One of the major bottlenecks of the Portuguese labor market is the level of educational attainment of the population. Despite considerable evolution over the last decades, the country is still behind the European Union average in most education indicators. In 2009, 69.2% of the population aged between 15 and 64 had less than upper secondary education, a value that is more than double the European average. Due to the measures and reforms that have been introduced, in 2019, this proportion had dropped to 47.6%. Between 2009 and 2019, self-employed persons had education levels below the average of the working population. In 2009, 79.0% had less than upper secondary education, and in 2019, this number was still at 50.6%. The human capital of the self-employed persons has significant consequences on their entrepreneurial activities. The low educational attainment level of the population has demanded extensive reforms. This chapter discusses the main policies implemented to improve educational attainment and obtain a comprehensive overview of labor market and education indicators.
TopIntroduction
Human capital has long been considered one of the most important determinants of economic growth and cross-country income differences, and in 2015 the Portuguese Prime minister recognized that the skill deficit is the most import deficit of the country. As stressed by the OECD (2015, p. 3), “skills and human capital are the bedrock upon which Portugal is building a new road to growth”. In an in-depth study of the Portuguese economic growth, Veiga, Alexandre, Silva, and Arezes (2019, p. 28) illustrate the gap between Portugal and other countries, “for at least two hundred years, Portugal has had a remarkable skills gap. In 2000, with less than eight years of average schooling, the Portuguese resident had a schooling similar to that of the resident in Germany of 1930 or in Romania of 1970”. Despite significant evolution over the last decades (Gouveia & Fernandes, 2017; Gouveia, Santos, & Gonçalves, 2017), the country is still behind the European Union average in most education indicators (OECD, 2015).
In 2009, 69.2% of the population aged between 15 and 64 had less than upper secondary education, which compares with 31.6% for the European Union (EU28). Due to the measures and reforms that have been introduced, in 2019, 47.6% of the Portuguese population aged 15 to 64 had less than upper secondary education and 23.8% had tertiary education, which compares to 24.9% and 29.5%, respectively, for the EU28. For the entire period, self-employed persons had education levels below the average of the working population. In 2009, 79.0% had less than upper secondary education. In 2019, despite some improvement, this number was still at 50.6%. The size and composition of the human capital of the self-employed persons have consequences in the size-class and volume of business of their firms. For that reason, in 2018, 96.2% of the Portuguese firms employed fewer than 10 workers (Statistics Portugal, 2020). At the firm-level, this issue has two types of consequences: (i) entrepreneurs with lower levels of educational attainment engage, on average, in economic activities characterized by less complexity (and less value added); (ii) the lack of qualifications of the workforce introduces constraints in the ability of firms to perform.
Obviously, it is important to have programs to promote entrepreneurship, but in a country with these characteristics qualifications must continue to be a top priority. In recent decades most national and international reports addressing the competitiveness of the Portuguese economy have highlighted the importance of increasing qualifications. For example, in the Memorandum of Understanding that Portugal signed in 2011 with the European Central Bank, the European Commission, and the International Monetary Fund it is stated that “the Government will continue action to tackle low education attainment and early school leaving and to improve the quality of secondary education and vocational education and training, with a view to increase efficiency in the education sector, raise the quality of human capital and facilitate labour market matching”.
The XXI Constitutional Government of Portugal (established in November 2015 as a Socialist Party minority government supported by an agreement celebrated with the Left Bloc, the Portuguese Communist Party, and the Ecologist Party “The Greens”) considered that the issues related to the system of education and vocational training were critical. Two main objectives were set: tackling school dropout and investing in lifelong learning opportunities. The actions carried out since the end of 2015 (by that Government and the subsequent one, established in 2019, also of the Socialist Party) were comprehensive. This chapter discusses the main policies introduced in the most recent period to improve educational attainment and produce a comprehensive overview of labor market and education indicators concerning the skills of employers and employees. A comparison with selected European countries is also made.
The chapter is organized as follows. Section 2 explores the link between entrepreneurship and skills. Section 3 presents recent actions to promote educational attainment in Portugal. Section 4 discusses the dynamics of education and labor market outcomes. Section 5 concludes.