Guide to living and working in Portugal

Portugal

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Country Overview

 

Population

10.5m

Unemployment Rate

7.4% (03/08)

Average annual unemployment rate 1995 – 2004

5.9%

GDP

€147bn / $230bn

GDP per head

€13,931 / $21,719

Capital

Lisbon

Major language

Portuguese

Life Expectancy (UN)

75 years (men)

81 years (women)

Monetary unit

1 euro = 100 cents

Internet domain

.pt

International dialing code

+351

 

Portugal has become an increasingly service-based economy since joining the European Community in 1986. Over the past two decades, successive governments have privatized many state-controlled firms and liberalized key areas of the economy, including the financial and telecommunications sectors. Economic growth had been above the EU average for much of the 1990s, but fell back in 2001-07. GDP per capita stands at approximately two-thirds of the EU average. A poor educational system has been a significant obstacle to greater productivity and growth. Portugal has also been increasingly overshadowed by lower-cost producers in Central Europe and Asia as a target for foreign direct investment. The budget deficit surged to an all-time high of 6% of GDP in 2005, but the government estimated it at 3% in 2007 thanks partly to deficit-cutting efforts. Nonetheless, the government faces the challenge of trying to boost Portugal's economic competitiveness while keeping the budget deficit within the Euro zone’s 3%-of-GDP limit.

 

The Economy

 

 

Industries include: textiles, footwear, wood pulp, paper, cork, metals and metalworking, oil refining, chemicals, fish canning, rubber, plastic products, ceramics, electronics and communications equipment, rail transportation equipment, aerospace equipment, ship construction and refurbishment, wine, and tourism.

 

Pay

 

 

 

Human development Index

 

Ranking:  29th
Index value:  0.897


The Human Development Index combines statistics on GDP, adult literacy, average years of schooling and life expectancy to provide an indicator of human development. The HDI shown here gives the ranking of 24 countries among 177. See http://hdr.undp.org/en/ for more information.

 

Getting a job

Overview of the labour market:

According to the European Labour Force Survey (data for the fourth quarter, 2006), rates of activity (74.1%) and employment (67.6%) in Portugal are higher than the EEA average (70.2% and 64.6% respectively). Participation of Portuguese women in the labour market is amongst the highest in Europe (but behind the Scandinavian countries).

Part-time work however is still limited (only 11.6% of total employment), and is particularly underused by women (16.1%) compared with the average of 31.3% of female employment recorded at EEA level. The number of temporary employment agencies operating in the market is rising continuously (currently over 250).

At the end of June 2007, 388 619 people were registered as unemployed at Job Centres, with 40.8% men and 59.2% women. Around 4.7% of these were unemployed foreign nationals.

The tertiary sector has become increasingly important in Portugal, particularly trade and vehicle repairs (14.5% of total employment), property, rentals and business services (6%), and the hotel and catering sector (5.5%), while tourism is clearly the driving force behind the economy and labour market. The establishment of Call and Contact Centres and Shared Services Centres in Portugal has also begun to create jobs.

Public services continue to represent a significant proportion of existing jobs (19.1%, including public administration, defence, social security, education, health and social work); although a net creation of jobs in this sector is not forecast in coming years. At the end of the first quarter of 2007, agriculture, forestry and fisheries represented 11.6% of the employed population; industry, the building trade, power and water represented 30.5%, and services 57.9%.

 

Applying for a job:

Letters of application should only be a single A4 page with a curriculum vitae (CV) attached. Copies of qualification certificates are only required later during the recruitment process, which takes on average two months. Application forms are widely used in Portugal and come in many varieties. They are used for applicants with or without qualifications. Some are fairly standardised, while others focus mainly on previous professional experience and use open-ended questions. Standard questions cover personal information, education, experience and knowledge of languages.

A Portuguese CV is generally drafted in chronological order on no more than two or three pages. A photograph is sometimes required. The following points should be mentioned: 

  1. Personal details (address, telephone number, e-mail etc.); 
  2. Education (highest level of schooling); 
  3. Vocational training (list training courses and practical training); 
  4. Professional experience; 
  5. Other skills (languages, information technology skills, driving licence); 
  6. Leisure activities (optional).

Interviews are the main selection technique. Interviewers place most value on professional experience, vocational training, knowledge of the company and its sector of activity and the country in general. You should take certain documents to the interview: copies of your CV, diplomas, evidence of previous experience (certificates of work), recommendations from former employers and a passport-size photograph.

The use of personality tests is quite common in Portugal. Aptitude and psychometric tests are normally used for applicants for middle management posts, particularly when recruitment is carried out with the help of consultants. Graphology is sometimes used (prior permission is not required).

 

Conditions and rights

Employment law:

Portuguese Employment Law is very strict, defining the terms of contract and regulating the relation between employees and employers. There is little for the two parties to define themselves in a contract.

Working hours:

Standard hours: these may not exceed eight hours per day or 40 hours per week. Normal working hours can be increased up to a maximum of four hours, though the duration of weekly work may not exceed 60 hours.

Overtime: per employee is restricted to: two hours on any normal working day and a maximum of 200 hours annually. The provision of overtime on a normal working day entitles employees to the following increases in pay: 50% of pay for the first hour; 75% for subsequent hours or part-hours. Overtime worked on a compulsory or additional weekly rest day or a public holiday entitles employees to an increase of 100% for each hour of work done. Overtime done on a working day, an additional weekly rest day or a public holiday also entitles employees to paid time off corresponding to 25% of the overtime hours worked. Work done on the compulsory weekly rest day entitles employees to one paid day off, to be taken in the following three working days.

Holidays and leave: In each calendar year all employees are entitled to a period of paid annual leave. The annual holiday period lasts for a minimum of 22 working days. After six full months of work in the year they are hired, employees are entitled to take two working days’ holiday for each month's duration of their contract, up to a maximum of 20 working days. Contracts lasting less than six months entitle employees to two working days’ holiday for each full month’s duration of the contract.

Absence and leave: Absences from work due to illness are deemed to be justified, but it is important that the employee is covered by a social security scheme providing sickness protection. Employees are entitled to be absent from work for 15 days per year to provide urgent and essential care to members of their household in the event of illness or accident.

Parental leave: Both the father and mother are entitled to three months’ parental leave in order to care for a child up to six years of age. Alternatively, they are entitled to work part-time for 12 months or to combine periods of parental leave and part-time work in which the total duration of their absence is equal to three months’ normal working hours. When these entitlements expire, the father or mother is entitled to special childcare leave for a maximum of two years.

Childcare leave: Employees are entitled to childcare leave to care for a minor who is ill. Such leave is limited to 30 days per year or is unlimited in the event of hospitalisation of the child.

Study leave: An employee who attends any level of academic education, including postgraduate courses, in an educational institution may be classed as a student-employee. This allows them to benefit from release from work for up to six hours per week, without loss of rights.

Portugal Public holidays: 1st January, Good Friday, Easter Sunday, 25th April, 1st May, Corpus Cristi, 10th June, 15th August, 5th October, 1st November, 1st December, 8th December and 25th December.

 

Contracts

Types of employment:

The minimum age for working for an employer is 16. A young person can only enter into a contract of employment if they have completed compulsory schooling. People of 18 years of age may enter into contracts of employment without having completed compulsory schooling.

Different types of contract include:

  • Contract of employment of indefinite duration: no time limit.
  • Fixed-term contract of employment: limited duration. This type of contract generally lasts for six months, though they may be shorter or longer, up to a maximum of six years (including renewals).
  • Contract of employment of unspecified duration: lasts as long as necessary to replace an absent employee or to complete a certain project.
  • Part-time contract of employment: corresponds to normal weekly working hours equal to or less than 75% of the hours worked on a full-time basis.
  • Teleworking contract: provision of labour with legal dependence by means of information and communication technologies.

Employment contracts:

Portuguese law requires fixed-term contracts of employment, contracts of unspecified duration, part-time and teleworking contracts to be set down in writing. This requirement does not apply to indefinite contracts of employment. When written, the contract must include the following information:

  • Identification of the employer and employee;
  • Object of the contract, including occupation/tasks to be carried out;
  • Duration of the contract, including the probation period;
  • Location of the job;
  • Payment and other benefits.

The employer must provide the employee with at least the following information in writing: identification of the enterprise; place of work; professional category and its content; date of entering into the contract; duration of the contract if subject to a time limit for termination; duration of annual leave; notice periods for terminating the contract; amount and frequency of payment; normal daily and weekly working hours and the instrument of collective labour regulation, where applicable. This document must be given to the employee within 60 days from the start date of the contract. If any of the above information is altered, the employer must inform the employee in writing, within 30 days of the date the alteration comes into effect.

 

Visas and work permits

Visas:

Citizens of the European Union: do not require a visa to enter Portugal. Passports are required for all foreigners except for EU nationals (excluding the UK: British nationals are required to have a passport) and citizens of Iceland, Norway, Malta, Switzerland and Liechtenstein, who may use valid National ID cards.

Portugal is a signatory of the Schengen Treaty. The 15 Schengen countries are: Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Italy, Greece, Luxembourg, Netherlands, Norway, Portugal, Spain and Sweden. With a Schengen visa, you may enter one country and travel freely throughout the Schengen zone.

Nationals of certain countries can visit Portugal for up to three months without a visa but will need to be granted a work permit to take up employment.

Passport holders from the following countries do not need a visa to visit Portugal or other Schengen countries: Andorra, Argentina, Australia, Bolivia, Brunei, Bulgaria, Canada, Chile, Costa Rica, Croatia, El Salvador, Guatemala, and Honduras. Israel, Japan, Republic Of Korea, Liechtenstein, Malaysia, Mexico, Monaco, New Zealand, Nicaragua, Panama, Paraguay, Romania, San Marino, Singapore, Switzerland, United States, Uruguay, Vatican and Venezuela.

Nationals of countries not mentioned above will need a visa to visit Portugal.

If you wish to stay in Portugal for more than 90 days or to work there, you must obtain a visa. The main types of visa are: 

  • A short term visa that permits a short term stay in Portugal. No other type of visa is required. The visa is issued at points of entry into Portugal. 
  • A residential visa: the visa is issued at points of entry into Portugal. 
  • A student visa: this is designated for purposes of study. The visa must present confirmation of studies in Portugal and proof of the means to live during the period of studies. 
  • Work visa: permits entry into Portugal to obtain employment. 
  • Temporary visa: permits entry into Portugal to obtain medical treatment and for the accompaniment of relatives who are receiving medical treatment, or relatives with a work or study visa.

In completing an application for a work visa, you will have to show proof of: a residence for the period of stay in Portugal, an employment contract with an employer and sufficient financial means to live during this period.

Residence Permits:

EU citizens are not required to have a residence permit nor a work permit in Portugal, but obtaining a residence permit may be useful as proof of residence for obtaining a local driver's license, tax purposes, etc. Only EU nationals may apply for a residence permit from within Portugal. All other nationals must apply at a Portuguese consular office abroad.

There are two kinds of residence permit in Portugal, both issued by the Immigration and Border Control Department:

  1. A short-term residence permit, which is valid from 90 days up to one year. 
  2. A long-term residence permit, which is valid for a period of five years, and may be renewed automatically for up to ten years. Beyond that, the applicant must apply for renewal in person. Your passport must be valid for the entire duration of your residency.

Work permits:

Portugal does not apply any restrictions on the access to its labour market by citizens of other EEA countries including citizens of the ‘new’ EU member countries (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia).

Non-EU/EEA citizens must obtain a work visa or permit to work in Portugal.

 

Tax, social security and healthcare

Taxation system:

Portugal's tax rates for individuals is progressive, the 2007 tax rate was 10.5% - 42%. Exemptions are granted to taxpayers with specific types of income. An individual whose total annual turnover is less than €149,753 may, subject to certain conditions in the law, avoid paying regular tax.
An individual in Portugal is liable for tax on his income as an employee and on income as a self-employed person. In the case of an individual who answers the test of a "permanent resident" of Portugal, tax will be calculated on his income earned in Portugal and overseas. A foreign resident who is employed in Portugal pays tax only on his income in Portugal.

To be considered a Portuguese resident, you must reside in Portugal for at least 183 days in any calendar year. If the individual has a home in Portugal that is his main residence, he will also be considered a resident. An employer is obligated to deduct, each month, the amount of tax and national insurance due from a salaried worker.

Portugal Individual Income Tax Rates 2008:

Income Band (€)

Tax (%)

0 – 4,544

10.5%

4,545 – 6,873

13%

6,874 – 17,043

23.5%

17,044 – 39,197

34%

39,198 – 56,807

36.5%

56,808 – 61,260

40%

61,261+

42%

 

Social security system:

Portuguese social security consists of a general contributory scheme and a non-contributory scheme. The general scheme includes support both for employees, the self-employed, and their dependants. The non-contributory scheme provides social protection in situations not covered by the general scheme.

The general social security scheme covers all employees, though special conditions apply for the self-employed and some agricultural workers. The general social security scheme provides support in the following cases: sickness; maternity, paternity and adoption; invalidity; old age; survivorship; occupational diseases; family support (dependants), and unemployment.

The self-employed must have social insurance (compulsory scheme) covering the risks of maternity, paternity and adoption, invalidity, old age and survivorship. The voluntary scheme for the self-employed also includes support in the event of sickness, occupational diseases and family support. Civil servants are covered by a special scheme for social security and health.

The social security system does not cover accidents at work. Employers are responsible for the full financing of protection against this eventuality. This coverage and a supplementary system covering occupational diseases are normally provided by insurance companies contracted by enterprises. The self-employed must take out their own policies with insurance companies.

Contributions: Both the employer and the employee registered in the social security system are required to pay contributions. The rates generally applicable are 23.75% for employers and 11% (deducted at source from gross pay) for employees. The self-employed have to pay monthly contributions at a rate of 25.4% of their declared income (if covered by the compulsory scheme alone) or 32% if they opt for the voluntary scheme.

 

Health system:

In Portugal the National Health Service (SNS) provides healthcare through Health Centres and Public Hospitals. EU nationals are also beneficiaries of the SNS under applicable EU legislation. To be able to benefit from SNS healthcare you should register with the Health Centre in the area where you live as soon as you start a job, presenting a valid proof of identity, a social security beneficiary’s card and a document proving that you are a resident. The Health Centre will issue an SNS user’s card in your name and assign you a family doctor. Health Centres provide general practice and family medicine, public healthcare, nursing, immunisation and some diagnostic tests.

Beneficiaries pay a small charge for each appointment or treatment provided in the SNS. In addition to Health Centres and public hospitals, various private health establishments and health practitioners operate on a freelance basis and complete the supply of healthcare, providing services privately or by agreement with the SNS. If you are an EU citizen, you should bring your European Health Insurance Card with you to Portugal so that you can get healthcare until your SNS user’s card is issued.
Medicines: The Portuguese State partially supports the cost of most medicines, though some are totally subsidised, particularly those which are vital for treating certain illnesses. SNS beneficiaries are partially subsidised when they purchase medicines prescribed by SNS doctors or private doctors, provided they present their SNS user card.