Work is more expensive in Portugal: Salary costs increased by 4% in the first quarter of 2025.

After a 10.1% increase at the end of 2024, cost growth slowed down.

According to data released by the National Statistics Institute (INE), the Labor Cost Index (ICT) registered a year-on-year increase of 4.0% in the first quarter of 2025, as reported by Notícias ao Minuto.

Cost per worker and hours worked on the rise

According to the INE report, both wage costs and other costs increased by 4.0% per effectively worked hour compared to the same period in 2024. This evolution results from the combination of two main factors: "The year-on-year evolution of the ICT also resulted from the combination of a 5.4% increase in the average cost per worker and a 1.5% increase in the number of hours effectively worked per worker," the INE stated.

The increase in the average cost per worker was observed in all economic activities, but with variations in intensity. The Public Administration stood out with the highest increase (5.8%), while Services recorded the lowest (5.0%).

Services lead increase in hourly cost

Despite registering the smallest increase in average cost per worker, Services had the highest increase in the Labor Cost Index, with a rise of 5.1%, due to a slight decrease in worked hours: "The hours worked per worker increased in all economic activities, except for Services, where they decreased by 0.1%", indicates the INE.

Other areas, such as Public Administration, also stood out, with an increase of 3.1% in hours worked, and Construction had the most modest growth in this respect, with only 0.5%.

Slowed growth compared to end of 2024.

Despite the 4.0% increase, the growth of labor costs slowed considerably compared to the last quarter of 2024, when ICT recorded a 10.1% rise. This deceleration may reflect some relief for companies, but the data confirm that labor costs continue to rise broadly across all sectors of the economy.

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