Minimum wage is already worth 91% of the median wage: the difference is R$115. Banco de Portugal warns of risks.
The national minimum wage (SMN) is increasingly closer to the median wage in Portugal, warned the Bank of Portugal (BdP) this Monday. In 2025, the minimum remuneration set by law reached 91% of the median salaryleaving only 114.7 euros difference between the two values.
The BdP recognizes the positive effects in reducing wage inequality, but also warns against risks on worker incentives, the valorization of qualifications and the productivity of the economy.
In an analysis of the salary distribution of salaried workers, published this Monday, June 8, the central bank, cited by , highlights that salaries have registered significant increases in recent years. In 2025, the average salary per worker grew by 5.6% in nominal terms and 3.1% in real terms, discounting the effect of inflation.
The evolution has been particularly marked at the base of the salary scale. THE national minimum wage increased by 6.1% in 2025, to 870 euros, while the median wage rose by 7%, to 984.7 euros.
Although the median salary grew slightly more this year, the accumulated result of several years of significant increases in the minimum wage is a strong compression of the salary distribution.
According to Banco de Portugal, this trend translates into a rise in the Kaitz indexan indicator that measures the ratio between the minimum wage and the median wage.
In 2019, the minimum wage represented 87% of the median wage. In 2025, this weight rose to 91%, according to Social Security microdata used by the central bank.
The risks
In 2024, Portugal had the highest value of this indicator among euro area countriesconsidering companies with ten or more employees, according to data from the Eurostat Remuneration Structure Survey. In this universe, the minimum wage corresponded to 69% of the median wage.
The BdP notes that the approximation between the minimum wage and wages in the center of the distribution is not new, but considers that its intensity raises relevant questions “in relation to workers’ incentives and the dynamics of the economy’s productivity”, reads the analysis.
The risk highlighted is that, in a labor market in which salaries are very concentrated around the minimum wage, differences in qualifications, experience or productivity are less reflected in earnings. This could reduce incentives for professional progression, skill acquisition and increased productivity, with potential negative effects on long-term economic growth, warns the bank.
The analysis focuses mainly on base salaries. When looking at total compensation, including other salary components, the concentration is less evident. This factor suggests that premiums, subsidies or other remuneration installments contribute to some dispersion in the income actually received by workers.
The BdP also points out that, in 2019, 2023 and 2025, the second decile of the salary distribution presents no observations, which reflects the high concentration of workers at levels close to the national minimum wage. In practice, updates to the minimum wage push up part of the lowest wages.
If the median does not follow this movement in the same proportion, the distance between salaries in the lower half of the distribution decreases.
On the other side of the analysis, Banco de Portugal highlights a reduction in wage inequality over the last 15 years. The ratio between the 90th and 10th percentiles of the distribution — that is, between the 10% who earn the most and the 10% who earn the least — fell from 3.4 in 2010 to 2.4 in 2025.
The reduction was more pronounced until the pandemic years and became more gradual in the most recent period. Even so, Portugal currently has one of the lowest levels of wage inequality in the euro area. In 2024, it recorded the lowest relationship between the median and the 10th percentile and one of the smallest relationships between the 90th and 10th percentiles.
