The outlook for the labor market in 2026, as reflected in the IOBE’s quarterly report, is shaped primarily by diverging trends among the economy’s key sectors.
Construction emerges as the strongest pillar for job creation, with 47% of businesses forecasting an increase in employment and just 9% a decrease.
In retail, 24% of businesses expect hiring to increase, compared to just 1% forecasting a decline, although the majority (75%) anticipate stability. In manufacturing, expectations are more subdued, with 24% forecasting an increase in jobs, 7% a decrease, and 70% stability.
In the services sector, 32% of businesses expect an increase in employment, but 7% anticipate a decrease, while there is an overall deterioration compared to last year.
At the same time, tourism appears to be “frozen,” with a neutral or even negative impact on employment, while the public sector is expected to substantially support the overall picture through new hires.
The brakes
The overall momentum of the labor market remains positive, but is clearly slowing down. According to the IOBE’s baseline scenario, the unemployment rate is estimated to stand at around 8.5% in 2026, with a more pessimistic scenario placing it at 8.8%.
The decline continues, but at a slower pace, as the scope for reducing cyclical unemployment is limited and more persistent structural problems, such as frictional unemployment and low labor force participation, come to the fore.
Investment remains a key factor for employment. The strengthening of the Public Investment Program, combined with the acceleration of the implementation of the National Recovery and Resilience Plan and increased credit expansion, creates the conditions for further job growth.
However, the expected rise in interest rates partially limits this momentum, negatively affecting the short-term outlook for investment and consumption.
The strong performance of the construction sector is directly linked to the flow of capital toward infrastructure projects and private investment, which explains the significant improvement in expectations within the sector. In contrast, the manufacturing sector is moving more cautiously, reflecting uncertainty in the international environmentand fragile external demand. In retail trade, the outlook has improved compared to 2025, but the slowdown in consumption is limiting the strength of the recovery.
In the services sector, the picture is more complex. Despite a slight improvement on a quarterly basis, a noticeable weakening of expectations is recorded on an annual basis. This development is linked both to the slowdown in consumption momentum and to the uncertainty caused by international developments, such as geopolitical tensions and the rise of trade protectionism.
Zero contribution
Of particular significance is the decline in the contribution of tourism, which in previous years served as a key driver of employment growth. For 2026, its impact is estimated to be neutral in the baseline scenario and potentially negative under more adverse conditions, reflecting increased global uncertainty and pressures on demand.
The Role of the Public Sector
The public sector acts as a counterweight to these trends and is expected to continue supporting employment through new hires. Its contribution takes on particular significance at a time when the private sector is showing signs of fatigue.
Overall, the labor market in 2026 remains on a positive trajectory but is entering a phase of maturation with lower growth rates. The challenges are now shifting from job creation to addressing structural weaknesses and ensuring the sustainability of employment, in an environment of heightened uncertainty and persistent inflationary pressures.