Latin America recorded one of its lowest unemployment rates in decades in 2025, with informality also declining, according to a new report from the International Labour Organization. The findings come alongside a warning that deep structural challenges remain across the region.
The ILO report, titled Labour Market Trends in Latin America and the Caribbean, said the evidence indicates that the labour market has moved from a post-pandemic recovery phase into a consolidation stage, in which structural factors are increasingly important in explaining the evolution of key labour indicators.
The unemployment rate fell to 5.3 percent, one of its lowest levels in recent decades. The ILO attributed the drop primarily to formal job creation, which it described as a positive signal for formalisation processes. The decline in unemployment was described as a broadly widespread phenomenon across subregions, linked to slower growth in labour supply, demographic transition, stabilisation of participation rates, and a gradual increase in women's participation and employment.
Informality also fell to its lowest level since the start of the pandemic, which the report called a favourable sign suggesting a gradual formalisation process and an improvement in the composition of regional employment. Nevertheless, close to half of all employed people in the region continue to work in informal conditions, with marked differences between countries, economic sectors, age groups, and sexes.
Wide gaps between countries
Bolivia recorded the highest informality rate in the region at 82.2 percent, followed by Ecuador at 70.1 percent, Peru at 69.8 percent, Paraguay at 64.3 percent, and Colombia at 54.3 percent. Uruguay had the lowest rate at 22.4 percent, with Chile at 25.1 percent.
The report also noted that women continue to face barriers to accessing and remaining in employment, closely tied to the unequal distribution of care responsibilities.
Looking ahead, the ILO said employment continues to grow and unemployment continues to fall into 2026, but sustaining the gains seen in 2025 will require favourable macroeconomic conditions and policies aimed at raising employment quality, strengthening productivity, and expanding job opportunities.
