Colombia closed the first month of 2026 with an unemployment figure that, on the surface, appears to offer reasons to breathe a sigh of relief. According to the most recent data from the Departamento Administrativo Nacional de Estadística (DANE), the unemployment rate stood at 10.9% in January, representing a drop of 0.7 percentage points from the 11.6% recorded in the same month of 2025.
This year-over-year contraction means that 186,000 fewer people were looking for work without finding it, and that the employed population grew by 324,000 people, according to specialized reports.
However, beyond the positive headline, a detailed reading of these figures leaves an ambiguous impression. The drop in unemployment does not necessarily translate into a deep or structural improvement in Colombia’s labor market; rather, it reflects a landscape in which conventional indicators conceal tensions and risks that could shape the country’s economic and social dynamics in the coming months.
Unemployment in Colombia fell in January, but leaves an ambiguous outlook
The most striking aspect of the DANE report is, without a doubt, the year-over-year reduction in the unemployment rate. In January 2026, the rate fell from 11.6% to 10.9%, a figure many analysts have described as an improvement in Colombia’s labor market compared with the previous year.
This drop, announced by major media outlets, could be seen as a favorable sign that more Colombians are finding jobs and that the economy has some momentum to absorb labor.
But that reading becomes more complex when considering the actual composition of the jobs that were created. Although the employed population increased by around 324,000 people, not all of those new jobs are synonymous with stable or high-quality opportunities.
Growth was concentrated in sectors such as public administration, education, and health care, which accounted for a significant share of those new positions.
On the other hand, key sectors such as commerce and restaurants posted job losses, with significant declines in their payrolls — something critics of the government link to this year’s more than 23% increase in the minimum wage.
This pattern shows that — even though more people are employed — these are not always jobs that offer stability, benefits, or working conditions that improve quality of life. The drop in unemployment, therefore, does not necessarily reflect an improvement in the country’s productive structure or in its formal labor force.
📊 En enero de 2026, la tasa de desocupación se ubicó en 10,9%. pic.twitter.com/zo1ZQZeTgF
— DANE Colombia (@DANE_Colombia) February 27, 2026
Beyond the percentage: participation and the labor force
Another aspect that calls for caution is that the unemployment rate can fall not only because more people find jobs, but also because fewer Colombians actively participate in the job search.
If part of the population decides to leave the labor force — due to discouragement, frustration, or inability to find opportunities — this automatically reduces the unemployment figure without the labor market actually generating more attractive opportunities.
In fact, DANE also reported that the population outside the labor force increased by more than 400,000 people, suggesting that a considerable portion of the working-age population chose not to actively seek employment in January 2026.
This phenomenon, known as the “discouraged worker” effect, can mask positive figures and create a more favorable impression of reality than actually exists in the labor market.
In this sense, a decline in the unemployment rate accompanied by a drop in the overall participation rate — which measures how many people are working or looking for work — may indicate that the reduction is due both to job creation and to people leaving the active segment of the labor market. It is a warning sign about the depth of the labor recovery.
One element experts have highlighted is that, beyond the unemployment rate itself, labor informality remains a structural problem in Colombia.
Informality — which involves jobs without social security coverage, without formal contracts, and with less protection for workers — affects more than half of those who are employed in the country. This reality limits the positive impact of any drop in unemployment, because many of the new jobs are, in fact, informal or precarious.
In addition, with an increase in the minimum wage of close to 23% for 2026, according to official data, hiring costs have risen for many companies, especially micro-, small-, and medium-sized enterprises (MSMEs), which are key to job creation in the country.
This could slow the creation of formal jobs and push more employment into informal conditions or self-employment, with negative implications in terms of protection, income, and social security.
Public administration and sectors related to government contracting drove down unemployment in Colombia last January. Credit: Josep Maria Freixes / Colombia One.
Risks and pressing challenges
The first obvious risk of this type of decline in unemployment is that it could create a false sense of stability, both among policymakers and the general public.
If positive figures are interpreted without considering their context, measures may be adopted that fail to address the roots of the problems, such as job quality, informality, and active labor force participation.
A second risk is that Colombia’s labor market could become trapped in a dynamic in which each decline in the unemployment rate is accompanied by lower-quality jobs or by a greater exit of people from the labor force. This could translate into greater precariousness, weaker social cohesion, and wider economic inequalities.
Finally, it must be considered that an apparent improvement in employment does not necessarily translate into a robust economic recovery if it is not accompanied by sustainable productivity growth and favorable conditions for investment and the creation of formal jobs.
Nevertheless, it is worth noting that, at least for now, the controversial increase in the minimum wage of more than 23% does not appear to have affected — in January — a sector that has been experiencing several years of bonanza, with steady reductions in the number of unemployed in a complex local and global economic context.