The Portuguese labor market legislation: a technological shock

The recovery of the Portuguese labor market is tenuous. Employment is 5.2 percent below the pre-crisis level; in Spain, it is only 1.3 percent below and, in Ireland, it already exceeds pre-crisis by 3.6 percent. The population loss, at levels similar to the 1960s, reduced the productive potential of the Portuguese economy. The lower oil prices and the devaluation of the euro alleviated the problem, but they are not structural growth factors. In this context, it is necessary to design a labor market regulation closer to the technological frontier. Standardize employment contracts and proper incentives in the unemployment insurance are two steps needed to promote steady growth. Growth based on the investment in the quality of labor matches. (JEL: J08, J41, J65)