INE's March Unemployment Read Holds at 5.8% as the Labour Underutilisation Rate Slips to 9.8% — Employed Population Reaches 5.07 Million, the Highest March Reading in the Quarterly Labour Force Survey Series

The provisional March 2026 results of the Inquérito ao Emprego, published by Statistics Portugal (INE) on Wednesday, hold the unemployment rate at 5.8%, identical to February's revised figure but 0.5 percentage points below March 2025. The labour underutilisation rate — INE's broader measure that adds underemployed part-time workers, the inactive who are seeking work but not immediately available, and the inactive who are available but not currently seeking — eased to 9.8% from 10.0% in February and 10.6% twelve months earlier.

The unemployed population is estimated at 326,300 people, essentially unchanged on the previous month and 27,400 lower than March 2025. Employment is up: 5.069 million people are working in Portugal under the LFS definition, the highest March reading in the survey series. The activity rate among the 16-89 working-age universe sits at 65.7%, up 0.4 percentage points on March 2025.

The Labour Market Has Been Tight for Two Years and Counting

The 5.8% headline conceals a structural tightness that has now persisted across the post-pandemic recovery. The Portuguese rate is currently 0.7 percentage points below the eurozone average of 6.5%. Job vacancies — measured by INE in a separate series — remain high in hospitality, healthcare and construction. Banco de Portugal's Q1 bank lending survey noted that SMEs cite labour-cost pressure as a binding constraint on growth, and INE's services turnover indicator continues to outpace its industry counterpart partly because services companies have been able to pass through higher wages while industrial exporters have not.

Activity Rate at a Multi-Decade High

The 65.7% activity rate is the headline behind the labour-cost pressure. Female participation has continued to climb — INE's quarterly cross-tabulations point to women's activity now within a percentage point of men's, a structurally narrower gap than a decade ago. Older-worker participation has also risen: the 55-64 cohort sits at activity rates above 70% for the first time, in part a function of pension-reform cohort effects that delay retirement.

The flip side is that the pool of inactive working-age residents available to enter the labour market is the smallest INE has measured. Population growth among 16-64-year-olds has flattened, and the marginal worker added in 2025 was overwhelmingly an immigrant entering through the AIMA pipeline rather than a domestic re-entrant. That pipeline is itself working through the spring 2025 backlog, with implications for marginal labour supply through 2026.

What This Means for Expats

• Hiring conditions remain tight. Foreign residents looking for skilled work in tech, healthcare, hospitality and construction continue to face employer markets, particularly in Lisbon and Porto. Salary inflation in those sectors is running well ahead of the overall 2.5% headline.
• Underemployment, not unemployment, is the real signal. The 9.8% labour underutilisation rate captures workers stuck in part-time contracts who want full-time hours. Job offers should be assessed on contracted hours, not headline pay.
• Activity-rate ceiling is approaching. Policymakers are increasingly aware that Portuguese labour supply growth is now overwhelmingly migration-led. Immigration policy and the AIMA backlog directly affect the labour market expats compete in.
• Wage tailwinds support consumer demand. The combination of low unemployment and high activity feeds the rental and services markets that push prices up. Expat households should expect continued upward pressure on services costs through 2026.
• Rate-cut transmission is muted. A tight labour market is one reason the ECB is unlikely to cut faster than its current path. Mortgage borrowers should not expect Euribor to fall back to 2024 lows.