Morning Chronicle - Minimum wage in focus as Portugal heads to polls

"We don't live, we survive," said the 40-year-old mother of a 12-year-old boy whose husband earns just a bit more than her.

"We learn to live with the essentials. It is frustrating and sad."

Portugal's large and growing pool of workers like Moreira who earn the minimum wage -- and the incumbent Socialist party's plans to raise it further -- is a key issue in Sunday's snap election.

Nearly 900,000 workers in Portugal earn the minimum wage, which was raised this year by 47 euros to 822 euros ($927) per month, still one of the lowest in western Europe.

Their numbers have doubled over the past decade, according to a study by economist Eugenio Rosa, who warns Portugal "is becoming a nation of minimum wages."

Prime Minister Antonio Costa has vowed to raise the minimum wage above 1,000 euros a month by 2026 if he is re-elected. It stood at 589 euros when he took office in 2015.

"It is even possible to go beyond that," Costa said Monday during a radio interview.

But the two hard-left parties that have propped up his minority government have slammed the proposed increase as too little while the main opposition centre-right PSD party argues it goes too far.

- 'Miserable wages' -

The Communist party voted against Costa's proposed 2022 budget, prompting the early election, in part because it deemed this year's minimum wage hike too small.

The PSD argues minimum wage increases should track growth in productivity and the economy.

PSD leader Rui Rio points out that Portugal's GDP per capita has increased by an annual average of just 0.3 percent between 2001 and 2020, less than half the EU growth rate.

Rio, an economist by training, says the government should focus instead on raising the medium wage since qualified graduates are being forced to choose between "miserable wages" at home and emigration.

While the minimum wage has steadily risen, the medium wage has stagnated at 1,160 euros per month, reducing the gap between the two.

"Companies have raised their minimum wages because they were forced to by law, but they left other salaries untouched," said Joao Duque, an economist at Lisbon's School of Economics and Management (ISEG).

The government's strategy to achieve full employment has led to the development of an economy based on low wages centred on sectors like tourism and construction, he added.

This has "encouraged the emigration of more qualified workers to countries where they are paid better, and the immigration of less qualified workers," Duque said.

- 'Not our recipe' -

Portugal's unemployment rate fell to around six percent last year, its lowest level in two decades -- a figure highlighted by the Socialists throughout the campaign.

Labour Minister Ana Mendes Godinho said the "significant" rise in the minimum wage has boosted economic growth.

"Austerity advocates claimed that freezing wages is the only way to become a competitive country. It's not our recipe," she told AFP.

The policy is popular with many low-wage voters ahead of Sunday's early election, with some polls suggesting the Socialists and the PSD are virtually tied.

"We have never seen such a significant increase in the minimum wage," said Amelia Casquinha Fernandes, 60, who earns the minimum wage as a cleaner at Lisbon airport.

She said she was pleased that the Socialists had "kept their promise".

The debate comes as EU member states in December agreed on measures to better protect wage levels in Europe and give workers more power to oppose low pay.

National pay systems and minimum wages vary widely, from 332 euros a month in Bulgaria to just over 2,200 euros in Luxembourg, according to EU data.

A.Wilson--MC-UK