This article by Michele d'Iseppi was written for Portogallo.cc during the economic crisis. We publish it in its original form, lightly corrected, followed by an update on the current situation.
How do people live in Portugal?
How do you live, financially speaking, in Portugal? That is the question I have to answer every time I go back to Italy. In recent years, as Italy's economic crisis worsened, reading up on the situation in other European countries to make an impossible comparison with Italy has almost become fashionable. It is as if people needed to know that someone is worse off than they are. Comparing with Portugal, Greece and Spain comes naturally, since these countries are also in crisis and, being Mediterranean, are closer to Italians in culture and habits than Germans, French or British. The answer, though, is simple: Portugal is in a deep crisis and it is hard to believe that, in the short or long term, it could become a great economic power. But life here is good: the simplicity of life and personal relationships helps preserve that inner serenity that should be part of all of us, and the beautiful nature inspires you every day to live intensely. But let us look at the details.
A deep divide
Without entering into long political and economic discussions, Portugal is small, with a limited population and few natural resources compared with the major European powers or emerging economies. Travelling around, you often get the impression that it is "behind" the big capitalist countries by at least a decade, both in business mentality and in lifestyle. These problems, perhaps summarised too generically here, inevitably create a big gap between rich and poor: a minority of people are very wealthy, while the great majority struggle to reach the end of the month. The middle class is being squeezed, almost crushed by large national and multinational companies. In many sectors a few big firms dominate, controlling various activities across the board and blocking small entrepreneurs and young companies from competing. On one side are business owners, managers, lawyers and bankers earning exorbitant sums; on the other, everyone else. A job with a "normal", well-paid contract has become a luxury reserved for skilled technicians, engineers and IT specialists, what is left of the middle class.
You can see the differences
Social differences are visible every day: just visit the capital. Lisbon has always been a city strongly divided into neighbourhoods, almost independent of one another. That makes the contrast all the more striking between the modern, luxurious residential districts, such as the Expo area, Parque das Nações, and working-class neighbourhoods or, worse, the bairros sociais, sometimes like real ghettos.
Cars, clothes, restaurants, private schools and beaches give further clues. In other countries a lower-middle-class person can at least choose, with effort and sacrifice, between a nice car, summer holidays or good clothes; in Portugal this is almost impossible: some can afford everything and others nothing, even with great sacrifices. Mentality does not help either, since showing off your social position is a status symbol needed to stand out from ordinary people.
"Qualidade de vida"
From this rather gloomy picture we return to the original question: how do people live in Portugal, and why live here if this is the situation? Despite the difficulties, people seem to accept it with a calm, serene resignation. A simplistic answer might put it down to habit, but that is not quite it. Another factor comes into play, one you hear about all the time: qualidade de vida, quality of life. Not the kind jokingly associated with the Milanese business mindset of "work, earn, spend, demand"; quite the opposite. The mild climate helps you relax after a hard day's work, the landscapes and nature remind you how exaggerated some problems can be, and the simplicity of life and relationships helps you keep your serenity.
Put simply: if you ask a Portuguese person whether they would rather work on Saturday afternoon for double pay or go to the beach with family or friends, what do you think the answer will be? That is Portuguese quality of life: having free time, the calm that helps you face difficulties, the patience to endure hard times and above all that genuine simplicity that lets you smile in the face of problems. "Sem stress, pá", no stress, mate: you hear it every day.
This quick and perhaps simplistic summary does not aim to judge the economic system or the Portuguese mentality, nor to offer easy moral judgements: it only seeks to offer some food for thought. Experts could analyse these problems and perhaps find solutions, but who can judge a way of life, or rank quality of life? The Portuguese context has many facets, and every element is two sides of the same coin: quality of life is linked to a weak capitalist mindset and a difficult economy, each the cause and consequence of the other. If a big salary cannot be reconciled with a place we love living in, what should we choose? After a thousand discussions, we may realise that the only people who can answer are ourselves.
Michele d'Iseppi for Portogallo.cc
Update: and today?
Portugal has changed a great deal since this article was written. The crisis is over, unemployment has fallen to around 6% and the minimum wage has more than doubled since 2007, reaching 920 euros in 2026. Income inequality has narrowed somewhat but remains above the EU average, and about one Portuguese in six is at risk of poverty after social transfers.
The most visible divide today concerns housing: the boom in tourism, short-term rentals and foreign arrivals with higher incomes has pushed rents and prices to levels often out of reach for people on Portuguese salaries, especially in Lisbon and Porto, driving many families and young people to the suburbs. Quality of life, however, remains one of the main reasons why so many people, Portuguese and foreign, choose to live here. For up-to-date figures see the page on the cost of living in Portugal.