Key Challenges

To begin, we must note three challenges common to many other European democracies that are not a problem in Portugal.
Immigration not
a divisive issue
First, regarding immigration and refugees, immigration is not a salient or even very divisive political issue in Portugal. In a survey conducted in the summer of 2021, only 2% of respondents in Portugal considered immigration to be among the two most important issues faced by the country. This was the lowest proportion in the European Union (alongside Ireland and Slovakia), and well below the EU-27 average of 10%. This is reflected in the country’s very positive score in terms of integrating immigrants.
Islamist radicalization
not a local concern
Second, Portugal does not have the same problem with Islamic terrorist radicalization (jihadists) that has been experienced by several other EU member states. Its (small) Islamic community is generally well integrated and participates in the country’s dynamic interfaith dialogue. Indeed, President Marcelo’s inauguration in both March 2016 included an interfaith ceremony held at the Central Mosque of Lisbon.
No significant anti-vaccination movement
Third, in the context of the pandemic, it should be noted that the country does not have a significant anti-vaccine movement. Portugal is the country with the highest rate of vaccination in the OCDE and is third worldwide (after the United Arab Emirates and Brunei). At 89% fully vaccinated as of 14 January 2022, that is eight percentage points more than the second-highest EU country, neighboring Spain; 14 percentage points more than France; and 16 percentage points more than Germany. Citizens tend to accept scientific and medical advice, and pandemic restrictions did not face significant pushback. This not only facilitated policy implementation during the pandemic, it has also provided a very solid base for quicker economic recovery.
The country nonetheless faces five challenges:
EU funds offer
unique opportunity
The first challenge pertains to the implementation of the country’s Recovery and Resilience Plan (RRP). Portugal’s share of the funding is an estimated €16.6 billion. This influx of funds constitutes a unique opportunity to increase the competitiveness of the Portuguese economy and address a number of long-standing structural challenges to creating a strong and environmentally sound economy. While the measures in Portugal’s RRP are positive, its ultimate success will depend on the capacity to implement and deliver on the plan.
Slow growth in governance capacity
The second and related challenge is the need to improve governance capacity. During the current and previous review periods, Portugal scored poorly in a number of areas related to governance capacity, including the use of evidence-based instruments in policymaking, the degree of strategic planning and input into policymaking, societal consultation, policy implementation and the degree to which institutional governance arrangements are subjected to considered reform. While it should be noted that the country has improved in these domains over time, enduring weaknesses in these areas impinge on the quality of policymaking, both in terms of conception and implementation. This governance capacity pertains not only to decision-making arrangements, but also to broader oversight mechanisms.
Unemployment rates among youth are high
The third challenge is that of youth unemployment. Youth unemployment rates have remained considerably higher than overall unemployment rates, and the pandemic showed the youth segment of the labor market to be particularly vulnerable. Labor market policies will need to tackle this issue in order to avoid wasting the significant educational investment that has been made over the past decade.
Balancing public services with consolidation
The fourth challenge is that of improving the quality of public services while continuing to consolidate the budget. Part of the issue here is certainly one of recruitment, as evidenced by the aging teacher population noted in this report. However, this will also require improved accountability within the public sector.
Aging population a growing challenge
The fifth challenge is that of Portugal’s aging population. The most recent data for 2019 shows that Portugal has the third-highest median age in the EU, at 45.5 years, relative to 43.9 years in the EU-27. Moreover, its old-age dependency ratio was the fourth-highest in the EU in 2020, at 34.5%. Barring a significant influx of immigrants, Portugal’s population is estimated to face a significant decrease over the next two decades. As this report notes, birth rates remain low, and policies to revert this trend remain insufficient. The window of opportunity to address this issue in a timely manner appears to be rapidly narrowing.
Eurostat, Old-age-dependency ratio, available online at: https://ec.europa.eu/eurostat/databrowser/view/tps00198/default/table?lang=en

INE, Population growth lower than in 2019 as a result of the decrease of the natural balance and the net migration – 2020, available online at: https://www.ine.pt/xportal/xmain?xpid=INE&xpgid=ine_destaques&DESTAQUESdest_boui=473118592&DESTAQUESmodo=2

New York Times, Tracking Coronavirus Vaccinations Around the World, 14 Jan. 2021, available online at: https://www.nytimes.com/interactive/2021/world/covid-vaccinations-tracker.html

Standard Eurobarometer 95, Spring 2021, Public opinion in the European Union, available online at: https://europa.eu/eurobarometer/surveys/detail/2532

Party Polarization

Stable party system
Comparatively speaking, Portugal’s party system is very stable. Since the October 1999 legislative elections, the party system has been almost entirely monopolized by five political forces: the Social Democratic Party (PSD), the Socialist Party (PS), Democratic and Social Center/Popular Party (CDS), the Portuguese Communist Party (PCP) and its ally the Ecologist Party “The Greens” (PEV), and The Left Bloc (BE). (And, before that time, by four: the PSD, PS, CDS and PCP.) Overall, Portugal has had seven legislative periods since the beginning of the new millennium. Out of a total of 1,610 members of parliament elected to these seven legislatures, 1,602 have been members of these five political parties.
Increasing interparty dissention
While this stability generally contributes to a low level of party polarization, as evidenced by the lack of ideological polarization as assessed in the 2018 ParlGov database, the period under review saw an increase in interparty dissention, with significant impact on policymaking and government stability.
Era of cooperation agreements
In previous edition, we noted the cooperation between the Socialist Party (Partido Socialista, PS), which has led minority governments since 2015, and the parties to its left including the Portuguese Communist Party (PCP) and the Left Bloc (Bloco de Esquerda, BE). This cooperation meant that the state budgets, the central policy plank of Portuguese governments, were approved with support provided by the PCP and BE throughout the 2015-2019 period.
alliance collapses
However, this cooperation frayed under the legislature elected in October 2019, and ultimately collapsed in the period here under analysis. The state budget for 2020, which came to a vote in early 2020, was approved with the abstention of the PCP and BE rather than their support. The BE then voted against the 2021 state budget in late November 2020, with the budget’s approval enabled by the PCP’s abstention on the proposal. In October 2021, however, both the PCP and BE voted against the government’s 2022 budget proposal, as did the parties to the Socialists’ right. The rejection of the state budget led the president to dissolve parliament, with the ensuing legislative elections held on 30 January 2022.
Greater polarization
The parliament that arises from those elections is likely to be more ideologically polarized than its predecessors, with polls indicating that the party system fragmentation appearing in 2019 is likely to be reinforced. Of the eight members of parliament that do not belong to the five main parties elected since 1999, seven were elected in the October 2019 election. Current polls indicate that one of these new parties, the populist radical right (Chega, which translates as Enough) – which won one seat in 2019 – may become one of the five largest parties in parliament in the upcoming elections, which would increase ideological polarization in parliament. (Score: 7)
Back to Top