Portugal faces productivity stagnation and immigrant overqualification

Portugal is experiencing a phenomenon described as “growing without converging.” Despite a real GDP growth of 26% between 2015 and 2025 and an employment rate of 79.6%—which exceeds the European Union average—the country has failed to close the productivity gap with wealthier European nations. While countries like Estonia and Poland have significantly increased their productivity relative to the EU average, Portugal’s productivity per hour worked has slightly declined from 67.6% of the EU average in 2000 to 66.9% in 2025.

This stagnation is linked to a high volume of job creation in low-value-added sectors. For example, while business services and hospitality have created significant employment, their value added per worker remains lower than in information and communication technologies.

Additionally, a study by the Migration Observatory reveals a significant mismatch in the labor market regarding immigrant qualifications. Over 50% of non-EU immigrants with higher education in Portugal are working in jobs below their qualification levels. This overqualification rate for non-EU citizens is 52.3%, compared to 14.1% for Portuguese nationals, a disparity that is higher than the European Union average.