Labor Market in Portugal: January 2026 Confirms Historic Lows in Unemployment
The new figures from the Instituto Nacional de Estatística (INE - National Statistics Institute), published in March 2026, bring news that was already being felt on the streets: the labor market in Portugal is experiencing its best moment in over 20 years. With the unemployment rate fixed at 5.6%, we have returned to levels not seen since 2002. To give you an idea, there has never been so many people working in the country: there are now 5.3 million employed people, a historic record.
Simultaneously, the labor underutilization rate fell to 9.6%, the lowest value since February 2011, and youth unemployment dropped to 18.2%, the lowest since April 2023. These results are part of a favorable macroeconomic context, with the Banco de Portugal (Bank of Portugal) projecting a GDP growth of 2.3% for 2026.
If you are planning to move to Portugal to work, invest, or open a business, these numbers are the "green light" you were waiting for. The current scenario shows a resilient economy and, above all, one full of open doors for those arriving now.
Summary of Key Indicators – January 2026
| Indicator | January 2026 | December 2025 | January 2025 | Annual Change |
|---|---|---|---|---|
| Unemployment rate | 5.6% | 5.6% | 6.3% | -0.7 p.p. |
| Employment rate | 65.8% | 65.8% | 64.6% | +1.2 p.p. |
| Activity rate | 69.7% | 69.7% | 69.0% | +0.7 p.p. |
| Underutilization rate | 9.6% | 9.7% | 10.7% | -1.1 p.p. |
| Employed population | 5,301.3 thousand | 5,315.7 thousand | 5,166.0 thousand | +135.3 thousand |
| Unemployed population | 315.0 thousand | 314.1 thousand | 349.3 thousand | -34.3 thousand |
| Active population | 5,616.3 thousand | 5,629.7 thousand | 5,515.3 thousand | +101.0 thousand |
| Inactive population | 2,436.4 thousand | 2,444.3 thousand | 2,480.0 thousand | -43.6 thousand |
Note: January 2026 values are provisional estimates. All values are seasonally adjusted.
Unemployment Rate: 5.6% — The Lowest in 24 Years
Portugal started 2026 on the right foot: the unemployment rate stabilized at 5.6% in January. It might seem like just a number, but the truth is we have to go back 24 years, to February 2002, to find a situation as positive as this one.
In annual terms, the rate fell 0.7 percentage points compared to January 2025 (6.3%), confirming a consistent downward trajectory throughout 2025. The unemployed population stood at 315,000 people, practically unchanged from December, but representing a reduction of 34,300 people (-9.8%) compared to January 2025.
Historical Context
To understand the magnitude of this result, it is useful to recall the trajectory of unemployment in Portugal:
- 2013: Unemployment rate above 17% — peak of the sovereign debt crisis
- 2019: Drop to the 6% range — pre-pandemic recovery
- 2020-2021: Temporary rise to 7-8% — impact of the COVID-19 pandemic
- 2023-2024: Stabilization in the 6-7% range
- 2025-2026: Break below 6% — lows of more than two decades
The drop of more than 11 percentage points in just over a decade represents one of the most significant labor market recoveries in the recent history of the European economy.
Employment at Historic Highs
The employed population in December 2025 reached 5,315,700 people — the highest value since the start of the data series in February 1998. In January 2026, the value adjusted slightly to 5,301,300, remaining at historically high levels.
The employment rate also broke records, reaching 65.8%. But what does this mean in practice? It means that in a single year, the Portuguese economy managed to create more than 135,000 new jobs. It is an impressive growth of 2.6% that shows momentum to continue.
Active Population at Maximums
The active population reached its highest value ever in December 2025: 5,629,700 people. This growth reflects not only job creation but also the entry of new workers into the market — including immigrants — and the reduction of inactivity. The activity rate rose to 69.7%, compared to 69.0% a year earlier.
Unemployment by Gender: Disparity Persists
The January 2026 data reveals that the gender disparity in unemployment remains:
| Indicator | Men | Women | Difference |
|---|---|---|---|
| Unemployment rate | 5.0% | 6.2% | 1.2 p.p. |
Women continue to face an unemployment rate 1.2 percentage points higher than men. This difference, although persistent, occurs in a context where both genders are recording historically low rates.
Youth Unemployment: Drop to 18.2%
The youth unemployment rate (16-24 years old) fell to 18.2% in January 2026, a reduction of 0.4 percentage points compared to December. This is the lowest value since April 2023.
Although still significantly higher than the overall rate (5.6%), youth unemployment in Portugal has been consistently reducing. The adult unemployment rate (25-74 years old) remained at 4.7% — the lowest value since April 2002.
| Age Group | Jan/26 Rate | Historical Low |
|---|---|---|
| Youth (16-24 years) | 18.2% | Lowest since April/2023 |
| Adults (25-74 years) | 4.7% | Lowest since April/2002 |
| Total (16-74 years) | 5.6% | Lowest since February/2002 |
Labor Underutilization at 15-Year Lows
The labor underutilization rate — a broader indicator that includes not only the unemployed but also involuntary part-time workers and discouraged inactive persons — fell to 9.6% in January 2026, the lowest value since February 2011.
In absolute terms, underutilization affected 552,600 people, a reduction of 53,200 compared to January 2025 (-8.8%). This improvement is particularly significant because it demonstrates that the labor market recovery is not limited to the official unemployment rate — it is also benefiting workers in precarious employment or involuntary part-time situations.
Inactivity Falling
The inactive population stood at 2,436,400 people, with an inactivity rate of 30.3%. This rate is close to the minimum since February 2011, reflecting the entry of more people into the labor market.
The reduction in inactivity results from multiple factors:
- Greater female participation in the labor market
- Attraction of qualified immigrant workers
- Improvement in wage conditions that encourages job seeking
- Extension of the retirement age and active aging programs
Macroeconomic Context: A Resilient Labor Market
The employment data is part of a robust economic framework for Portugal in 2026:
- GDP: Projected growth of 2.3% (Bank of Portugal), above the Eurozone average
- Private consumption: Sustained by real wage growth
- Investment: Driven by the Recovery and Resilience Plan (PRR - Plano de Recuperação e Resiliência)
- Tourism: Sector in continuous growth with record revenues
- Trade: Sales growing 2.1%, with retail in strong acceleration (+4.6%)
Oxford Economics highlights that Portugal has "unemployment at 25-year lows and employment growing above the European average," positioning the country as one of the most dynamic economies in the Eurozone.
What These Data Mean for Those Planning to Live in Portugal
For Professionals and Workers
With an adult unemployment rate of just 4.7%, Portugal offers a labor market with low competition for qualified professionals. The sectors with the highest demand include technology, tourism, health, and construction. For those intending to work in Portugal through a D1 visa (subordinate work) or D3 visa (highly qualified work), conditions are the most favorable in decades.
For Entrepreneurs
The growth of the active population to historic highs indicates the availability of labor for new companies. The dynamism of private consumption (retail +4.6%) creates favorable conditions for new businesses. Holders of D2 visas (entrepreneur) find an expanding business ecosystem.
For Digital Nomads
Portugal's economic robustness translates into quality infrastructure, a mature technological ecosystem (especially in Lisbon and Porto), and a competitive cost of living compared to other European destinations. Holders of D8 visas (digital nomad) benefit from an economically stable and growing country.
For Retirees
The health of the labor market directly reflects the sustainability of the social security system and the quality of public services. For those considering retiring in Portugal with a D7 visa, economic solidity is an additional factor of confidence.
Recent Evolution: Consolidated Downward Trajectory
| Month | Unemployment Rate | Employment Rate | Underutilization Rate |
|---|---|---|---|
| January 2025 | 6.3% | 64.6% | 10.7% |
| September 2025 | 6.0% | 65.7% | 10.2% |
| October 2025 | 5.8% | 65.6% | 10.1% |
| November 2025 | 5.7% | 65.7% | 9.8% |
| December 2025 | 5.6% | 65.8% | 9.7% |
| January 2026 | 5.6% | 65.8% | 9.6% |
The table above demonstrates a consistent downward trajectory of unemployment over the last 12 months, with the rate falling from 6.3% to 5.6% — an improvement of 0.7 percentage points in a single year.
Outlook: Room to Continue Falling?
According to analyses by Público and consulted economists, the unemployment rate in Portugal may be approaching its "structural minimum" — the level below which it is difficult to fall without generating significant inflationary pressures. However, several factors suggest there is still room for improvement:
- Labor underutilization (9.6%) remains significantly above the official unemployment rate, indicating a labor reserve
- Youth unemployment (18.2%) is still high and can be reduced with training and qualification policies
- Qualified immigration continues to contribute to the growth of the active population
- The PRR will generate investment and job creation in the coming years
Frequently Asked Questions
What is the unemployment rate in Portugal in 2026?
The unemployment rate in Portugal is 5.6% in January 2026, according to provisional estimates from the INE. This is the lowest value since February 2002, 24 years ago.
How many people are employed in Portugal in 2026?
Portugal has 5,301,300 people employed in January 2026, close to the historic record of 5,315,700 reached in December 2025. The employment rate is 65.8%, also at historic highs.
What is the youth unemployment in Portugal?
The youth unemployment rate (16-24 years old) is 18.2% in January 2026, the lowest value since April 2023. The adult unemployment rate (25-74 years old) is only 4.7%.
Can it be said that it is easy to find a job in Portugal today?
With adult unemployment at just 4.7%, it has never been more favorable to look for work here. If your field is technology, tourism, health, or construction, the chances are very high. It is undoubtedly the best scenario of the last two decades for those arriving with the right qualifications.
Is unemployment in Portugal below the European average?
Yes. At 5.6%, Portugal positions itself significantly below countries like Spain and close to the Eurozone average, reflecting the dynamism of its economy.
Sources and References
- INE – Instituto Nacional de Estatística. Monthly Employment and Unemployment Estimates – January 2026. Published on March 3, 2026.
- Banco de Portugal. Economic Bulletin – December 2025. Macroeconomic projections for 2026.
- Oxford Economics. Portugal Economic Outlook 2026. Labor market analysis.
- Trading Economics. Portugal Unemployment Rate. Historical series.
Need expert guidance?
Talk to the Studio Cidadania team and get all your questions answered about European citizenship, visas, and residency. Human support, no commitment.
Free WhatsApp Consultation