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Government approves increasing minimum wage to 635 euros in 2020

The Council of Ministers have today approved an increase of the minimum wage to 635 euros as of January 2020, the Government estimates it could lift the salaries of around 720,000 workers.

At a press conference at the end of the Council of Ministers meeting in Lisbon, the Minister of Labour, Security and Social Solidarity, Ana Mendes Godinho, announced that “the Government has approved the decree law providing for the updating of the minimum wage in 2020 to 635 euros”.

 “The value we set today was the result of listening to our associates, and is the result of assessment of a positive evolutionary situation”, as the unemployment rate has dropped over the years, and according to the latest figures, stands at 6.1%.

This update to the minimum wage takes effect on January 1st, 2020. The most recent estimates point to 720,000 Portuguese workers currently earning the national minimum wage. The minister highlighted the fact that the new minimum wage value was set “some time in advance” giving companies some “time to adapt, to take effect in early January”.

“But this figure also results from this weighting of the prospects for the evolution of indicators, both inflation and productivity, and also that it is the value perspective as a tool for improving income distribution and improving workers’ living conditions, especially for those with lower income, “said Ana Mendes Godinho.

From 2020 onwards, the Government will decide on the minimum wage “on an annual basis, depending on the assessment of economic developments, productivity, inflation and employment indicators” in order to update the figure set today. “In fact, we have, in the last four years, achieved some recovery of the national minimum wage, but we aim to continue on this path with the goal we identified in the Government Program of reaching 750 euros in 2023,” said Godinho to journalists.

The MP also announced that on the 27th of November “discussions will start for a global agreement for an income and competitiveness policy”, which will involve setting up a working group to discuss “the reconciliation of personal, family life and professional life”. This first meeting will be attended by the Minister of State, Economy and Digital Transition, Pedro Siza Vieira, and the Minister of State and Presidency, Mariana Vieira da Silva.

Asked about the possibility of compensation schemes through the Labour Compensation Fund, something approached by some business representatives, the Minister of Labour pointed out that “it is at this venue on the 27th that all policy issues will be addressed, the various group members will identify the proposals they have for this global agreement to be formed, which concern not only income policy, but also competitiveness and business growth policy, and priority areas affecting all, namely the bettering of conditions for qualified young people, the issues of vocational training, and also the issues related to reconciling personal, family and professional life”.