Inflation Shaves the Real Gain From Portugal's 920 Euro Minimum Wage to About 2.6 Percent, a Third Less Than in 2025, as 970 Euros Is Pencilled In for 2027

Portugal's minimum wage went up by 50 euros in January, from 870 to 920 euros a month, a nominal rise of 5.7 percent. With prices climbing faster than expected, part of that rise is going on higher prices. On the Bank of Portugal's forecast of 3.1 percent average inflation for 2026, the real rise is about 2.6 percent, or roughly 22 euros a month at 2025 prices. In 2025 the real rise was about 3.8 percent.

So inflation has cut the real gain by about a third this year, not by half. The gap looks bigger only against the latest monthly reading: annual inflation reached 3.6 percent in September, and the National Statistics Institute (INE) confirmed that figure on 13 October. If prices kept rising at that rate for a whole year, the real rise would fall to about 2.1 percent.

Where the numbers come from

The 920 euro figure was set by Decreto-Lei n.º 139/2025, published on 29 December 2025. It covers mainland Portugal; Madeira and the Azores set their own regional rates. The decree carries out the tripartite agreement on pay and growth for 2025 to 2028, which provides for 50 euro rises every year until the minimum wage reaches 1,020 euros in 2028.

Inflation forecasts differ. The Bank of Portugal's October Economic Bulletin expects 3.1 percent for 2026 and 2.4 percent for 2027, measured by the harmonised index. The Finance Ministry's 2027 budget report uses 2.9 and 2.3 percent. The Public Finance Council's opinion, annexed to that report, puts 2026 nearer 3.2 percent and finds 2.9 percent or less in only 2 of 20 scenarios. On those figures, the real rise for 2026 comes out between 2.5 and 2.8 percent.

What 2027 looks like

The budget report says the government will raise the minimum wage to 970 euros in 2027, another 50 euros or 5.4 percent. Like this year's rate, it still has to be set by decree-law. Against the Bank of Portugal's 2.4 percent forecast, that is a real rise of about 3.0 percent, or 27 euros a month at 2026 prices. If inflation stayed at September's 3.6 percent, the real rise would be about 1.8 percent.

For a full-time worker, 970 euros over 14 payments comes to 13,580 euros a year gross, up from 12,880. The budget sets the tax-free income floor at the same level, so a full-time minimum wage would pay no IRS. The bank expects average pay per employee to grow 4.5 percent this year and 4.1 percent in 2027, so the minimum wage keeps rising faster than the average.

What happens next

The unions want more. The UGT confederation, which signed the agreement, is asking for at least 1,000 euros in 2027; the CGTP, which did not sign, wants 1,100 euros. Employers' confederations say there is no reason to reopen the deal. Labour Minister Maria do Rosário Palma Ramalho has said that any change would need a new agreement between all three parties. The next meeting of the social concertation standing committee is scheduled for 21 October.

The government is also meeting the three public sector union federations today, according to Lusa. The multi-year deal signed with two of them raises public pay by 2.3 percent or at least 60.52 euros in 2027, which would lift the base public sector wage from 934.99 to 995.51 euros a month. The unions have asked for considerably more, up to 15 percent, citing faster inflation.

If you earn the minimum wage, check that your payslip shows at least 920 euros gross a month for full-time work.