Challenges in Colombian labor market due to high informality

Colombia's unemployment rate fell to 10.9% in January 2026, according to Dane, marking a 0.8 percentage point improvement from January 2025. Andi president Bruce Mac Master questioned the one-point drop in informality and noted that job growth was driven by non-salaried positions.

The National Administrative Department of Statistics (Dane) released January 2026 labor market data, showing an unemployment rate of 10.9%, a 0.8 percentage point decline from January 2025. Of the 324,000 new jobs created, only 75,000 were salaried positions, indicating that growth was primarily in non-salaried employment.

Bruce Mac Master, president of the Colombian Association of Entrepreneurs (Andi), voiced concerns over high informality levels. He stated: “One of the biggest challenges in the labor market is the high levels of informality. It is not clear how the January results show a one percentage point reduction in informality.” Mac Master also questioned whether the occupancy increase stems from public spending on service provision orders prior to the Guarantees Law, after reviewing results by activity and occupational position.

Despite the lower unemployment rate, labor market participation declined, with 410,000 people becoming economically inactive. The Global Participation Rate stood at 63.6%, and the Occupancy Rate at 56.7%, similar to figures from a year earlier. Overall, Colombia had 23.2 million occupied individuals.

The commerce and vehicle repair sector accounts for 17.2% of workers but lost 149,000 jobs compared to January 2025. In contrast, public administration and defense added 172,000 positions, while professional, scientific, and technical activities gained 155,000 new jobs.

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Photorealistic image of happy Colombian workers symbolizing 8.2% unemployment rate drop, blending formal and informal jobs in urban setting.
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Colombia's unemployment rate falls to 8.2% in October 2025

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Dane reported that Colombia's unemployment rate in October 2025 was 8.2%, the lowest for an October since 2017, with 2.1 million people unemployed. This marks a drop of 0.9 percentage points from October 2024. However, Andi warned about the rise in labor informality amid job creation.

In December 2025, Colombia created 603,000 new jobs, lowering the unemployment rate to 8.0%, a drop of 1.1 percentage points from 2024. Yet, 55.5% of workers, or about 13.45 million people, remain in informal employment. Experts note progress but warn of ongoing structural challenges in the labor market.

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DANE reported a 10.9% unemployment rate for January 2026, the lowest in recent history for a first month of the year, despite a 23% minimum wage increase. Informality dropped to 55%, and the employed population grew by 324,000 people. Yet, these official figures are sparking political polarization.

Colombia's National Administrative Department of Statistics (Dane) reported that manufacturing production rose 1.9% in October 2025 compared to October 2024. Manufacturing sales grew 2.4%, and employed personnel increased 0.7%. Bruce Mac Master, president of Andi, highlighted sectoral heterogeneity and the importance of the year's final months.

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Anif has warned about the consequences of 'intermittent formality' in Colombia's labor market, affecting the accumulation of quoted weeks and social protection. According to Asofondos, only one in four workers accesses a pension due to persistent informality. This leads to employment precarization and challenges for the retirement of millions of Colombians.

Colombia's gross domestic product grew 3.6% in the third quarter of 2025, exceeding market expectations and marking the strongest expansion since 2022. The result was mainly driven by public spending and sectors such as commerce and public administration. However, activities like mining and construction showed contractions.

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Colombia has seen a sharp drop in the manufacturing industry's share of its GDP, from 16% in 2005 to 9.9% in 2025. This structural decline is accompanied by relative growth in the agricultural sector, signaling reprimarization. Neighboring countries like Mexico and Brazil have maintained more stable industrial bases.

 

 

 

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