Portugal’s 2026 Salary Budgets Stay Steady with 3.2% Average Raise
In 2026, salary budgets in Portugal are projected to stabilize, according to the latest Salary Budget Planning Survey by WTW. The average salary increase is anticipated to be 3.2%, slightly down from the 3.5% increase recorded in 2025.
Macro-Economic Context
Several factors contribute to this overview. Inflation is expected to slow to 2.0% in 2026, down from 2.4% the previous year. Additionally, the unemployment rate is forecasted to fall to 6%. This creates a more predictable economic environment.
GDP Growth Forecast
The Gross Domestic Product (GDP) is projected to grow by 2.3% in 2026. Amid these conditions, nearly half of employers (43%) opted to maintain their mid-year salary budgets without adjustments.
Changes in Budget Projections
- 24% of employers anticipate reducing their salary budget projections.
- Only 7% expect to increase their initial salary budget proposals.
Drivers of Change
The key factors influencing these adjustments include:
- Better financial outlooks (29%)
- Talent shortages (18%)
- Inflationary pressures (13%)
- Changes in compensation strategy (13%)
- Concerns about pay equity (11%)
Employer Priorities in 2026
Paul Richards, Managing Director of Rewards Data Intelligence at WTW, noted that employers are entering 2026 with clearer salary priorities and increased discipline. They are applying salary budgets as strategic tools rather than just financial inputs.
Attracting and Retaining Talent
In talent management, the percentage of companies reporting no difficulties rose to 20% in 2025. However, many continue to enhance flexibility policies, compensation programs, and employee experience initiatives.
The integration of artificial intelligence (AI) in rewards management is on the rise, although still limited. Companies plan to invest more in salary benchmarking, job architecture, skills management, and market trend analysis—areas where AI can assist in decision-making.
Focus on Employee Experience
According to Sandra Bento, Associate Director at WTW, the stabilization of salary budgets highlights the necessity for greater investment in employee experience. These efforts have yet to result in tangible reductions in labor costs.
In summary, the data indicates a year of continuity and prudence in salary policies among Portuguese companies. Despite geopolitical uncertainties, these businesses are adopting predictable budgets and established practices moving forward.
