Asunción, Paraguay – Paraguay's labor market is showing clear signs of recovery, with the unemployment rate falling to 5.6% in the first quarter of 2025, a significant 1.3 percentage point decrease compared to the same period in 2024. This notable decline, as reported by the National Institute of Statistics (INE) through its Continuous Household Survey (EPHC), translates to over 41,106 fewer unemployed individuals year-on-year.

The EPHC survey revealed that the total number of unemployed individuals in Paraguay during the first quarter of this year stood at 171,634. Of this figure, 79,845 were men (46.5%) and 91,789 were women (53.5%).

Combined Unemployment and Underemployment Rate Declines to 8.7%

The total population experiencing unemployment or underemployment due to insufficient working hours reached 268,360, representing 8.7% of the total labor force in Q1 2025. This marks a 1.1 percentage point decrease from the 9.8% recorded in the first quarter of 2024, equating to approximately 33,351 fewer individuals in this category. Analysts attribute this reduction primarily to the substantial decrease in the number of unemployed individuals.

Slight Dip in Labor Force Participation Rate Accompanies Job Growth

Paraguay's labor force (the sum of employed and unemployed individuals) in Q1 2025 totaled approximately 3,083,338 people, accounting for 70.0% of the population aged 15 and over. This represents a slight decrease of 0.5 percentage points compared to the same period last year, although the absolute size of the labor force remained relatively stable.

Conversely, the number of employed individuals saw an increase, reaching 2,911,705, or 66.1% of the population aged 15 and over. This is a 0.4 percentage point increase from the 65.7% recorded in Q1 2024, translating to an addition of approximately 41,838 employed individuals.

Underemployment Rate Sees Marginal Increase, Job Gains Concentrated in Primary and Tertiary Sectors

The rate of underemployment due to insufficient working hours saw a slight uptick, reaching 3.1% of the total labor force, or approximately 96,726 individuals. This is a marginal increase of 0.2 percentage points compared to the 2.9% recorded in the first quarter of 2024. This suggests that despite the overall increase in employment, a segment of the workforce is still seeking more work hours.

Examining the sectoral changes in employment, the primary sector (agriculture, fishing, etc.) experienced an increase of 13,392 employed individuals, while the tertiary sector (services) saw a significant rise of 29,301 employed individuals. These two sectors appear to be the primary drivers of the positive employment growth observed in the first quarter.

Overall Analysis and Future Outlook

The results of the Q1 2025 EPHC survey paint a positive picture of Paraguay's labor market, indicating a broad recovery. The significant decrease in the unemployment rate coupled with the rise in the number of employed individuals are encouraging signs for the country's economic health. However, the slight increase in the underemployment rate suggests that there is still room for improvement in the quality of employment.

Experts are closely monitoring the relationship between these labor market shifts and Paraguay's overall economic growth. The notable job creation in the primary and tertiary sectors is expected to inject vitality into these industries and positively influence the broader economy. Looking ahead, the Paraguayan government is likely to focus on implementing policies that not only sustain economic growth but also aim to improve the quality of employment opportunities within the nation. The focus will likely be on creating more full-time positions and addressing the needs of those currently underemployed to ensure a more robust and equitable labor market.

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