A Bank of Portugal analysis shows the unemployment benefit replacement rate has dropped from 70% in 2015 to 64% in 2025. This decrease is due to wage growth outpacing adjustments to benefit caps, which are tied to the Social Support Index (IAS).
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Read today’s briefingThe government projects the national unemployment rate will reach 5.8% for 2026 and further decline to 5.7% in 2027. These figures are described as being consistent with forecasts from other institutions and reflecting a context of economic dynamism and full employment.
The government submitted the 2027 State Budget proposal to Parliament on Thursday, projecting unemployment rates of 5.8% for 2026 and 5.7% for 2027. These figures reflect an official outlook of economic dynamism and near full employment.
A Bank of Portugal analysis shows that the unemployment benefit replacement rate fell from 70% in 2015 to 64% in 2025, primarily because wages grew faster than the benefit caps linked to the IAS (Social Support Index). While the average nominal value of the benefit rose to 700 euros by 2025, it covers a smaller portion of previous earnings, particularly for low-wage earners. The study also notes a significant demographic shift in benefit recipients, with the share of foreign workers increasing from 2.2% in 2015 to 26.6% in 2025.