The job market in Porto
In the past few years, the labor market in Porto has suffered a considerable boom. There are far more opportunities now that the 2011-2015 crisis is apparently water under the bridge, with new businesses and new companies growing as days go by. Be that as it may, you should definitely do some research about the specific area of work you are looking for, as the Portuguese economy is famous for running on low wages, making it increasingly difficult for the average Portuguese worker to afford to live in the big cities.
What is the job market in Porto like?
With an unemployment rate of 5,90%, below the national average, there are plenty of job offers in Porto. This comes as no surprise, as Portugal tends to focus most of its people and economic activity in the big cities (such as Porto and Lisbon), where pretty much all the major companies and public institutes set base. Plus, Porto also boasts a highly qualified workforce compared to the rest of the country, aside from Lisbon.
However, as more tourists and expats make their way into the city, the cost of living has become almost unbearable for most people, driving locals further and further away from the downtown area. Although it may surprise some people, considering the Portuguese economy is statistically doing well, ranking among the fastest-growing in the EU in 2023, the truth is that most businesses run on criminally low wages, especially within the tourist sector. Currently, the average wage in Porto stands at around 1,200€ gross, while the minimum wage is 760€. When compared to the city's average rent prices, which show that the new leasing contracts signed in the first quarter of 2023 reached an average of 1,064€/month, it becomes clear how difficult it is to survive on a single monthly paycheck when working for a local company in Porto. And even when sharing expenses, there's still not a lot of wiggle room.
As for taxes, you'll be paying a flat 11% of your paycheck towards your future public retirement fund (Segurança Social), while the remaining taxes (IRS) will depend on how much you make. Portugal boasts a progressive tax system, which means the more you make, the higher the bracket that will establish how much in taxes you'll be paying every month. Unlike the US, when under contract with a company, you don't need to do your own taxes, as your employer will be responsible for automatically deducting your taxes from your wage and handing the amount to the government. Needless to say, in order to abide by the law, everything must be mentioned in your pay slip. Currently, IRS percentages can range from 0% (if you earn the minimum wage) to 41% (if you make over 20k/month), with plenty of other brackets in between.
As for freelance workers in Porto, they will need to register their activities at their nearest Finance Department or online through the Financial Department Platform and issue invoices called Recibo-Verde (green receipt). Freelancers earning less than 13,500€/year are usually exempt from paying VAT and do not need to pay the IRS on a monthly basis to the government (though they'll have to do their taxes every year between May and July and pay any taxes owed to the state). They also need to pay the pension fund contribution every month, according to the amount they made throughout the previous trimester. Regarding freelance work, we strongly advise consulting with a Portuguese accountant since there are many nuances that will impact how much you'll pay in taxes, including the nature of your activity and how much you make, to the dates you issue your invoices and your deductible work expenses.
As a final note, it is also worth mentioning that the brand-new digital nomad visa used to include access to the RNH Status, which provides tremendous tax benefits for digital nomads establishing themselves (and their businesses) in the city for a period of 10 years. If your line of work falls within with one of the designated categories, you can enjoy a flat 20% tax on your income, a percentage that Portuguese workers (or foreign workers without the digital nomad visa) reach when earning over 1,961€/month. That being said, if you make more than that amount, you'd be saving on taxes by adhering to the visa. Be that as it may, and according to recent news, the government is getting ready to scrap the RNH scheme in 2024. Once again, it is always best to consult with an accountant for further details.
Popular industries in Porto
Hospitality services and tourism
Many of the opportunities currently available in the city are related to the recent boom in tourism figures. There is a high demand for cleaning workers, cooks, servers, managers, receptionists — every single job you can consider in the hospitality industry. However, not every company looks for the most skilled professional, and, in many cases, the job gets done by the one who asks for the smallest paycheck. The tourism industry is still a very challenging area, as workers tend to be burdened with overextended schedules and below-average wages. If you look for a position in the hospitality industry, be sure to visit hotels and restaurants in Porto beforehand, and don't settle for just any proposal.
Multinational companies
Porto has also become a bit of a startup hub in recent years, as well as a point of interest for many foreign companies known for their fantastic work ethic, atmosphere and worker-friendly politics. Just look at some examples: Farfetch, Mercadona, Prozis or Concentrix all have current office or shop locations in Porto and are continually looking for new talent. In some cases, you won't even need to speak Portuguese fluently.
Generally, a shortage of talent is currently experienced in the following areas: IT and communications, tech development, healthcare, tourism and hospitality and agriculture.
Availability of jobs and competition in Porto
With most locals (especially the younger generations) being able to speak pretty good English, the competition can be very tough on expats. The labor market is not particularly saturated – as we've discussed in detail above – but the lack of Portuguese fluency can be crucial in whether or not expats will be successful. Full English-speaking jobs are usually found in the tech area or as a TEFL teacher. Furthermore, unless you're working in tech or have your own business, chances are you won't be enjoying a particularly good standard of living in case you're earning a Portuguese wage. Finally, knowing a third language, like Spanish, French or German, can be a pretty valuable asset.
Working hours in Porto and legal details
When looking for job opportunities in Porto, there are a couple of important legal information you must know, in order to be protected. From a legal standpoint, full-time workers have a 40-hour week schedule, which means that if you work more time, you should be paid more (although that is rarely the case). On top of the regular eight-hour work days, employees usually have a 1-hour break for lunch or dinner. Working between midnight and 7 a.m. also means one should receive compensation for night hours, so be sure to talk to a lawyer if you notice a company trying to pay less than what you are owed.
Furthermore, local full-time workers are entitled to 14 paychecks per year, one for each month, plus two supplementary wages (called Holiday Allowance and Christmas Allowance). When working in Porto, you should get at least 22 days of vacation (the legal minimum), although companies are free to offer you more paid time off work, depending on their policy.
Finally, remember Porto is a very diverse city when it comes to its labor market, as you can find both extremes – the best and the worst. Make smart choices, and don't be shy about being vocal about your rights.
