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Skills shortage hampers Portugal’s economic recovery

Portugal's skills shortage is putting the brakes on its growth potential
AFP

Lisbon (AFP) – When French technology consultancy Altran needed to hire staff for a new centre in Porto, it held a recruitment fair on board a boat docked in the northern Portuguese city’s colourful riverside area.

Dozens of recent graduates mingled with Altran staff as they enjoyed sweeping views of Porto’s iconic double-deck metal arch bridge.

At the end of the day Altran managed to fill just over 20 positions and the company plans to repeat the experience again this year.

The event held in July highlights the effort companies need to make to woo skilled workers in Portugal, which is facing a shortage of qualified talent that is hampering its economic recovery.

“Given the scarcity of technology professionals we ended up having to draw their attention in a more appealing way,” Altran Portugal’s human resources manager, Ricardo Machado, told AFP.

Portugal, which has bounced back from a 2011-14 debt crisis that brought the country to the brink of bankruptcy, is grappling with a skills shortage that is capping how fast its economy can grow.

Fuelled by a tourist boom and a surge in exports, the Portuguese economy expanded 2.7 percent last year, the fastest pace since 2000.

This helped bring the unemployment rate down to 7.9 percent in January, down from a record 17.5 percent in 2013 at the height of the debt crisis.

But companies from the tourism to the textile sector complain they struggle to find candidates with the skills they need.

– Drop-out rate –

Over half of Portuguese CEOs, 55 percent, surveyed by recruitment consulting firm Stanton Chase, ranked difficulties finding qualified workers as their biggest headache.

“We have today in every sector a huge shortage of qualified workers,” said the head of the Portuguese Business Confederation, the country’s main business lobby, Antonio Saraiva.

Portugal simply does not produce enough of the skilled workers it needs. 

While education reforms have improved its track record in recent years, the country still has one of the biggest high school drop-out rates in Europe, a legacy of the country’s 1926-74 right-wing dictatorship which invested little in schooling.

Only 24 percent of Portugal’s adult population has attained a post-secondary education, compared to 46 percent in Britain and 44 percent in Finland, according to 2016 figures from the OECD, which groups 35 developed economies.

Portugal’s key auto sector will need to hire 10,000 people until 2022, 30 percent of them with technical skills, said Jose Couto, the president of Mobinov, a lobby group that represents the sector’s 975 firms.

“We don’t have in the pipeline in our universities enough people with these skills,” he said at a business conference in Cascais, a seaside resort near Lisbon, last month, echoing a complaint made by many other business leaders at the event.

– ‘Revolution’ –

The severe recession that accompanied Portugal’s debt crisis worsened the problem as many skilled workers and recent graduates left the country in search of work.

While exact figures are hard to come by, one study by the University of Coimbra, Portugal’s oldest university, estimates the country lost one-fifth of its qualified workforce during the crisis.

The OECD has urged Portugal to boost vocational training and offer more adult education.

“Raising the skills of the labour force will also lift potential growth, by alleviating the skill shortages faced by Portuguese companies,” it said in a report on the Portuguese economy last year.

Portuguese universities are starting to churn out more graduates but this will take time to be felt by the economy, Economy Minister Manuel Caldeira Cabral said at the conference in Cascais.

Germany has three times more adults aged 55-65 with a university degree than Portugal, but among those aged 25-35 Portugal “has slightly more people with a degree than Germany,” he added.

“This is what has changed, it is a sort of a revolution. This should bring a big improvement in productivity in the future,” he said.

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