Unemployment rate at 6.8% in 2020, below all forecasts

In the last three months of 2020, the unemployment rate stood at 7.1%, 0.7 points lower than in the previous quarter, according to data released on Wednesday by the National Statistics Institute (INE). The average of all four quarters shows that for the entire year of 2020, the unemployment rate will have remained at 6.8%, below the estimates of the government, the Bank of Portugal and the Public Finance Council.

In Q4 2020, “the unemployment rate stood at 7.1%, down 0.7 percentage points (pp) from the previous quarter and up 0.4 pp from a year earlier,” INE stresses, in a statement released this Wednesday. Altogether, in 2020, the unemployment rate stood at 6.8%, a jump of just 0.3 p.p compared to 2019, much lower than what was estimated. Still, in the labour underutilisation rate, there was a rise of 1.2 percentage points to 13.9%.

The government projected that in 2020 the unemployment rate would rise to 8.7%, a more optimistic estimate than that of the Public Finance Council (10%), but more pessimistic than that of the Bank of Portugal (7.2%). The rate that was actually recorded (6.8%) was below all these projections.

It is important to note that although unemployment increased by only three-tenths compared to 2019, the employed population decreased by 2% to 4,814.1 thousand people, meaning that 99 thousand jobs were destroyed in 2020 compared to the previous year.

INE also reports that the unemployed population increased by 3.4% to 350.9 thousand people and that the unemployment rate among young people soared 4.3 p.p. year-on-year, to 22.6%. On the other hand, the proportion of long-term unemployed was estimated at 39.5%, 10.3 p.p. less than in 2019, “which corresponded to the highest decrease in the data series”.