Portugal’s Unemployment Falls to 5.7% as Youth and Women Lag Behind

A 5.7 % unemployment rate may sound like a statistic, yet for families from Braga to Faro it means the tightest labour market in more than two decades. Fewer people are actively looking for work, more are clocking in every morning, and Portugal now outperforms the average of both the EU and the euro area.

Snapshot – What Portuguese households need to know now

• 5.7 % jobless rate in November, the lowest since 2002

• 65.8 % employment record, reflecting 5.306 M people at work

• 318 800 unemployed, down 9 000 month-on-month

• Youth unemployment still at 19.3 %, well above the national average

• Government credits training incentives and wage subsidies for the gains

A labour market running hotter than continental peers

The latest flash estimates from the National Statistics Institute (INE) show that the Portuguese labour market is not only healthier than it was a year ago, it is also healthier than that of many neighbours. While the euro area averaged 6.3 % unemployment in November, Portugal slipped to 5.7 %, edging closer to the 5.6 % floor reached in February 2002. Economists highlight three forces behind the drop: a tourism surge that refused to fade after summer, a record year for property development, and the continued relocation of tech and shared-services hubs to Lisbon and Porto. The result is a job market in which vacancies exceed skilled applicants in several industries, pushing the employment rate to 65.8 %—the highest since 1998.

Not everyone is celebrating – youth, women and regional pockets

Beneath the headline figure, structural weaknesses linger. The share of 16- to 24-year-olds out of work climbed slightly, closing November at 19.3 %. Gender also matters: women face a 6.4 % rate, compared with 5.0 % for men. Regions such as the Alentejo coast and parts of the interior Norte report tighter opportunities once the tourist season ends. Demographers warn that an ageing society amplifies such divides; for every ten employees retiring, fewer than seven new entrants join the workforce. As a result, companies scramble to retain young talent with remote-work perks, rapid promotions and training budgets.

Policy cocktail – from IEFP cash to PRR reskilling funds

Lisbon’s toolbox for 2025 mixed financial carrots and tax tweaks. Programmes like “+Emprego” and “Emprego +Talento” reimbursed employers up to €9 405 per open-ended contract, rising above €22 000 when hiring disabled or highly qualified candidates. Concurrently, the Recovery and Resilience Plan (PRR) earmarked funds for digital and green skills, while the IRS Jovem tax break made early-career earnings more attractive. The minimum wage moved to €870, and firms received deductions for health-insurance perks and on-site crèches. Analysts credit these policies for shifting 30.6 % of registered unemployed into jobs between the 2nd and 3rd quarters.

Where the jobs surfaced – clues ahead of January data dump

Although sector-specific figures for November will not land until mid-January, partial releases point to momentum in manufacturing (+4.8 %), information & communication (+34 %) and construction tied to urban regeneration and renewable projects. Corporate creation data up to November show double-digit growth in real-estate services, ICT and agriculture. INE is scheduled to publish detailed services turnover and construction indices on 13 and 14 January, offering a clearer view of the hiring map.

Why it matters for wages, mortgages and the 2026 outlook

A tighter labour market typically feeds higher wage demands, something already visible in collective-bargaining rounds this winter. The Bank of Portugal predicts unemployment could stabilise near 6.3 % in 2026–27, suggesting today’s floor may not hold indefinitely but also that sudden job losses look unlikely. For homeowners, robust employment underpins stable mortgage repayment capacity, a relief as Euribor rates creep downward. For public finances, lower joblessness means stronger social-security inflows and a lighter unemployment-benefit bill, giving the next government room to manoeuvre on tax reform.

Quick takeaways

Record-low unemployment signals a fundamentally strong economy but masks persistent youth and gender gaps.

Government incentives—from wage subsidies to tax breaks—played a measurable role in job creation.

Upcoming INE sector data will test whether momentum spreads beyond tourism and tech.

Households can expect gradual wage pressure and greater job stability through at least early 2026.

Policymakers’ next challenge: translating raw job numbers into quality, future-proof careers for Portugal’s younger generation.