Underused Immigrants in the Labor Force
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The latest study by Randstad Research, titled "Myths and Realities About Migration and the Labour Market," sheds light on the significant role of immigrants in Portugal's economy and demographic landscape.
The study reveals that the number of immigrants with permanent residency has grown substantially, surpassing 1.04 million in 2023, a threefold increase over the past decade. This growth has had a profound impact on Portugal's demographic structure.
Immigrants are predominantly young, with over half (55%) between the ages of 20 and 44, providing a vital demographic boost amid low birth rates and increasing life expectancy.
Contrary to common perceptions, a significant portion of the foreign-born population in Portugal has high qualifications. In fact, 31.6% have higher education, and 43.6% have secondary and post-secondary education. However, there is a mismatch between qualifications and employment sectors, with foreign workers often underutilized given their qualifications.
Despite having a higher unemployment rate (11.9%) than the general population (6.6%), the proportion of long-term unemployed among immigrants is 16.7 percentage points lower. This indicates a greater capacity for faster integration into the labour market.
Unemployment among foreigners is more seasonal than that of the total population, suggesting persistent challenges in their full and equitable integration into the labour market.
The study also found that more than one-third (33%) of foreigners had temporary employment contracts in 2024, compared to 15.9% of the total population. Part-time employment was more prevalent among immigrant workers, with 11.2% compared to 8.1% of the total population.
At the end of 2024, Portugal had a foreign active population of 346,800, with 302,200 employed and 44,600 unemployed.
Immigrants are disproportionately concentrated in less-skilled jobs, with more than half in unskilled jobs (29.7%) and in personal services, protection, and sales (22.4%). There is still a lower representation in professions requiring higher qualifications and responsibility, such as intellectual and scientific fields, technical fields, and intermediate-level professions.
Barriers such as qualification recognition, language requirements, and the need for nationality may explain the difference in employment between foreigners and Portuguese workers.
Foreigners contribute significantly to the sustainability of Social Security systems, with a balance between contributions and benefits received reaching a maximum of 2.958 billion euros last year.
Regarding regional distribution, Lisbon, North, and Algarve regions accounted for the majority of unemployed foreigners in Portugal. Foreigners were more represented in sectors such as agriculture, hospitality, administrative activities and support services, and construction, where Portuguese workers had lower shares.
In sectors like industry, commerce, vehicle repair, transportation and storage, consulting and scientific activities, and public administration, education, and healthcare, the proportion of foreigners was lower than that of Portuguese workers.
The study used data from the Ministry of Labour, Solidarity and Social Security, the Institute of Employment and Vocational Training (IEFP), the National Institute of Statistics (INE), and Eurostat.
In summary, the Randstad Research highlights the strategic importance of migrants in Portugal’s labour market, particularly their role in filling talent shortages, challenges related to underemployment relative to qualifications, and their demographic benefit to the aging population, with implications for future labour and social security policies aiming to leverage these assets more effectively.
- To better maximize the economic potential and bridge the talent gap in specific sectors, businesses in the Algarve region of Portugal should consider implementing diversity-and-inclusion strategies to attract and retain skilled immigrants with higher education, who are currently underutilized in less-skilled jobs.
- As the foreign active population in Portugal continues to grow and contributes substantially to the financing of Social Security systems, it is essential for the country's financial sustainability that initiatives be taken to increase diversity-and-inclusion in businesses, creating a more level playing field for immigrants and fostering their full and equitable inclusion in Portugal's labour market.
