The Portuguese labour market has seen notable improvements in recent years. In the second quarter of 2024, the employment rate for the population aged 15‑64 reached 72.7%, surpassing the OECD and EU averages, and the unemployment rate dropped significantly from a peak of 17.0% in 2013 to 6.6% in the second quarter of 2024. However, several challenges remain. Despite significant improvement, disparities exist across age groups, gender, and educational levels. Young people, in particular, face substantial barriers, with the unemployment rate for youth (15‑24) nearly four times higher than for adults aged 25‑64 in 2023. More generally, an ageing population and a persistent high incidence of temporary contracts present ongoing challenges for Portugal.

In this context, active labour market policies (ALMPs) and public employment service (PES) have an important role to play in connecting people with jobs, for instance by helping young people and the unemployed gain practical work experience and skills to re‑enter the labour market. Portugal has made significant efforts to enhance the performance of its PES, the Institute for Employment and Vocational Training (IEFP), which handles both employment services and vocational training in collaboration with the social partners. Spending on ALMPs in Portugal is 0.43% of GDP in 2022, slightly above the OECD average. The largest area of ALMP expenditure is training, which includes internship programmes like ATIVAR.PT. Evaluating the impact of these internships on employment outcomes is crucial to inform and improve policy measures, and to ensure public money is well spent.

Drawing on data linked across different registers and a methodology that compares programme participants with similar non-participants, this report shows that the internship programme ATIVAT.PT increases the probability of employment by 10 percentage points and increases monthly earnings by about EUR 120‑180 for at least nine months after the end of the internship. The long-term sustainability of these effects, their validity in different economic context and the extent to which internships promote unsubsidised employment remain to be assessed.

The report provides a detailed analysis that could help the Ministry of Labour, Solidarity and Social Security and the IEFP to further invest in developing their capacity to link administrative data for research purposes. This could include incorporating additional data from different registers, such as data on social outcomes and health, and improving the quality of the data currently available.

The key policy recommendations emerging from this report for Portugal include:

• Target internships to groups more likely to benefit from them and increase participation of jobseekers with upper secondary education or less, and those living in non-urban areas.

• Assess the sustainability of the positive effects of the internship on employment and earnings in the medium and long term, and beyond the specific economic context of the pandemic and assess the extent to which an internship leads to unsubsidised employment.

• Carry out a comprehensive cost-benefit analysis of internship programmes weighing up the savings for the government stemming from the reduced expenditure against the total cost of these programmes.

• Improve data coverage and quality by linking and making available administrative data on employers, job quality, counsellors’ characteristics, social benefits and health or justice data to explore the wider impact of ALMPs.

• Establish an evidence‑based approach to ALMP design, targeting and implementation by improving the infrastructure that enables data and metadata access for research purposes and adopting a strategy for making systematic evidence generation an integral part of the policy making process.