Portugal lost nearly 41 thousand jobs in three months: Why is unemployment still 5.7 percent?

There has been a remarkable change of direction in the Portuguese labor market in recent months. According to the calculation made based on INE data, employment in the country decreased by approximately 41 thousand people in the last three months.

This is one of the most significant employment declines in a short period since the pandemic.

However, during the same period, Portugal's official unemployment rate remains low.

According to the provisional estimate published by INE for August, the unemployment rate is 5.7 percent.

While the two numbers may seem contradictory at first glance, they actually measure different things.

41 thousand job losses do not mean 41 thousand new unemployed people

There are three main groups in labor force statistics: employed, unemployed and people outside the labor force.

Just because a person stops working does not automatically mean that he or she is considered "unemployed" in official statistics.

To be considered unemployed, he must meet certain criteria; These include being actively looking for a job and being ready to work.

People who stop working and are not actively looking for a job or who leave the labor market are not added to the unemployed count in the same way.

Therefore, it is statistically possible for the unemployment rate to remain relatively low at the same time as employment decreases.

Unemployment was 5.7 percent in August

According to INE's provisional August forecast, the unemployment rate in Portugal is at 5.7 percent.

This rate is the same as July.

0.1 points higher than three months ago and 0.2 points compared to August 2025 score is low.

The underutilization rate of the workforce was calculated as 9.7 percent.

This indicator is higher than the unemployment rate because it attempts to capture a broader share of the untapped potential in the labor market, not just the officially unemployed.

The picture is weaker in young people

One of the striking parts of the weakening in the labor market is young people.

According to DN's analysis based on INE data, the decline in youth employment has been continuing for about a year.

This distinction is important because the fact that the total unemployment rate is low does not mean that employment conditions are equally strong in all age groups.

What does it mean for those working in Portugal?

It is too early to infer a long-term labor market crisis from a single quarterly movement.

On the other hand, the continuation of the decline in employment for a few more periods may become more important, especially if economic growth and consumer demand weaken.

It is necessary to follow three indicators together in the coming months:

total employment, unemployment rate and active population.

Looking only at the unemployment rate may hide some changes in the labor market.

Therefore, the message given by today's data is not "41 thousand new unemployed people have formed in Portugal".

The more accurate result is this: While employment in Portugal has decreased by approximately 41 thousand people in the last three months, the official unemployment rate remains low at 5.7 percent for now.

Resources

INE – Estimativas mensais de emprego e desemprego, August 2026

https://www.ine.pt/

Diário de Notícias — País curtain 41 mil empregos em apenas três meses, 2 October 2026

https://www.dn.pt/economia/pas-perde-41-mil-empregos-em-apenas-trs-meses-maior-apago-desde-o-tempo-da-pandemia