Colombia closed 2025 with unemployment at historically low levels, consolidating a downward trend that was maintained throughout the year. Official figures confirmed that the labor market showed great strength even in a context of moderate economic growth, U.S. tariff threats during much of the year, and global economic volatility.
Against this backdrop, the South American country managed to close 2025 with an unemployment rate below 9%, something that had not happened in 25 years. The annual balance left a mixed scenario: More people working and fewer unemployed, but with persistent challenges such as informality and job quality.
The figure marks a benchmark for the country’s economic and social policy, as it awaits the supposed negative effects that some analysts and the conservative opposition predicted for the labor market following the presidential decree that increased the minimum wage for 2026 by nearly 23%.
Colombia ends 2025 with record-low unemployment
Colombia ended 2025 with an average annual unemployment rate of 8.9%, the lowest in at least a quarter of a century, according to official data from DANE. In December, the indicator stood at 8.0%, the lowest level recorded for that month since comparable records exist, confirming the downward trend observed throughout the year.
In absolute terms, the country closed the year with around 2.1 million unemployed people, after an annual reduction of approximately 272,000 people in that condition. At the same time, the employed population reached 24.2 million, driven by the annual creation of around 603,000 jobs.
The performance of the labor market exceeded expectations despite moderate economic growth, close to 2.9% of gross domestic product, reinforcing the idea of a sustained employment recovery after the shocks of previous years.
The drop in unemployment was accompanied by an increase in employment and an improvement in the structural indicators of the labor market. The national employment rate reached levels close to 59% at the end of the year, while labor force participation remained relatively stable at around 64%.
In the months before the annual close, a favorable trend was already visible. For example, in November 2025, the unemployment rate had fallen to 7%, with increases in participation and employment compared with the previous year, reflecting a more dynamic labor market.
The increase in employment was linked to the expansion of sectors such as manufacturing, which led to job creation in the last month of the year, along with other productive activities associated with consumption and the end-of-year season.
The combined effect of greater labor absorption and changes in population participation helped explain the reduction in unemployment. Part of the adjustment occurred because some people stopped looking for work, which affected the overall labor market statistics.
📊 En diciembre de 2025, la tasa de desocupación se ubicó en 8,0%, con una variación estadísticamente significativa de -1,1 p.p. frente a diciembre de 2024, cuando fue del 9,1%. pic.twitter.com/s0gFCbwzHx
— DANE Colombia (@DANE_Colombia) January 30, 2026
Informality and job quality, the challenges that remain
Despite the positive results, the structure of employment continues to show weaknesses. Informality remains one of the main challenges, with more than half of workers in precarious labor conditions.
However, there were signs of improvement. The share of informal workers declined slightly in 2025, suggesting gradual progress in the formalization of the labor market, although it is still insufficient to structurally change the composition of employment in the country.
The outlook also points to pressures ahead. A shortage of skilled workers amid stronger labor demand is beginning to push wages upward, with potential effects on inflation and business costs.
The government has presented these figures as evidence of the effectiveness of its economic and labor policy. However, economists warn that the new level of labor costs, combined with increases in the minimum wage, could raise informality if smaller companies are unable to absorb those changes.
The challenge ahead will be to sustain job creation in an uncertain global context and with structural productivity constraints. The evolution of the labor market will depend on factors such as economic growth, private investment, and the capacity to generate quality formal employment.
The final balance for 2025 shows a stronger labor market than in recent years, with historically low unemployment levels. However, the consolidation of this trend will depend on the country’s ability to transform the quantitative improvement in employment into a sustained qualitative improvement over time.
Related: Colombia’s Central Bank Announces Steep Interest Rate Hike.