Costa, who was speaking at a debate at Minho University in the northern city of Braga, said that out of 341,000 new jobs created in the past three years, 87% had permanent contracts.

"Combatting job insecurity is vital for greater productivity," Costa said, adding that an increase in productivity implied enhancing the skills of human resources.

Costa also pointed out that the country's new law to combat job insecurity was yet to be approved by parliament and included a set of measures to encourage permanent contracts.

"Job insecurity is not only negative for workers," Costa said, adding that companies were also affected.

Portugal's government, which lacks a majority in parliament but survives thanks to the votes of MPs from the Left Bloc and the Portuguese Communist Party, expects the country’s Gross Domestic Product (GDP) to grow by 2.2% next year, the unemployment rate to fall to 6.3% and public debt to drop to 118.5% of GDP, while promising civil servants higher pay and raising social benefits.

The draft budget also projects a budgetary deficit of 0.2% of GDP next year and 0.7% of GDP this year.