IndustriAll Europe is stepping up its monitoring of how the green and digital transitions are reshaping Europe’s industrial base. With our Just Transition Manifesto, we have set out clear conditions for a transformation that is fair for ALL workers, that “does not destroy but preserves and creates good quality jobs”, and that is “anticipated, managed and negotiated with workers for every aspect that concerns them”.

This is the one of articles in our Just Transition mini series based on country factsheets prepared by Syndex for our Fair Transformation workshop for Southern Europe. Portugal stands out as a frontrunner in renewable energy, but the findings also highlight important shortcomings in industrial transformation and worker participation that must be addressed.

Portugal’s green transition is advancing, but industry faces important challenges

The factsheet shows that more than a third of Portugal’s energy consumption came from renewable sources in 2024, placing the country well ahead of the EU average. This reflects Portugal’s long-standing commitment to decarbonisation and demonstrates that ambitious climate policies can deliver tangible results.

However, progress in other areas of the twin transition is less encouraging. Portugal’s automotive industry, employing around 40,000 workers, has yet to make significant progress towards electric vehicle production, with almost no battery electric vehicles produced in 2025. While production is expected to increase later this decade, the sector remains at an early stage of transformation.

Digitalisation is also progressing more slowly than elsewhere in Europe. Less than a quarter of manufacturing companies have reached a high or very high level of digital intensity, well below the EU average, while the uptake of artificial intelligence in manufacturing has slowed and now trails the European average. Although employment in high- and medium-tech manufacturing has increased slightly, Portugal still faces a significant technological gap that will require sustained industrial investment to overcome.

Manufacturing remains under pressure despite areas of resilience

Manufacturing continues to play an important role in Portugal’s economy, accounting for around 16% of total employment. Yet, as across much of Europe, its share of overall employment has gradually declined.

Developments across industrial sectors have been mixed. Production has continued to weaken in the chemical and automotive industries, while sectors such as rubber and plastics and non-metallic mineral products, including ceramics and cement, have proved more resilient. Employment gains in medium-tech manufacturing have only partly offset significant job losses in Portugal’s traditional apparel industry, underlining the need for industrial policies that support both innovation and quality employment.

A Just Transition requires stronger social dialogue

Portugal’s experience also demonstrates that delivering climate targets alone is not enough. While coal was phased out in 2021 and fossil fuel use continues to decline, the closures of the country’s coal-fired power plants and the Matosinhos oil refinery have been widely criticised by trade unions as examples of how not to manage a Just Transition.

According to Portuguese unions, these restructurings were carried out without sufficient consultation, transparency or support for affected workers and communities. The closure of the Matosinhos refinery has been criticised for prioritising real estate development over productive industrial activity, while the coal plant closures were marked by a lack of governance, social dialogue and timely support measures.

At the same time, Portuguese trade unions remain strongly engaged in shaping the transition. Since 2021, a national agreement on vocational education and training linked to the green and digital transitions has strengthened the role of social partners in developing the skills needed for the future economy and will remain in place until 2030.

IndustriAll Europe’s message

Portugal has shown that an ambitious shift towards renewable energy is possible. But a successful Just Transition requires much more than decarbonisation alone. Industrial investment, technological upgrading and high-quality jobs must go hand in hand with meaningful worker involvement.
Workers must not be on the menu, but have a seat at the table when planning decarbonisation and digitalisation. Portugal’s experience highlights the risks of excluding trade unions from major industrial decisions, but also demonstrates the important contribution social dialogue can make in preparing workers for the industries of the future. A truly fair transition will depend on ensuring that workers and their representatives are involved every step of the way.

More country factsheets will follow as more regional workshops are on the line.