Portugal Unemployment: 12.5% Drop in Couple Joblessness

Portugal's Instituto do Emprego e Formação Profissional (IEFP) has reported a striking decline in dual-household unemployment—a fall of 12.5% year-on-year—signaling relief for the nation's most vulnerable families but also exposing persistent structural gaps in skill alignment and long-term economic security.

The agency's latest figures reveal that 4,697 couples found themselves jointly unemployed in January, down from the prior year but still representing a significant cohort facing compounded financial stress. Across the broader labor market, 310,708 individuals were registered as unemployed at the end of January, an 11.1% drop compared to January 2025, yet a 3.8% rise from December—a pattern attributed to post-holiday contract terminations and seasonal slowdowns in tourism and retail.

Why This Matters

• Household vulnerability: When both partners lose income simultaneously, the risk of poverty and social exclusion escalates dramatically, even with state support.

• Job placement acceleration: Placements in January surged 48.7% compared to December, though still 11.4% below the same month last year.

• Skill mismatch warning: Nearly half of all unemployed workers (49.8%) hold qualifications below secondary level, limiting access to emerging sectors.

Who Is Still Looking for Work

The demographic breakdown of unemployment in mainland Portugal shows distinct patterns. Single individuals accounted for the largest share at 138,916, down 13.1% year-on-year. Married or partnered workers totaled 93,343 (down 10.6%), while divorced people numbered 35,447 (down 7.6%), those in civil unions 26,310 (down 5.7%), and widowed individuals 4,815 (also down 5.7%).

Of the married or partnered unemployed, 9,394 people (7.9% of that group) had a spouse or partner also registered as jobless with the IEFP, forming those 4,697 dual-unemployed households. This figure, though improved, highlights a persistent challenge: when both earners in a household lose work, the financial cushion evaporates rapidly. Families in this situation report heightened debt, difficulties maintaining adequate heating, and delayed dental and medical care.

The Portugal Social Security system provides a safety net through unemployment benefits and social unemployment subsidies, with dual-unemployed couples eligible for a 10% increase in benefit amounts if they have dependents. Yet historical data suggest that Portugal's unemployment protection has been "subprotective," with benefit levels often insufficient to sustain a household without additional resources.

The Professional Landscape: Low-Skill Dominance

By occupational category, the largest share of registered unemployed workers falls into "unskilled workers" at 30.1%, followed by "personal services, security, and sales workers" at 20.2%. Specialists in intellectual and scientific activities made up 10.5%, while administrative personnel accounted for 10.2%.

This distribution underscores a critical mismatch: Portugal's proportion of workers with low qualifications—those with up to secondary-level education—sits at 29.2%, more than double the European Union average. Meanwhile, sectors such as information technology, engineering, and industrial automation report acute talent shortages, particularly in Cloud computing, DevOps, artificial intelligence, and cybersecurity.

The IEFP and private recruiters alike cite that 45% of hiring difficulties stem from a lack of technical profiles and specialized training. As generative AI and automation reshape the labor market, demand for digital literacy, data analysis, and strategic thinking is surging—competencies largely absent among the nearly half of unemployed individuals who never completed secondary school.

Regional and Sectoral Variations

All regions of Portugal recorded year-on-year unemployment declines. The Autonomous Region of Madeira led with a 13.9% drop, the steepest in the country. The mainland saw broad-based improvements, though the winter months typically bring a seasonal uptick as temporary contracts in hospitality and commerce expire.

Job vacancies received by the IEFP in January totaled 11,753, a modest 0.9% decline compared to January 2025 but a dramatic 104.6% jump from December. At month's end, 11,451 unfilled positions remained, up 3.5% year-on-year. The majority of placements continue to cluster in lower-skill roles, reflecting both the profile of the unemployed and the operational demands of service and support sectors.

Placements executed during January reached 6,883 nationwide, down 11.4% from the prior year but 48.7% higher than December—a typical rebound after the holiday lull.

What This Means for Residents

For families navigating unemployment, the data offer both encouragement and caution. The headline decline in joblessness, particularly among dual-unemployed couples, suggests that Portugal's labor market is absorbing workers more effectively than a year ago. Population employment reached an estimated 5.316,9 M people in December 2025, with the unemployment rate at 5.6%, the lowest since February 2002.

However, the 38,360-person reduction in registered unemployment compared to January 2025 was driven largely by those unemployed for less than 12 months and workers over 25 seeking new positions—groups more likely to possess recent work experience and transferable skills. For those with minimal education or outdated competencies, the path back to stable employment remains steep.

Policymakers and training institutions face mounting pressure to address this divide. The Portugal Qualifica network, managed by the IEFP, is expanding offerings in digital literacy, AI fundamentals, and green economy skills. Yet the pace of technological change—particularly in automation and machine learning—risks outstripping the speed at which Portugal can retrain its workforce.

The Skills Gap and Formação Needs

Portugal ranks as the third country in Europe with the greatest difficulty recruiting qualified professionals, a function of both structural education gaps and accelerating sectoral transformation. Beyond IT and engineering, sectors such as green energy production, industrial maintenance, and advanced manufacturing (Industry 4.0) are reporting vacancies that go unfilled for months.

Employers increasingly demand not only technical know-how but also "soft skills": adaptability, communication, empathy, and creative problem-solving. These competencies, harder to automate, are becoming differentiators in a market where routine tasks vanish into algorithms.

Training priorities identified by labor market analysts for 2026 include:

• Upskilling and reskilling programs targeting workers displaced by automation.

• Digital competencies: AI literacy, cloud infrastructure, cybersecurity, big data, 5G network management, and UI/UX design.

• Industrial 4.0 roles: CNC programmers, robotics specialists, maintenance technicians, and process engineers.

• Data analytics and digital marketing, areas where Portugal's firms are investing heavily.

• Green transition skills, particularly in energy efficiency and renewable production.

• Healthcare professions, which maintain strong employability amid demographic aging.

The IEFP's active employment policies, coupled with funding from the EU Recovery and Resilience Mechanism (PRR), are channeling investment into these areas. Yet the timeline for impact remains uncertain, and the 49.8% of unemployed workers lacking secondary education face formidable barriers to accessing high-demand roles.

Financial and Social Consequences

Dual unemployment inflicts a compound burden. Research cited by social policy experts shows that households where both partners are jobless experience not only income collapse but also psychological strain, increased conflict, and diminished educational outcomes for children. The poverty rate among the unemployed stood at 42.6% in 2024, down from 44.3% the prior year but still far above the national 15.4% poverty incidence.

Social transfers—excluding pensions—reduced poverty by 5.2 percentage points in 2024, underscoring the role of unemployment subsidies, family allowances, and housing support programs. The Extraordinary Rent Support scheme, in effect through December 2028, offers non-refundable monthly assistance to households spending 35% or more of income on rent, a threshold many dual-unemployed families exceed.

Despite these interventions, Portugal remains among the most unequal societies in the European Union. The challenge for policymakers is not merely to sustain benefit levels but to accelerate pathways back into productive employment—particularly for those whose skills no longer match market demand.

Looking Ahead

The January data paint a picture of cautious optimism tempered by structural reality. Portugal's unemployment rolls are shrinking, driven by robust employment growth above 3% in 2025, rising wages, tax cuts, and minimum salary increases that have bolstered private consumption. Yet the labor market's reliance on low-skill service roles, combined with acute shortages in high-value sectors, points to a bifurcated recovery.

For the 4,697 couples still jointly unemployed, and the broader cohort of 310,708 job seekers, the coming months will test whether Portugal's training infrastructure and economic growth can bridge the gap between available workers and the competencies employers now demand. The decline in dual-household unemployment is welcome news, but the persistence of nearly half the jobless lacking secondary education signals that the hardest work—retooling an entire generation's skill base—remains ahead.