This policy paper examines one of the key structural challenges to fiscal consolidation in Portugal: the rigidity of public expenditure, with a particular focus on the public sector wage bill. Against the backdrop of fiscal normalization under high debt and constrained policy space, the analysis explores how wage-bill dynamics shape the pace, composition, and sustainability of fiscal adjustment. Drawing on recent empirical evidence and the Portuguese experience, the paper highlights the limitations of short-term, crisis-driven measures and argues for durable structural reforms in public employment and pay-setting frameworks to support credible and growth-friendly consolidation.
About the Institute of Public Policy
The Institute of Public Policy (IPP) is an independent Portuguese academic think tank. Its mission is to contribute to the continuous improvement of public debate and the analysis of institutions and public policies, with a focus on Portugal and Europe, through the production and dissemination of relevant, evidence-based research.