Record Employment, Twenty-Fourth Place: Portugal's Hourly Productivity Sits Further From the EU Average Than It Did in 2000

Portugal has more people in work than at any point in its history, and a smaller share of the European Union's hourly output than it had in the year 2000. That is the paradox at the centre of the September edition of Comparar para Crescer (Compare to Grow), the benchmarking snapshot published on Monday by the Associação Business Roundtable Portugal (BRP), the association of the chief executives of 46 large Portuguese companies.

The headline number: in 2025, value generated per hour worked in Portugal was 66.9 percent of the EU average measured in purchasing power standards. In 2000 it was 67.6 percent. Twenty-five years of convergence produced a net movement of minus 0.7 percentage points.

Relative position moved further. Portugal was 17th of 27 member states on hourly productivity in 2000. In 2025 it was 24th.

The jobs came, the output did not

The employment side of the ledger is genuinely strong, and the report says so. More than five million people were in work in 2025, a record. The employment rate climbed from 63.4 percent in 2013 to 79.6 percent in 2025, above both the EU average of 76.1 percent and the 76.7 percent recorded by the comparison group the report calls "competitor countries": Czechia, Greece, Slovenia, Spain, Poland, Italy, Estonia and Hungary.

Portugal also out-grew Europe on headline output, with cumulative GDP growth of 26 percent against 19.3 percent for the EU average and 23.6 percent for the competitor group.

The report's conclusion is that the growth came from putting more labour in rather than getting more value out of each hour of it. With the population ageing and the labour market close to full employment, it argues, that model has run out of room.

Who overtook Portugal

The country comparisons are where the snapshot lands hardest. Measured against the EU average set at 100, and comparing 2000 with 2025:

• Estonia: 38.3 to 73.0, a gain of 34.7 percentage points.
• Poland: 45.7 to 68.6, up 22.9 points.
• Hungary: 51.7 to 70.6, up 18.9 points.
• Czechia: 61.1 to 78.4, up 17.3 points.
• Slovenia: 76.7 to 86.0, up 9.3 points.
• Portugal: 67.6 to 66.9, down 0.7 points.

Estonia and Poland both started well below Portugal and finished above it. The competitor group as a whole moved from an average of 71.6 percent of the EU level in 2000 to 77.9 percent in 2025. The report attributes their gains to joining capital-intensive industrial and service value chains after their 2004 accession, on the back of heavy foreign direct investment.

Three countries did worse than Portugal in trajectory: Spain fell 4.7 points, Greece 19.1 and Italy 28.9. But the levels matter. Spain sits at 96 percent of the EU average and Italy at 96.1, having started from 100.6 and 125.0 respectively. Portugal's decline is small because there was less height to fall from.

Four blockages

The snapshot names four structural constraints.

Chronic under-investment. Portugal has invested below the EU average for 15 straight years, accumulating a shortfall the report estimates at more than 42 percent of GDP. Total investment bottomed at 15 percent of GDP in 2013. Public investment did not exceed 3 percent of GDP in 2025, against roughly 4 percent in both the EU and the competitor group, held back by slow public procurement and licensing, weak long-term planning, and difficulty turning capital spending into lasting productivity gains. Private investment reached 17.7 percent of GDP, marginally above the EU's 17.5 percent.

The composition of new jobs. Between 2011 and 2024, across twelve sectors, Portugal created 684,357 jobs with average annual gross value added of 40,400 euros per worker. But roughly 60 percent of that job creation happened in sectors averaging just 31,700 euros: administrative activities, accommodation and food service, agriculture and fisheries, and construction.

The counter-example the report holds up is information and communication technology, where 81,000 new jobs arrived carrying gross value added of 61,800 euros per worker. That, it argues, is what sectoral growth looks like when it raises employment and aggregate productivity at the same time.

Company size. Microenterprises are 93.1 percent of Portuguese firms and large companies 0.3 percent. Microenterprises generate about 26,000 euros of gross value added per worker; large firms generate 63,000. Scale, the report argues, is what lets a company invest, absorb technology and pay more.

Costs of context. Bureaucracy and energy prices, grouped together as the friction that sits on top of everything else.

The minimum wage argument

The section certain to draw fire is the one on pay compression. The BRP calls the rise in the minimum wage positive in itself, then argues that because it has not been matched by proportional gains in productivity and value creation, it is squeezing the rest of the pay scale and leaving employers less room to reward experience or hold on to qualified staff.

Its evidence is the share of new employee contracts set at the national minimum wage: about 21 percent of contracts signed in 2024, against roughly 5 percent in 2002.

This is a live political argument rather than a settled one, and the association is an interested party in it. Portugal's largest union confederation is currently pressing for 1,100 euros from January 2027, above the path written into the signed tripartite accord, and ministers have already pushed for a figure above the agreed 970 euros, with economists raising the same compression concern from a different direction.

Immigration in the numbers

The report identifies immigration as one of the principal drivers of employment growth, citing the Banco de Portugal's March 2026 Boletim Económico for the presence of roughly 1.4 million foreign-national workers, of whom about 1.1 million are employees. Its argument is not about the number but about where those jobs sit: the sectoral composition of that inflow, concentrated in the lower value-added activities listed above, conditions aggregate productivity.

That tracks with what the contribution data already shows. Foreign workers now make up nearly one in five Segurança Social contributors. It also sits alongside outward flows, with Portuguese emigration settled at about 70,000 a year.

One bright line

Foreign direct investment is the indicator where Portugal clearly leads its comparison group. Net FDI reached 4.3 percent of GDP in 2024, against an EU average of 1.5 percent and a competitor-group average of minus 2.6 percent, with Estonia at minus 8 percent and Hungary at minus 27.9 percent.

The report adds its own caveat: not all FDI does the same work. Property investment and the purchase of existing companies matter less than new productive projects, and the available statistics cannot separate the two. The two largest sectors by accumulated inward stock in 2024 were financial and insurance activities at 21.2 percent and professional, scientific and technical activities.

What the BRP wants

Three priorities: raise productive investment through a licensing framework that is more stable and predictable, remove the obstacles that keep companies small and improve the conditions for capitalising them, and shift the tax treatment of wage progression so that moving up the scale is not penalised.

Those are the asks of an employers' association, and they should be read as such. The diagnosis underneath them, though, is the one the Banco de Portugal has been circling for some time. Its June Boletim Económico cut the 2026 deficit forecast while flagging the same wage-and-productivity tension, and company labour costs accelerated to 5.4 percent in the second quarter, led by construction, one of the low value-added sectors the snapshot singles out.

Comparar para Crescer is compiled by the BRP with KPMG and draws its productivity series from AMECO, the European Commission's macroeconomic database. The September edition is titled, without much ambiguity, Crescer sem Convergir: growing without converging.