Generation Z says pay no longer matches cost of living

Portugal’s youngest workers are reshaping the country’s labour market, with almost all Generation Z employees believing their salaries are too low to keep pace with the rising cost of living, according to a new report by Randstad Research.

The study, Generation Z in the Labour Market: A Redefinition of Professional Success, found that 93.4% of young professionals say current pay levels are not fair when compared with living costs, highlighting the financial pressures facing those entering the workforce.

Housing costs are proving particularly challenging. More than half of respondents said they spend over 40% of their monthly take-home pay on accommodation, while 56.2% still live with parents or other family members as a result of financial constraints.

The report also reveals that one in four young workers has taken on two or more sources of income to make ends meet, underlining the growing pressure on younger generations to supplement their earnings.

Despite concerns over pay, salary is not the main reason Generation Z employees are changing jobs. The research found that 37.5% had changed employer during the past 12 months, with the lack of career progression emerging as the primary motivation rather than higher wages.

Many respondents also believe their skills are being underused. Almost six in 10 (58.7%) said they are capable of taking on greater responsibilities than those currently assigned to them, while 40.4% felt their managers showed little interest in their long-term professional development.

The transition from education into employment is another area of dissatisfaction. Many young workers believe the education system did not adequately prepare them for the practical realities of the workplace, leaving them feeling under-equipped when they entered employment.

Flexible working has also become a defining priority for this generation. According to the study, 27.2% of respondents would reject a higher-paid job if it did not offer remote working opportunities, suggesting that work-life balance is now considered a non-negotiable benefit for many younger professionals.

The research also points to widespread adoption of artificial intelligence in the workplace. Almost three-quarters (72.8%) of Generation Z workers use AI tools as part of their daily routine, while 69.9% of those users say the technology has directly improved their productivity.

Isabel Roseiro, Marketing Director at Randstad Portugal, said the findings show that employers must rethink how they attract and retain young talent.

“The results indicate that the metrics for attracting and retaining talent in Portugal are undergoing a structural shift,” she said. “Generation Z is highly qualified, but its career decisions are strongly influenced by macroeconomic factors. As a result, salary alone is no longer the only competitive factor.”

Roseiro said organisations seeking greater workforce stability should develop clearer internal career pathways, embrace flexible working models and invest in employees’ digital skills, particularly in artificial intelligence.

The report suggests that while competitive salaries remain important, Generation Z increasingly expects employers to offer opportunities for professional growth, flexibility and continuous learning alongside financial reward.

Source: Jornal Económico

Inês Lopes

Newspaper editor at The Portugal Resident