The Portuguese National Minimum Wage (SMN) in 2024 will be set at €820 per month, an increase of €60 compared to the value in force in 2023.
This increase of 7.9% is significantly higher than the inflation forecast for 2024, representing a improvement in the purchasing power of workers covered by the SMN.
The government also confirmed, according to Economy and Finance, that workers who receive the SMN will not be subject to paying Personal Income Tax (IRS) on the value of their salary. This involves updating the IRS-exempt annual income limit to reflect the new National Minimum Wage value.
Comparing the increase in the National Minimum Wage with the inflation expected for 2024, according to Banco de Portugal projections released in October 2023 the expected inflation rate for 2024 is 3.6%, compared with expected inflation of 5.4% at the end of 2023.
Workers can ther therefore look forward to a real increase in their purchasing power compared to the previous year. This increase compensates for the slight loss of purchasing power that occurred in 2023, when the National Minimum Wage only increased by 7.8% in relation to inflation of 8.1% (HICP).
The current value of the National Minimum Wage in 2024, also known as Guaranteed Minimum Monthly Remuneration (RMMG), exceeds the previous projection of €810 by €10. This raises the possibility that the targets for 2025 and 2026 could also be revised upwards, although there is no additional information on this matter yet.
The increase in the national minimum wage in 2024 is positive news for worker, with improvement in purchasing power and the IRS exemption giving significant benefits that could alleviate financial pressure slightly on lower-paid workers in Portugal.
