Economists dismiss Mário Centeno's pessimism

The net destruction of jobs in recent months “must be taken into account”, given that the impact on the labor market depends on economic developments, point out economists interviewed by Lusa, who consider this a cautious warning from Centeno.

In the presentation of the June Economic Bulletin, the governor of the Bank of Portugal (BdP) warned of the “net destruction of jobs” that has been occurring consecutively between October 2024 and March 2025, which, according to Mário Centeno, had not been observed since the first quarter of 2013.

According to calculations by the BdP, based on microdata from Social Security and provided to Lusa, the net hiring rate was -0.3 in March, while in the same period of the previous year it was 1.

This is a worsening compared to the figure recorded in February, when it was -0.1, but an improvement compared to the start of the year (it was -0.5 in January). An official source from the regulator stresses, however, that the data for March are provisional and subject to review, which “could be significant” and points out that “these series show high seasonality”.

Speaking to Lusa, economist João Cerejeira said that the data is not surprising, in light of the “recent evolution of the Portuguese economy”.

But he recalls that “the labor market always operates with some lag in relation to economic activity”, which is why the warning from the former Finance Minister is a “more cautious alert”, given that, after “atypical economic growth” at the end of 2024 – on the back of the update of IRS withholding tax rates, which, in turn, boosted household consumption – the trend reversed “completely in the first quarter of 2025”, with a chain-effect fall in GDP.

In other words, “it must be taken into account” and is justified in light of the fact that some sectors such as automobiles, textiles and footwear are “more vulnerable” to the international situation, as well as due to the increase in the number of collective dismissals (the first quarter of which was the worst since 2014), but without major drama, points out the professor of Economics at the University of Minho.

The position is shared by Ricardo Ferraz, professor at ISEG and Universidade Lusófona, who stresses that “ there is no reason for alarm, but there is reason, taking this alert into account, for policy makers to monitor the evolution of the labor market with some attention ”.

The economist also highlights that “it is worth taking into account that the labor market in Portugal is quite dynamic, so there are several fluctuations over time, in a given time horizon, there is net creation and destruction of jobs”.

Pedro Braz Teixeira, in turn, says that the data “is moderately negative”, but “not very negative”, given that we are talking about “a few tenths”.

“It’s a wake-up call to be vigilant, but it’s not a red light. It’s a yellow light ,” summarizes the director of the research office of the Forum for Competitiveness.

The economists interviewed by Lusa therefore believe that, for now, there is no reason for alarm and place the onus on the evolution of economic activity.

“We are not yet talking about an increase in unemployment”, stresses the professor of Economics at the University of Minho, indicating that this will only occur “if this slowdown in economic activity is intense” and “persistent over time”.

But if there is an increase in unemployment combined with lower growth, there could be greater reasons for alarm, given that tax revenues will be lower than expected and there will be “an increase in expenditure through the minimum wage”, he admits.

“It is not possible to continue to grow employment at the rate we had in previous years if we have a slowdown in economic activity, as we already had in the first quarter”, he argues, indicating that “the main driver of growth for this year” will be internal demand, whether through household consumption or public investment.

Ricardo Ferraz also highlights that Portugal is “growing above the European average, but the external situation is not favourable”, at a time when some institutions have already revised downwards their growth forecasts for the Portuguese economy.

Unlike João Cerejeira, Pedro Braz Teixeira also highlights the fact that in Portugal employment growth is, to a large extent, “at the expense of immigration” and, given the “greater demands on the hiring of immigrants” decided by the Government, this could mean an increase in the unemployment rate.

In turn, the professor of Economics at the University of Minho argues that “a very liberal policy” in a phase of “moderation of growth” could lead to an increase in unemployment.