Portugal is rapidly losing its young people. Will this new scheme convince them to stay?

Lisbon: In the autumn of 2018, I moved to Lisbon for a month-long course at the Universidade de Lisboa. I struggled to find any short-term sublets in the city, so the university stepped in to offer me a shared room in an all-male dormitory in an upmarket neighbourhood. I was surrounded by young, highly educated Portuguese students who all agreed upon one thing: after graduating, they would be leaving the country.

Now the coalition government, the centre-right Aliança Democrática, is using this year’s budget to try to stem this brain drain and keep young graduates in Portugal. The proposed policy is a progressive, multi-year tax holiday for those aged 18 to 35 on annual salaries of up to €28,000 (£23,360). But is this the right approach?

Emigration is a huge issue that must be addressed by the country: roughly 30% of young people born in Portugal now live and work abroad, representing the highest emigration rate in Europe.

My own family history is captured in this statistic: my mum and my four grandparents emigrated to Canada from Portugal in an era when there were severely limited educational opportunities for them (a third of the population was illiterate in 1960, the year of my mother’s birth). The current wave of migration is something else entirely, however: a generation armed with degrees in medicine, nursing and engineering without any prospect of obtaining well paid work in their home country.

The impact of this loss is felt acutely in Portuguese society today. One stark example is the regular closure of obstetrics clinics, due to low staffing numbers, which recently caused a woman in labour to travel 200km (125 miles) to find somewhere to give birth.

In my Lisbon dorm, one of the first people I met was Paulo, a cheeky Brazilian-born student who had immigrated to Portugal as a child. He would spend hours in his room studying German alongside his maths and physics course books, trying to improve his grasp of what he called “a language of opportunity”.

After graduating with a master’s degree in civil engineering, he was offered an internship in Portugal. The annual salary was a barely believable €15,000 (£12,500). He knew he had no choice but to cast his net wider. Eventually, Paulo received a job offer from a rail construction company based in Edmonton, Canada. I asked him what he thought about the proposed change to the tax regime for young people. “I think it’s a very interesting policy, but it really doesn’t change our lives.”

Ever the engineer, he broke down the maths for me and said that the tax holiday still wouldn’t leave enough money for him to stay. Wages needed to be higher in the first instance, and to earn significantly more than what he was initially offered in Portugal represented a near-impossibility: “You would have to be a unicorn.” The data bolsters his argument: only 2% of workers in Portugal aged 18 to 35 earn more than €41,000 annually (£34,200).

Melissa Sobral is part of this generation of emigrants. She moved to Switzerland in 2014, now the second-most popular destination for Portuguese emigrants with a population of about 260,000. She works as an accountant and lives with her husband and newborn son in the city of Martigny.

“This won’t be why people return or not,” she responded when I asked if the proposed policy enticed her. “The situation for us in Portugal is not good. They pay poorly, there are no jobs, and we don’t get the recognition we deserve.” She says the only reason she is considering moving back is to be closer to family, especially since the birth of her son.

I was also struck by a very strange paradox currently taking place in Portugal: my former classmates were desperate to find jobs in Canada, the UK and the US, while simultaneously young people from these countries are flocking to Portugal as digital nomads. “It’s a little frustrating,” says Paulo. “They are the unicorns we can only dream of being, but never will be in Portugal.”

Depriving the public purse of much needed revenue and critical capacity won’t solve Portugal’s problems; it will only worsen them. The country’s ability to improve its healthcare system and keep medical professionals depends greatly on public investment through tax collection. The International Monetary Fund has also highlighted a major concern: there is no proof this radical and costly measure – currently estimated at €525m (£438m) – will even be successful.

This money would be better spent on increasing the wages of civil servants, teachers and transport workers, with unions representing these workers going on strike in the past month alone. If these well deserved pay rises are too costly, perhaps the wealthy retirees and digital nomads on generous tax regimes wouldn’t mind chipping in a bit more for the price of paradise.