Economic Policy Reforms 2023

Portugal

See more data for Portugal on the related dashboard.

Product and labour markets functioning

Performance gaps

• Participation in training is low. Some ambitious training programmes are in place, but those not included in these programmes benefit from limited incentives and opportunities to seek training. Resources for active labour market policies and public employment services are relatively low.

• Increases in house prices have reduced housing affordability and may affect labour reallocation.

• Despite significant progress, the duration of insolvency procedures remains elevated, lowering the liquidation value of failing firms.

Recommendations

• Expand training programmes and boost incentives to participate, especially for workers in jobs that are more affected by the digital and green transitions.Provide more individualised job-search and training support to jobseekers, especially younger ones.

• Accelerate the digitalisation of public employment services to free up resources and support caseworkers.

• Revise land use regulations and limit discretionary powers of municipalities in licensing procedures to spur business investment in dwellings, boost housing supply and support labour mobility.

• Encourage the use of out-of-court procedures to prevent court congestion and accelerate insolvency procedures.

Digital transition

Performance gaps

• Small firms lack expertise in digital technologies. Low digital skills, particularly among older and less-educated workers, limit the uptake of digital technologies.

• Schools and teachers are not well equipped to use and teach ICT.

• Broadband prices are high by international standards, reflecting low competitive pressures, holding back the use of digital tools.

Recommendations

• Expand programmes for small firms to acquire digital training, advisory services and information on security and privacy.

• Ensure the completion of the planned expansion of digital resources and ICT training to schools and teachers in the Recovery and Resilience Programme.

• Reduce barriers to consumer mobility across telecommunications providers.

Inclusiveness, social protection, and ageing

Performance gaps

• Despite labour market improvements over recent years, in-work poverty remains high.

• The pandemic has highlighted structural weaknesses in the healthcare system, including inefficient budgeting procedures, shortages of nurses and long-term care workers, insufficient resources in primary care and prevention, as well as social and geographic health disparities. The ageing population will increase financial pressures.

Recommendations

• Strengthen labour inspections to prevent abuses in the use of fixed-term and non-standard contracts.

• Extend performance-based remuneration and improve working conditions and training opportunities.

• Strengthen budgeting procedures, accountability and coordination across the health system.

Climate transition

Performance gaps

• Portugal is broadly on track to reach its 2030 greenhouse gas emission targets. Renewable electricity production has increased rapidly. However, air quality remains a concern and emissions from the transport sector are high.

• Carbon price signals are unclear, varying by sector and fuel type.

Recommendations

• Accelerate investment in electric mobility and public transportation and adjust vehicle taxes in proportion to emissions.

• Improve price signals on the use of fossil fuels while providing financial support to shift to greener consumption choices, particularly for low-income and vulnerable households or for large up-front costs.

Overall performance