During the presentation of the Algarve Social Development Plan, at the end of last year, it was indicated that poverty rates in the Algarve are related to excessive dependence on the main economic sector in the region: Tourism.
In fact, there is a huge concentration of the job market in hotels and similar sectors and this fact explains, in part, the reason why poverty rates in the Algarve are above the national average, as this sector is strongly marked by seasonality, part-time work and wages below the national average.
However, the influence of tourism on the results of the Algarve economy and its positive contribution to the national Gross Domestic Product (GDP) in recent years has been well-known. However, the main driver of growth for the region's economy has remained the same for decades.
The Algarve is no longer considered a developing region, especially because, like the Lisbon region, the two are the richest regions in terms of GDP per capita.
In fact, in the case of the Algarve, it has a higher GDP than the rest of the country, despite the average salary being 1.106,30 euros, lower than that of the mainland, which, on average, is 1.294,10 euros. , according to INE data.
This situation should lead us to question whether the economic model implemented in the region is adequate to the real needs of the territory and its populations.
I believe it is unanimous that the diversification of the Algarve's regional economy is a plan that must effectively take large steps towards its consolidation in the region, in order to improve, mainly, poverty and well-being indicators.
To this end, the Algarve Regional Program – Algarve 2021 is in force for the period 2027-2030, which is a financial instrument that has 780,3 million euros of European funds and can reorient and modernize the economy Algarve, as this program aims to promote environmental sustainability, the competitiveness and diversification of the economy, the appreciation of the territory and people, with a focus on their quality of life.
For an effective diversification of the regional economy, I believe that the first axis (1A) of the Algarve 2030 Regional Program, the Innovation and Competitiveness axis, and the fourth axis (4A), Qualifications, Employment and Inclusion, are those that must be more leveraged to have the right impact in the region.
I say this because, the more innovation there is, the more new products and/or services can emerge, or new forms of production can be designed, thus creating new knowledge that can be transferred to the business environment, helping the so-called diversification of the economy.
When it comes to qualifications, employment and inclusion, these are areas that the region needs to reinforce to support the diversification of the economy, as only through greater interaction between knowledge and practice can the Algarve's business ecosystem be effectively diversified. .
Furthermore, and according to data from the Directorate-General for Education and Science Statistics, in 2021/2022, the Algarve is the region of the country with the lowest enrollment rate in higher education, with around 24,5% (well below the 41,4% national average). It will therefore need a boost to reinforce qualifications, so that it can take new steps in the much-vaunted diversification of the economy.
The challenges for the Algarve in the coming years are of enormous importance for the economic and social development of the region, as we live in a time of unparalleled availability of community financial support.
However, to overcome these challenges, it is necessary to take risks, because only when we risk going too far do we discover how far we can go.
Author Ricardo Proença Gonçalves has a degree in Business Management and a Postgraduate in Management of Health Units, from the Faculty of Economics of the University of Algarve. He also holds an Executive Program in Management Control and Performance Assessment from Nova SBE. He is also an effective member of the Algarve Regional Delegation of the Order of Economists and a member of the think tank «Thinking Algarve».
Note: article published under the protocol between the Sul Informação and the Algarve Delegation of the Economist Order
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