Record Hiring Boosts Job Prospects in Portugal as Jobless Rate Falls

Jobless Rate Dips to 5.8% in Q3 as Hiring Reaches 14-Year Peak

Portugal’s labour market kept up its steady expansion over the summer, pushing the unemployment rate down to 5.8% between July and September, according to figures published by Statistics Portugal (INE). The new reading is 0.1 percentage points below the previous quarter and 0.3 points lower than one year earlier, extending a gradual decline that began after the pandemic.

Employment at highest level since 2011

INE estimates that 5.33 million people were working during the third quarter—about 85 000 more than in the spring and 190 000 above the same period of 2024. The 1.6% quarterly jump and 3.7% annual gain mean total employment stands at its strongest level in 14 years.

Younger workers still face double-digit unemployment

Joblessness among 16-to-24-year-olds remains well above the national average, rising 0.7 points on the quarter to 18.8%. Even so, youth unemployment is nearly one percentage point lower than it was a year ago. Analysts note that the recovery has been slower for younger job-seekers, partly because new graduates often enter the labour force at the start of the summer.

Under-employment edges lower

INE’s broader measure of labour under-utilisation—which combines the unemployed with people who would like to work more hours or are available but not actively looking—stood at 9.9%. That is 0.2 points below the previous quarter and half a percentage point lower in annual terms, reflecting a tighter jobs market overall.

Services drive hiring surge

Most of the additional jobs were created in customer-facing service activities, particularly retail, transport, hospitality and food services. Employment also rose among 25-to-34-year-olds, a cohort that had lagged behind the wider recovery in 2023. Roughly one in five workers continued to follow a hybrid schedule, splitting time between home and the workplace—a pattern that employers now regard as a permanent feature of Portugal’s labour landscape.

Regional picture remains uneven

Despite the national improvement, unemployment stayed above average in Península de Setúbal (6.9%), Greater Lisbon (6.2%) and the North (6.1%). Rates below 5.5% were recorded in the Autonomous Regions of the Azores and Madeira as well as in Alentejo and the Algarve.

How Portugal compares with Europe and the pre-COVID era

The third-quarter reading leaves Portugal in line with the latest EU average, which Eurostat placed at 5.8% earlier this year. It also puts the country comfortably below its pre-pandemic level—unemployment hovered around 6.5–6.7% in 2019 and early 2020.

Policy environment supports demand for labour

Economists attribute the sustained demand for workers to a combination of robust domestic consumption, faster-than-expected deployment of Recovery and Resilience Plan funds and an expansionary 2025 budget. Measures introduced this year include a higher statutory minimum wage (now €870), expanded income-tax relief for young employees, and tax breaks for companies that raise pay or offer health insurance. While no single programme can be singled out as decisive, the package collectively buttresses household income and business activity, feeding through to job creation.

Outlook: solid but not without risks

Most forecasters still expect unemployment to hover close to 6% through 2026, citing the drag from higher interest rates in key export markets. However, Portugal’s ability to keep joblessness below the EU average while setting post-crisis employment records signals resilience. The main challenges, specialists warn, are lowering youth unemployment and ensuring the recent gains in services spread to higher-productivity sectors such as industry and technology.