2025/12/30 | Vittorio Peretti, Carolina Monzón, Juan Robayo & Angela Gonzalez
In November, the unemployment fell to a new record low. According to DANE's labor market report for November, the national unemployment rate fell to 7.0%, 1.1 pp down on an annual basis. Meanwhile, the urban unemployment rate fell to 7.3%, 0.8 pp below last year’s print, once again below the Bloomberg median (7.7%) and our forecast (7.6%). Employment increased by 4.2% YoY in November (stable from October), while the labor force rose by 2.9% (+3.1% in the previous month). The participation rate increased to 64.7% (+63.7% one year ago). Sequentially, employment increased by 0.6% (compared to a previous increase of 1.2%), while the unemployment rate (SA) sits at 8.3% (compared to 8.9% in October). Meanwhile, the urban unemployment rate (SA) remained stable at 8.7%, well below BanRep’s NAIRU estimate (10.2%).
Private and self-employment payrolls continued to be key job drivers this month. In the quarter ending November, employment rose by 3.8% YoY (+2.7% in 3Q25). This annual increase was driven by a 3.8% YoY rise in private salaried posts (+5.5% in 3Q25), while self employment posts increased by 4.1% YoY (+1.4% in the 3Q25). Conversely, public sector jobs fell by -0.5% YoY (-4.8% in 3Q25). Agriculture, hospitality and restaurants, and financial activities were key job drivers in the month.
Our take: Persistent positive labor market surprises along with the unprecedented minimum wage hike should further rise inflation expectations. We predict an average unemployment rate of 9.0% for 2025, compared to 10.2% in 2024. Nonetheless, following the significant increase in the nominal minimum wage of 23% (18% in real terms) for 2026, we anticipate an adverse impact on the labor market. Our initial assessment is that a single-digit unemployment rate is unlikely to be sustained in the medium term. We also anticipate a substantial increase in informality, which stood at 55.4% in October at a national level.