IRS Jovem wants to stop emigration, but can level salaries with people with more experience. A bank employee with 20 years of experience receives only 6% more than a young person at the beginning of their career.
The Income Tax discount for young people is a measure announced by the previous government and has now been extended to ten years, without the need for higher education and valid until 35 years of age.
In the first year of work, a young person is 100% exempt from IRS, and from the eighth to the tenth year the exemption is 25%, explains .
However, as points out, based on simulations by the consultant Ilya, this measure will level salaries of young people who have just entered the job market and experienced people who have been with the company for 20 years.
And according to the economist Luis Leon“there is no doubt that the net income of young people over 10 years increases, but it is not expected that they will stop leaving Portugal because of the IRS.”
Mário GonçalvesBusiness Director at Hays, says that “tax differentiation already exists depending on domicile, or even for workers with a fiscally relevant degree of disability”, but guarantees that “this is the first time that the differentiation criterion is agean already critical factor in the job market”.
It guarantees that even though “companies with a higher percentage of senior professionals will, naturally, have the worry about adjusting your salary situation“. Compensation can take the form, for example, of “flexible schedules, extension of vacation periods, reinforcement of training to allow more senior people to make more significant career leaps”.
“We realized that the human resources directors are worried with this difference in income versus experience with a generational focus”, assures the general director of Adecco Portugal, Alexandra Andrade.
And examples? There are several.
Let’s consider a bank employee with 20 years of experience. Without considering benefits, a person in this condition has so far received an average of €325 more per month than a young person at the beginning of their career. Now, this number drops to €90, just 6% less than someone with 20 years of experience.
In the case of a network engineer, who on average earns 60 thousand euros per year, this is now the earn practically the same than a young man at the beginning of his career. The difference is 5 euros.
In the chaos of a medical information delegate, for example, the difference is also almost non-existent. He received 32,500 euros/year, 262 euros/month net more than a young man, but that changes now. The young person now earns just €7/month less.
