Companies in Portugal forecast wage growth in 2023 below inflation, study says

Companies in Portugal are assessing below-inflation wage increases next year, hiring prudence and difficulty retaining talent, according to Mercer’s “Total Compensation 2022” study published this Thursday.

This year’s edition of the study analyzed 160,076 jobs in 527 companies based in the Portuguese market, with the sample consisting mainly of multinational companies (56%), whose parent company is mainly located in the United States, in 15% of cases . cases, and in Germany – 9%.

According to Mercer, the geopolitical context and its impact on the economic level with rising inflation has influenced companies and conditioned their decision making.

“Greater uncertainty about hiring new talent/increasing ‘headcount’, more difficulty retaining talent, and generally higher wages are some of the reflexes of this structure,” said the statement, summarizing the findings of the “Full Compensation” study. 2022″ developed by Mercer.

“The median salary increase forecast for 2023 is about 2.8%, which corresponds to a slight increase of 0.5% compared to the forecast in 2021-2022 (2.3%),” the statement said.

In other words, “despite the growth, it is not enough to keep up with the escalation of inflation, which could lead to a loss in the purchasing power of employees,” says Thiago Borges, Mercer Portugal’s “professional business leader,” quoted in the communiqué.

“In a high-inflation scenario, the issue of wage increases and their ability to respond to this context will certainly be a challenge for Portuguese companies in the short term,” he adds.

In terms of hiring, the study presents “a scenario in which about 43% of companies expect to increase the number of employees this year, but only 31% currently expect to maintain this growth until 2023,” he says. , quoted in a statement, Marta Diaz, “awards leader” Mercer Portugal.

More than half (53%) of companies “admit that they are having a hard time retaining professionals, wages have generally increased year-over-year, and the macro environment does not seem to give organizations the confidence to plan and execute medium-term growth,” he said. indicates that.

The positive change in wages at the operational level is due to the increase in the minimum wage in the country.

“Importantly, this is happening across all levels of responsibility, with an overall increase of 5% on average compared to 2021. In addition, in particularly hot areas such as information technology, this dispersion is even more relevant, with growth of about 18% in two years,” the document says.

In terms of benefits, training support is becoming increasingly important in companies, with more than half (57%) of study participants co-paying the cost of training their employees (up from 46% in 2021). .

In terms of referral bonuses (in the context of new hires), the study says they have become a trending practice, with over a third (35%) of companies (23% in 2021) adopting the practice.

According to the study, more than three-quarters (83%) of companies conduct salary reviews annually.

“The second most common trend is salary reviews without due dates, which are carried out by 10% of the organizations surveyed” and “the rest of the companies do it twice (5%) or three or more times a year (2%)”, while “Preferred months for salary revisions are January, April and March (29%, 15% and 13% respectively),” the study says.

The main benefits that companies offer to employees are: Medical plan (90% of organizations), of which 70% cover plan coverage for spouses and children of employees; automotive policy (88%); life insurance (70%); discounts on the company’s products (59%); covering expenses related to education (57%); and vacation days in excess of those stipulated by law (54%).

The sample of the study is representative of the main sectors of activity in the national economic fabric, 67% of which include companies in general services, manufacturing industries, pharmaceuticals, large distribution and retail, consumer goods, information technology.