Ministers Push for a 2027 Minimum Wage Above the Agreed €970 as Economists Warn of a Squeeze on the Middle of the Pay Scale

Portugal's minimum wage is already set to rise to 970 euros a month next year, but part of the government now wants to go further — and a chorus of economists is urging it not to, warning that pushing the floor up too fast risks squeezing the workers just above it.

The national minimum wage stands at 920 euros in 2026, and a medium-term agreement signed with unions and employers pencils in 970 euros for 2027, a 50-euro increase. Adriano Rafael Moreira, the Secretary of State for Labour, has argued that conditions exist to negotiate a higher figure, "a number more adequate to reality," reopening a debate the tripartite agreement was meant to settle.

The unions need little encouragement. The União Geral de Trabalhadores (UGT, the General Workers' Union) believes 1,000 euros is within reach for 2027, while the more combative Confederação Geral dos Trabalhadores Portugueses (CGTP, the General Confederation of Portuguese Workers) is demanding 1,050 euros now, arguing that "promises for 2027" do not pay this month's bills.

Employers and economists pump the brakes

On the other side of the table, employers say the numbers do not add up. Armindo Monteiro, president of the Confederação Empresarial de Portugal (CIP, the Portuguese Business Confederation), opposes any rise beyond the agreed 50 euros, noting that the productivity gains the pay deal was meant to track have fallen short of target.

Several economists share that caution. Pedro Braz Teixeira has called even the planned 50-euro step "risky" against a backdrop of weak growth and slipping productivity, while Óscar Afonso recommends "considerable restraint" and suggests waiting for updated productivity data in the new year before committing to anything larger.

Their sharpest concern is wage compression — the flattening that happens when the legal minimum climbs faster than the pay scale above it. As the floor rises toward the wages of more experienced or skilled staff, the reward for training, seniority and responsibility shrinks, leaving those middle earners feeling that their extra effort no longer pays. Over time, economists warn, that can erode motivation and push firms to hold down other salaries to contain their total wage bill.

A soft economy complicates the call

The backdrop makes the decision harder. Portugal's economy showed no chain growth at all in the first quarter of 2026, one of the weakest performances in the euro area. A minimum wage rising quickly into a stagnant economy is precisely the combination that worries the cautious camp: it lifts the lowest-paid, but if output is not expanding to fund it, the cost lands on employers, on prices, or on the pay of everyone else.

The figure for 2027 will be thrashed out in the coming months at the Comissão Permanente de Concertação Social (the Standing Committee for Social Dialogue), where government, unions and employers meet. For now the agreed number is 970 euros — but with ministers, unions and economists pulling in three different directions, that floor is far from fixed.