Is Portugal's New Tax Holiday Enough to Keep Young Graduates from Leaving? Discover the Truth Behind the Brain Drain!

In autumn 2018, I embarked on a month-long course at the Universidade de Lisboa, where I encountered many young, educated Portuguese students. They all shared a common sentiment: after graduation, they planned to leave the country.

Currently, the coalition government, led by the centre-right Aliança Democrática, is proposing a progressive, multi-year tax holiday for individuals aged 18 to 35 earning up to €28,000 (£23,360) annually, in an effort to combat this brain drain. But is this the right solution?

Emigration is a pressing issue for Portugal, with approximately 30% of young Portuguese living abroad, the highest rate in Europe. This trend is particularly concerning as many graduates in fields like medicine, nursing, and engineering struggle to find well-paying jobs at home.

The loss of young talent is evident in various sectors, including healthcare, where clinics often close due to low staffing numbers. This has led to situations where women in labor must travel significant distances to find care.

Paulo, a Brazilian-born student I met in Lisbon, graduated with a master’s in civil engineering but faced a meager internship offer of €15,000 (£12,500) annually. He expressed skepticism about the tax holiday, stating it won’t significantly improve his situation. Only 2% of workers aged 18 to 35 in Portugal earn over €41,000 (£34,200) annually.

Melissa Sobral, who emigrated to Switzerland in 2014, echoed similar sentiments. She noted that poor pay and lack of recognition in Portugal are major deterrents for returning, despite considering proximity to family after her child's birth.

Interestingly, while young Portuguese seek opportunities abroad, many from countries like the UK and US are flocking to Portugal as digital nomads. This creates a frustrating paradox for locals like Paulo, who feel they are missing out on opportunities.

The proposed tax break, estimated to cost €525 million (£438 million), raises concerns. The International Monetary Fund questions its effectiveness, suggesting that funds would be better allocated to increase wages for civil servants, teachers, and transport workers, who have been striking for better pay.

In conclusion, while the government’s intentions may be good, without substantial wage increases and improvements in the job market, these efforts may not be enough to retain Portugal's youth.