Economists admit that there is a risk that savings with IRS Jovem end up contributing to Reduce salaries in new job offers for people up to 35 years old.but points out different reasons.
The risk exists because of the possibility that companies will take advantage of the opportunity to make lower wage proposalsthus accommodating a part of the increase in net income that IRS Jovem will provide or because the measure will lead to an increase in the supply of people available to work and, therefore, will have a negative effect on wages.
In response to Lusa about whether any mechanism is planned that could prevent a possible exploitation of the net effect of the IRS Jovem by offering lower salaries to those entering the labor market, an official source from the Ministry of Labor refers to the contemplated salary increase. in it agreement signed with the social partners and the application of several measures that contribute to the objective of “attracting and retaining young talents in Portugal with better living and working conditions.”
“The Government agreed with the social partners on the measure to increase the average salary, by a percentage of 4.7% by 2025, whose charges will be deducted from the IRC,” underlines the ministry, adding that the executive is “optimistic about the presentation of salaries that value the qualifications acquired by young people, who are simultaneously the subject of an active measure of staggered employment depending on their qualifications in internships, and of support for permanent hiring in the case of young people with higher qualifications.
“It is clear that this risk of capture [de parte do benefício] exists“Economist Susana Peralta told Lusa, pointing out that this scenario arises every time taxation is modified. However, he points out, these types of situations It will always be impossible to monitorbecause “no one knows” what the salary offered would be “with and without benefits.”
Stressing that it is not even desirable that there be some type of control at this level, the economist and professor at the Nova School of Business and Economics emphasizes that there is nothing, from the outset, that makes one believe that companies will retain all the benefits, of the same So there is nothing to suggest that young people will reap all the benefits.
The same idea is shared by João Loureiro, economist and professor at the Faculty of Economics of the University of Porto, who also claims to have doubts about the effectiveness of IRS Jovem to retain and attract people, since it is a extent “lose”.
“This risk is a potential risk” and “I am not saying that it will materialize, but it exists,” says the economist, recalling that in the past there have been cases in which the tax benefit did not have the desired effect nor was it enjoyed by the recipient, exemplifying with the latest VAT reduction in restaurants a few years ago, in which “there was no price drop, what happened was an increase in the restaurants’ profit margin.”
Susana Peralta also points out the recent zero VATpointing out that, although the measure focuses on easily observable prices, there are studies that indicate that the The companies captured around 30% of the profit.
João Cerejeira, economist and professor at the Faculty of Economics and Management of the University of Minho, for his part, does not foresee that there is a risk that companies will reduce the remuneration of job offers, since they know from the beginning that with IRS Jovem The new worker will see an increase in net wages, but believes that the increase in the supply of people available to work could, in some cases, lower wages.
“The IRS Jovem makes it more attractive to work or less attractive to emigrate and this can put additional pressure on the job offer,” says João Cerejeira, pointing out that only by “this effect” does he understand that [a medida] “It could lower wages.”
IRS Jovem, one of the Government’s flagships, will cost 525 million euros.
This measure, which was modified after negotiations with the PS, will cover, according to the Minister of Finance, 350 to 400 thousand young peopleproviding for a total tax exemption in the first year of work and a tax discount for the following nine years.
Source: Observadora
