By Sergio Goncalves
LISBON (Reuters) – Portugal’s government, major business associations and the country’s second-largest labour union UGT have struck a deal to raise the wages of private sector workers by 5.1% in 2023.
The four-year pact, announced late on Sunday after months of negotiations, also includes a compounded rise to 20% by 2026, in an attempt to offset the effects of surging annual inflation, which hit a three-decade high of 9.3% in September.
Agreed to by its powerful associations of industry, tourism, agriculture, commerce and services, the increases are a benchmark Portugal’s more than 4 million private sector workers.
The proposed private sector salary increase for 2023 is higher than the 3.6% average increase the government is willing to award to Portugal’s more than 733,000 civil servants.
In June, the average monthly salary of private sector workers rose 4.4% from the previous year, while civil servants had an average 1.4% increase, official data showed.
Portugal’s Prime Minister Antonio Costa said that, in return for wage increases, the government will give tax benefits to companies especially on investments on research and development, as well as incentives to reinforce their capital positions.
Costa said firms that increase wages as agreed and reduce the pay gap between high and low earners will have a tax benefit equivalent to 50% of the salary increases.
“The agreement is a framework of confidence, it gives everyone certainty about the objectives for improving (workers’) income and the competitiveness of the economy,” Costa said.
The deal also considers raising the monthly minimum wage to 760 euros ($739) in January 2023 from the current 705 euros and gradually raising it to 900 euros within four years.
($1 = 1.0282 euros)
(Reporting by Sergio Goncalves; Editing by Inti Landauro and Alexander Smith)
