Low-wage employment in Portugal: Social dimension and recent evolution

Low-wage employment is one of the main origins of poverty and social exclusion in Portugal, along with low pensions granted to elder citizens. In this paper our aim is to provide a first approach of the social dimension of low-wage employment in Portugal, analysing its incidence and profile among regions, sectors, professions, skill levels and gender. This decomposition analysis will stress the most important factors underlying the phenomenon. At a first stage we shall study wage structure and wage inequality evolution in the last decade. The incidence and evolution of low wages and minimum legal wages will be compared whith average wages, in order to evaluate the situation of the low payed vis a vis the other better paid workers. We proceed analysing low-wage decomposition by the criteria mentioned above, taken separately and in interaction, to identify the main determinants and the cumulative effects of these factors in the explanation and evolution of low wages. The main data set available is "Quadros de Pessoal" (Data base of worker characteristics provided by firms) from the MESS ( Employment and Social Security Ministry). In this study we will use directly this data base. Other statistical sources will also be used for complementary aspects. We must say that the data on these area of research are still insufficiently developed in Portugal, and that, in consequence, socio-economic knowledge on low-wage employment as a mechanism of social exclusion is still incipient. Low-wage are but one of the dimensions of social exclusion, closely related with poverty as insufficient economic resources, and is often associated with other dimensions of social exclusion in the labour market, such as unemployment vulnerability and job instability. The crucial role in this triad - low-pay, unemployment, job instability - is played by skill levels, which are particularly low in our country, as we?ll try to demonstrate. Social exclusion must however be analysed at the family unit. As long as income is concerned, wages are far the most important source, particularly for low income active families, and the ?low skills - low pay - low income? chain seems to be the major determinant of social exclusion. The evidence about this mechanism can be found in recent data on Family Budgets.