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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Illustration of joyful diverse Colombian workers celebrating the unemployment rate drop to 8.8%, featuring job signs, graphs, and national flag.
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Colombia's unemployment rate drops to 8.8% in March 2026

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The Departamento Administrativo Nacional de Estadística (DANE) reported that Colombia's unemployment rate fell to 8.8% in March 2026—the lowest for any March since 2001, continuing the downward trend from 10.9% in January and 9.2% in February—with 2.34 million people unemployed (down 174,000). This marks a 0.8 percentage point drop from 9.6% in March 2025. The employed population grew by 650,000 (2.7%), while the January-March quarter rate stood at 9.6%. Neiva ranked among cities with the lowest unemployment.

Grupo Cibest warned of high labor informality and vulnerable self-employment in Colombia, despite job creation recovery. Dane data showed an unemployment rate of 8.8% in March. The report highlights challenges including 55.6% informality and wage growth without productivity gains.

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Dane reported Colombia's February 2026 unemployment rate at 9.2%, the lowest for any February since 2001, with 2.45 million unemployed people. Occupied population rose to 24.09 million, up 624,000 from February 2025. President Gustavo Petro and Labor Minister Antonio Sanguino hailed the figures and defended the minimum wage increase.

The Dane reported that Colombia's GDP rose 2.2% in the first quarter of 2026, below the 2.5% recorded a year earlier. Growth was driven mainly by public spending and household consumption, while sectors such as construction and agriculture posted declines.

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The Swedish Public Employment Service forecasts unemployment will fall toward 6 percent next year. Recovery is proceeding slowly, with pre-recession levels not expected until the second half of 2027.

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