Portugal labor minister sees across-the-board job creation

LISBON (Reuters) - Portugal’s unemployment rate is set to fall below the government’s forecast of 8.6 percent in 2018, thanks to job creation in the booming tourism sector but also in technology and traditional areas like textiles, the labor minister said.

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The economy created 290,000 jobs between 2016 and 2017 as its recovery from a 2011-14 debt crisis accelerated, lowering unemployment at one of the fastest rates in Europe and helping to boost Portuguese workers’ disposable incomes.

Average unemployment reached a nine-year low of 8.9 percent last year, down from a crisis-era high of 17 percent in 2013.

Labour and Social Security Minister Jose Antonio Vieira da Silva told Reuters “the goals that the government has fixed can be considered somewhat conservative in terms of job creation and the unemployment rate”. He cited? surveys of companies showing they are seeking to employ more workers.

During its bailout by the European Union and International Monetary Fund, Portugal was obliged to carry out labor market reforms -- mainly cutting the cost of hiring and firing -- to boost competitiveness.

The Socialist government’s far-left allies -- the Communists and Left Bloc -- have supported a reversal of these reforms. But the minister ruled that out.

“If you ask me if it is the government’s intention to make radical reforms to labor legislation, I would say no. That is not in the government’s program, nor is it our ambition,” Vieira da Silva said.

Salaries in some sectors have begun to creep higher from some of the lowest levels in Europe -- one reason why Portugal is attracting technology companies and other investment.

Vieira da Silva said salary increases are “inevitable” but this time they will not undermine Portugal’s competitiveness.

Portugal’s minimum salary has risen by 9 percent to 580 euros a month in the last couple of years but the country has continued to gain market share for its exports. The government hopes to raise the minimum salary to 600 euros, which would remain one of the lowest in Europe.

“I don’t think this (salary increases) is a problem, it is a positive factor,” said Vieira da Silva. “In fact this would allow Portugal to maintain skilled workers who today easily find job alternatives with significant differences (abroad).”

A key aim for the government is to retain skilled workers at home, reversing the migration that took place during the crisis.

The minister said job creation goes well beyond the tourist industry, which welcomed a record number of foreign visitors to Portugal last year.

“If we look at the north and the northern coast there is an industrial dynamic. There is also innovation, even in traditional sectors like shoes and textiles, the potential for innovation is large,” he said.

Portugal’s economy grew 2.7 percent last year, its highest rate since 2000. Monthly unemployment in December reached 8 percent, the lowest monthly level since July 2004.

The government has forecast economic growth of 2.2 percent this year, but the minister said he “would not be surprised” if growth beats that level, further helping job creation.

Writing By Axel Bugge; Editing by Andrei Khalip and Catherine Evans