Europe is competing for global talent – is Portugal still winning?

The global competition for skilled workers is intensifying.

Ageing populations, low birth rates and shortages in areas such as healthcare, engineering, construction and technology mean European countries increasingly need foreign workers. At the same time, governments face political pressure to restrict immigration.

Portugal sits directly at the centre of this contradiction.

For several years, the country appeared to have found a successful formula. Safety, good weather, comparatively accessible residence visas and favourable taxation attracted entrepreneurs, remote workers and highly qualified professionals from Europe, North America, Brazil and elsewhere.

Portugal remains one of Europe’s most attractive lifestyle destinations. But attracting people is only the first step. The country must also convince them to remain.

Long delays and administrative difficulties surrounding residence applications and renewals have damaged Portugal’s reputation among some international residents. Problems with documentation can affect people’s ability to travel, change jobs or simply plan their lives with confidence.

Housing is another major obstacle. International workers may find Portugal affordable compared with New York or London, but rents in Lisbon, Porto and parts of the Algarve are extremely high relative to Portuguese salaries.

Tax changes have also altered the equation. The original Non-Habitual Resident regime became one of Portugal’s most powerful international recruitment tools. Its replacement is considerably more targeted, focusing incentives on particular scientific, academic and innovative professions.

This could help Portugal attract precisely the highly qualified workers it needs, but the country is competing in an increasingly crowded international market.

Italy, Spain, Greece and other European countries have introduced their own tax incentives and visa programmes designed to attract wealthy residents, entrepreneurs and skilled professionals.

Portugal must also address the gap between attracting foreign talent and properly using it. Highly qualified immigrants can find that professional qualifications obtained overseas are difficult or slow to recognise, potentially leaving doctors, nurses, engineers and other professionals unable to work in the sectors where their skills are most needed.

There is also a danger of creating two separate economies: one where internationally recruited professionals earn salaries linked to London or American markets, and another where Portuguese workers struggle with substantially lower local wages while competing for the same housing.

The answer is not to stop attracting international talent. Portugal’s demographic situation means immigration will almost certainly become increasingly important to economic growth.

Instead, the challenge is to ensure that immigration creates wider economic benefits – generating businesses, investment, tax revenue and better-paid employment for the population as a whole.

Portugal has enjoyed a remarkable period in which people from around the world actively chose to move here.

The question now is whether, as international competition for those same people increases, Portugal can continue to give them enough reasons to stay.