By Sergio Goncalves
LISBON, July 20 (Reuters) - Jose Simao arrived in Portugal from Angola in 2022 to work as a bricklayer, part of a wave of immigration providing a welcome boost to the country's deeply understaffed construction sector.
Today, he doesn't know if he will be allowed to stay.
"I did everything the authorities asked of me, and I'm here legally. But the government changed the rules. I'm afraid they'll send me back," he told Reuters.
Portugal's hardening immigration stance — part of the government's
attempt to fend off an ascendant far right — is choking the labour supply for construction firms even as they work to alleviate one of Europe's worst housing crises.
The centre-right coalition government argues it wants to restrict "uncontrolled inflows" of migrants and ensure dignified conditions for those already living in Portugal.
But construction company executives and industry groups told Reuters the measures have worsened an acute shortage of workers, undermining efforts to meet demand for affordable housing and endangering a sector that makes up nearly 8% of the economy.
"The government has restricted immigration too much and too quickly given the country's needs," said Oscar Afonso, an economics professor at the University of Porto. "It was a political choice, but immigrants are essential to the economy."
SHIFTING TO THE RIGHT, PORTUGAL CURBS IMMIGRATION
Hundreds of thousands of foreign workers came to Portugal after 2017 when the previous centre-left government allowed them to enter without work visas and then apply for residency after a year in a job with proof of social security contributions.
Between 2021 and 2025, the number of foreign residents more than doubled to a record 1.6 million, or 14% of Portugal's population.
They provided relief for builders, who have seen many of their Portuguese workers leave to earn more money in wealthier EU countries. Foreigners now account for some 30% of the sector's workforce.
However, their growing numbers also offered ample campaign fodder for the anti-immigrant Chega party, whose growing popular support traditional Portuguese political forces are struggling to counter.
In 2024, Portugal, like many European nations, tightened its immigration rules following a shift to a centre-right government, with one cabinet minister at the time declaring that "the time for an irresponsible policy is over."
BUILDERS TACKLING HOUSING SHORTAGE FACE LABOUR CRUNCH
A Bank of Portugal study showed the curbs had already halved net immigration to about 6,200 a month in 2025 from a year earlier. Experts predict further declines.
For builders, the timing could hardly be worse.
Portugal faces an acute housing shortage, with new-lease rental costs almost doubling since 2017. The central bank estimates a shortfall of 300,000 homes nationwide, equivalent to the capital Lisbon's entire housing stock.
Portugal plans to build 150,000 affordable homes by 2030 under a €9 billion ($10.3 billion) EU-backed programme.
Even with a 34% surge in jobs between 2020 and 2025, however, the construction sector is lacking manpower.
Portugal's largest construction association, AICCOPN, estimates the sector still needs 80,000 additional workers just to keep current projects on track.
And Albano Ribeiro, head of the Construction Workers' Union, said the sector risks a 120,000-job shortfall as major projects ramp up, with Lisbon's new airport alone requiring 10,000 workers.
The government launched a fast-track visa scheme last year to help firms recruit overseas. But it requires them to offer contracts and provide adequate accommodation up front. So far, the government has granted just 5,000 construction visas.
"The sector needs workers to build homes ... yet builders must now secure housing for incoming immigrants," Joao Sousa, chief executive of JPS, one of Portugal's largest developers, told Reuters.
"If there are no homes for those already here, how can we provide housing for people coming to Portugal?"
About 90% of JPS's roughly 700 to 800 workers are foreigners.
Smaller firms have even less capacity to provide dormitory accommodation near often remote construction sites, builders and unions say.
The tightened immigration regulations also risk affecting the status of many, like Simao, already living and working in Portugal.
While he has an employment contract, Simao's two-year residence permit expires in August. To renew it under the revised regulations, he must now provide a rental contract.
He rents his room in Lisbon for €380 a month under an informal agreement, however, and his landlady will not provide rental payment receipts.
"I came here to improve my life and hoped to one day bring my mother to Portugal," Simao said.
Despite the growing focus on immigration, other European governments facing labour shortages, like Spain and Italy, are now working to regularise undocumented migrants or grant more work visas.
JPS's Sousa said he wants more training programmes and higher wages to attract more Portuguese workers, but foreign labour is essential.
"Many projects could be delayed or cancelled unless the government adopts exceptional measures, as other countries have, to attract and retain migrants," he said.
($1 = 0.8773 euros)
(Reporting by Sergio Goncalves; Editing by Andrei Khalip and Joe Bavier)
