the study as close to full employment and above the European Union average of 76.1 percent.

The study identifies four main obstacles to productivity: “chronic underinvestment by both the public and private sectors, low value-added and low-wage sectors dominating job creation, the predominance of small-scale companies in the business landscape, and high contextual costs.”

Increasing productive investment

The association recommends solutions that involve increasing productive investment “through a regulatory framework that makes licensing processes more stable and predictable,” as well as “promoting business growth by removing obstacles and improving conditions for their capitalisation.”

BRP also argues for the need to “value the labour factor” by focusing on “promoting skilled jobs in technology sectors and easing the tax burden on salary progression,” SIC Notícias reports.

According to the calculations in the analysis, between 2011 and 2024, measured across 12 sectors of economic activity, more than 680,000 jobs were created, with an average annual gross value added (GVA) of 40,400 euros.