Work Underutilization Rate Hits Record Low: What Does It Mean?
The work underutilization rate in Portugal has reached a historic low, according to the latest report by Randstad Portugal. This analysis, based on data from the National Institute of Statistics (INE) and the Employment and Professional Training Institute (IEFP), covers the job market trends as of September 2025.
Employment Growth and Labor Market Activity
In September, employment saw a modest rise of 0.2%, equating to an increase of 9,400 individuals in jobs. The active workforce also expanded by 0.3%, adding another 13,700 people, bringing the total to 5.62 million. This number marks a record high for the country.
When comparing year-over-year figures, the trends are even more striking. There are 183,000 more employed individuals than in September 2024—an increase of 3.6%. Additionally, the active population rose by 3%, reflecting growth of 164,600 individuals.
Unemployment and Work Underutilization Rates
Despite these positive signs, the unemployment rate stood at 6% in September. This is a slight increase of 0.1 percentage points from August but represents a decrease of 0.5 points from the previous year. There were 337,200 unemployed individuals, down by 18,500 from a year prior.
Notably, the work underutilization rate dropped to an all-time low of 10.2%. This metric indicates the extent to which individuals are not fully utilizing their skills or are working fewer hours than they desire. Currently, 585,300 people are in this category, which includes:
- 337,200 unemployed individuals
- 118,000 part-time workers seeking additional hours
- 31,800 inactive individuals actively looking for jobs but currently unavailable
- 98,300 inactive individuals available for work but not actively seeking employment
Ten years ago, the underutilization rate stood at 22% of the broader active population, equivalent to 1.16 million people. The significant decline highlights improvements in the job market conditions and economic growth, as well as more effective policies.
Path Towards Full Employment
Experts believe this trend of decreasing work underutilization is encouraging. Isabel Roseiro, Marketing Director at Randstad Portugal, stated that this trend reflects a more dynamic and inclusive job market, edging Portugal closer to full employment. However, challenges remain. There is still a mismatch between available skills and industry needs, known as structural unemployment.
Despite the positive advancements, structural unemployment persists even during growth phases, underscoring the necessity for ongoing training and professional development initiatives.
Recent Unemployment Trends
According to Randstad, the data from Employment Centers indicate a slight increase in registered unemployment by 0.3%, totaling 302,600 people. Job applications have also risen by 0.7%, with an increase of 3,179 applications. This uptick has been more pronounced among men, while there has been a slight decline in unemployment among women.
In year-over-year comparisons, there has been a decrease of 2.6% in registered unemployment, amounting to 8,149 fewer people seeking work. Additionally, job applications fell by 2.4%, translating to 10,551 fewer submissions for employment.
Overall, the current job market is demonstrating positive signs of recovery and growth, although the path to fully aligning workforce skills with market demands remains critical for sustained progress.
