Portugal’s Productivity “Among EU’s Worst”

Timed for the day that parliament is due to discuss the government’s much-criticised blueprint for labour reform, Expresso carries a dismal story to show that Portugal’s productivity is “among the worst in Europe”.

Portuguese workers put in longer hours than most Europeans, but productivity has fallen back to the fourth-lowest level in the European Union

Indeed, there have been four consecutive years of gradual slippage, “reinforcing concerns over the country’s long-standing economic weaknesses”, says the paper.

New Eurostat data shows that productivity per hour worked in Portugal fell to just 66.8% of the EU average in 2025 – down from 68.4% in 2024. Only Latvia, Bulgaria and Greece recorded lower levels, leaving Portugal as the fourth-worst performer in the European bloc.

The setback comes despite the fact that the average working week in Portugal reached 37.4 hours in 2025 – around 1.5 hours more than the EU average.

Sectors including hospitality, agriculture, forestry, fishing, transport and warehousing regularly exceed 40 hours a week, while, as economists say, these industries are typically characterised by lower wages, greater seasonality and less structured working patterns.

“Portugal works hard, but creates less value than more developed economies,” Miguel St. Aubyn, professor at Lisbon’s ISEG economics school, tells Expresso.

Experts argue that the problem is structural. Portugal continues to suffer from low levels of capital investment per worker, smaller company sizes, weak management practices and lower levels of innovation compared with many European competitors.

The country’s wage levels also remain well below the European average. According to the European Commission’s Ameco database, average salaries in purchasing power terms stood at 81.4% of the EU average in 2025 – placing Portugal 19th among the bloc’s 27 member states.

All this comes days after the PM said other European countries are ‘green with envy’ over Portugal’s financial health – a claim that brought endless ‘mirth’ over social media, and comments (yet again) that the country’s political leaders live in an alternative reality.

Says Expresso, the Bank of Portugal has repeatedly identified weak capital investment as a key obstacle to stronger productivity growth, arguing that increased investment in internationally competitive industries is essential if Portugal is to close the income gap with the rest of Europe.

Researchers also point to shortcomings in education, vocational training, public administration, infrastructure, the justice system and regulatory frameworks.

As Pedro Martins, former Secretary of State for Employment, explains, low productivity and low wages remain locked in a vicious cycle.

“Low productivity means low pay, and low pay means workers need to work more hours to compensate,” he says.

Breaking this cycle will require a shift away from investment concentrated in real estate and towards innovation, technology and export-focused industries capable of generating higher-value jobs, suggest economists.

Bottom line: without sustained reforms, Portugal risks remaining trapped near the bottom of Europe’s productivity rankings despite a workforce that continues to put in some of the longest hours on the continent.

Source: Expresso