As real estate investors continue to steer Lisbon towards a future as the digital nomad and expat capital of Europe, the cost-of-living crisis faced by the city’s working-class residents is only worsening.
Inflation aside, Lisbon’s young working class is plagued by housing costs that are on a seemingly unstoppable rise due in part to huge rates of investment and migration of affluent demographics from Europe, North America, and elsewhere. While entrepreneurs and retirees come to Portugal for cost-of-living rates that look comparatively attractive, those who rely on Portuguese wages are finding it harder and harder to make ends meet.
Evidence of the real estate industry’s opportunism is easy to find. In real estate agency Tagus Property’s 2022/23 investment breakdown, they clearly lay out why Portugal’s housing crisis can be advantageous for foreign investors and property owners, and how it has already impacted the market.
“Lisbon is the city that most attracts these foreign investors, who invested a record 920 million euros in the capital’s properties last year . They accounted for almost 40% of the residential property market,” Tagus Property claims. After asking themselves if, “at a time of crisis in Portugal, is an investment really appropriate?” the folks at Tagus say,
“Yes, it is precisely in times of crisis that the best opportunities can be found. Indeed, prices are historically low as a result of the ongoing crisis. Taking a long-term approach, Portuguese real estate has never been more attractive.”
Further down, they explain how a struggling population is good for landlords:
“Because of the difficulties in financing their purchases, the Portuguese rely more and more on rented accommodations, which ensures a good rental level, both in terms of prices and the selection of candidates.”
The real estate agencies Tagus Property and Lisbon Estates did not respond to questions for this article concerning the impact of foreign investment on housing prices in Lisbon or if real estate investors and agencies have benefited from the country’s cost-of-living crisis.
Associação Lisbonense de Proprietários, the Lisbon landlord association, also did not provide comments to questions regarding the cause of Lisbon’s high cost of living and if short-term rental ventures like AirBnb and Alojamento Local have had an impact on the price and scarcity of housing in Lisbon.
Meanwhile, Portugal’s working-class residents living on Portuguese wages are faced with rents simply out of reach for most of them.
According to crowdsourced consumer database Numbeo, the national average monthly cost of a one-bedroom apartment has nearly doubled in the past 12 years, rising from €530 in 2010 to €1,024 in 2022. Additionally, data from real estate search website Idealista show that the average rental cost in Lisbon per square meter was €17.3 as recently as June of this year — an increase of 31.8% from June 2022.
The minimum wage has not kept up.
From 2012 to 2023, Numbeo’s data show that Portugal’s national minimum wage has only increased by €285, rising from €475 in 2010 to €760 in 2023, compared, for example, to Spain’s 2023 monthly minimum wage of €1,260.
Moreover, due to Portugal’s 14-month annual payment cycle, the gross minimum wage for workers who choose to spread their extra two months of pay out across the year is €886.67.
According to the European Union’s Eurostat website, Portugal is one of 14 EU member countries with a minimum wage below €1,000.
The disparity between wages and costs make financially and materially comfortable lives hard to attain. Living alone is an impossibility for many young adults in the working class, and even rents for single rooms are quickly rising to unreachable heights. Scanning rental groups on Facebook and apps like Idealista, people searching for a place to live are all too often hard-pressed to find livable, private rooms for less than €450 – more than half of the gross minimum wage. Cheaper rooms are often shared with other people, windowless, or the size of closets.
This past February’s apartment fire in Mouraria that took the lives of four immigrant workers and injured 14 others, including four children, shined a light on the dangerous and deplorable conditions that characterize the worst extreme of the cost-of-living crisis. In the aftermath of the blaze, the ground floor was revealed to contain makeshift beds for 22 people, clustered together in a claustrophobic, hazardous apartment.
Listings for dorm-room-style living accommodations can still be found online.
When rental prices for safe, comfortable rooms threaten to eclipse the national minimum wage and T1 or T0 apartments can’t even be considered, young adults from less affluent backgrounds are constantly forced to sacrifice fulfillment for survival. Droves of young people needing employment are often driven to the hospitality and customer service industries for work. Most of the work to be found here is often not only emotionally and physically taxing, but also makes it hard for young people to find the time and energy needed to pursue a fulfilling career, even with a degree.
As 21-year-old student Clara, whose last name is not being used in this article, puts it, “to find a job in our area, we need time. And that’s one thing we don’t have.”
The story is the same for many young people from more modest backgrounds. Many people who dream of a more fulfilling future are often forced to dedicate so much time and energy to getting bills paid that they find it hard to effectively work toward enrichment. “I’m not sacrificing for something that I love or for comfort,” says Clara, a Brazilian who, in addition to her studies, works full-time at a popular hostel destination in the center of Lisbon. “I’m sacrificing simply to live.”
This reality is easy to find in the streets, universities, Teleperformance offices, bars, and restaurants of Lisbon. Speaking to any number of young people in the city will likely elicit similar responses.
The 40 to 45 hour weeks during which Clara tends bar at the hostel net around €800 to €900 a month. Most if not all of this salary, only nominally above the national minimum, goes towards funding her anthropology degree and getting her basic needs met. Her schooling, which costs €70 per month, is also a full-time endeavor. Clara’s lectures usually run from 10:00 am to 4:00 pm Monday through Friday, but as her job requires her to show up at 15h, she is not able to attend her full day of classes. After school, Clara tends a consistently bustling bar until clocking out around 11:30 pm. In the midst of everything, she still must find time to study. “This is my life. I’m in a rush all the time,” Clara says.
Clara pays €333 a month before utilities for her bedroom in an apartment shared with three other students. The fact that Clara struggles month to month, despite paying less in rent than the national average and receiving a salary above minimum wage, highlights the disparity between wages and the real cost of living in Lisbon. Considering transportation costs, health insurance, asthma medication, school fees, utilities, and food, Clara’s monthly cost of living comes out to just about €800. With a cost of living so precariously close to her total monthly salary, Clara, like so many other young workers in Lisbon, has no financial room for savings, unforeseen costs, or emergencies. There can be no true comfort or security living so close to the bottom of one’s wallet; Clara has already been evicted once for not being able to keep up with rising rental costs. She echoes the sentiments of all underpaid young workers in Lisbon: they do not feel financially secure. “No. Not at all.”
Even with more space put between rent and salary, it is difficult to find room to grow in the midst of the month-to-month struggle between living and surviving. Ana, a 27-year-old Portuguese woman who requested her real name and employer not be used in this article, has been working as a customer service representative in a large customer service outsourcing company for two years. She considers herself lucky to pay only €250 per month for the room she rents in a four-person apartment.
“It’s not bad, considering what other people go through,” says Ana.
While her base pay is the national minimum, attendance and productivity bonuses usually help net Ana at least €900 per month, though these bonuses can’t be guaranteed. Ana is a university-educated artist and filmmaker, but her salary still does not allow her to pursue her artistic passions. Basic gear that is essential to Ana’s filmmaking, like the €500 camera she has been trying to save for, are woefully out of reach. In Ana’s words, “You have to have a job so you have money for your [passions], but then you don’t have money for your [passions] because you have to pay for, you know, living.”
The bootstraps method of self-determination, if it was ever valid at all, is no longer an option for many young people in Lisbon who wish to live and create rather than just survive. The artistic, intellectual, and professional potentials of young adults that could help build a brighter, happier, and more vibrant Lisbon are being squandered by the endless necessity to work long hours in jobs that do not lead to careers and provide no financial room for personal development.
“A job takes a lot from your personal life,” says Ana. “Even when you have [free] time, you’re still thinking about it, and it makes you sad.”
Often, jobs in the customer service and hospitality industries are not simply menial, but emotionally taxing and sometimes even degrading. Working with the express purpose of hearing and logging complaints can be truly damaging work. “Even when you’re not working, the time after work [is spent] healing,” Ana says. Work in bars and restaurants can be just as demanding, as anyone who has had to change numerous beer barrels a night will know. “We sacrifice our bodies,” says Clara. “We get so tired.”
Global Citizens Solutions, a self-described boutique investment and migration firm, estimates that the average cost for a single person to live comfortably in Portugal rests around €1,200 a month – €440 more than the minimum wage, €300 more than Clara’s largest paychecks, and €200 more than Ana’s largest paychecks. Workers and students in similar situations deal with this disparity by sacrificing a vast amount of comforts.
If Portuguese wages properly took the real cost of living into account, things would look different for young adults like Clara and Ana. Housing would be the first change for many young people in shared apartments. For Clara, “The perfect thing would be if I lived by myself. I study, I work . . . I would like to live in my own apartment.”
Ana would also like an apartment to call her own, and something left over to put towards her career in art and film. If Ana was paid what she believes would be a fair wage considering the cost of living and the work her job entails – double her current salary – she would “[save money] so I can invest in my education, make time for artistic programs, invest in my art, try to have my own house. My own house would probably be the first thing.”
Portugal’s cost of living shows no signs of leveling out, nor do wages show signs of rising by any substantial amount. As Lisbon continues to build a wall between the city and its young working residents, despair and frustration are replacing the hope and growth that should characterize a person’s 20s. With such a glaring cavity between wages, rents, and the cost of living, a fulfilling life is no longer something attainable if only young people chose to work harder. It is the victim of a bonafide crisis.