Italy is experiencing an unusual shift in its labour market, with new data showing that both unemployment and the number of available jobs are declining at the same time, a combination that economists say points to deeper structural weakness rather than improvement.
The latest surveys released ISTAT show that the total number of people in work has fallen, while the number of unemployed has also decreased. At the same time, there has been a sharp rise in the number of people who are no longer seeking employment at all, a trend that analysts describe as particularly worrying.
At first glance, a fall in unemployment might appear positive. However, economists stress that this drop is not being driven people finding jobs. Instead, it reflects a growing share of the population leaving the labour force entirely. These individuals are classified as inactive rather than unemployed, meaning they are not counted in official jobless figures because they are no longer actively looking for work.
According to ISTAT, the decline in employment affected multiple sectors, including services and parts of industry, suggesting that the slowdown is broad based rather than limited to a single area of the economy. Younger workers and those on temporary contracts were among the most affected, highlighting the vulnerability of groups already facing precarious employment conditions.
The fall in available jobs further complicates the picture. Vacancies declined as companies reduced hiring plans amid weaker economic growth, high borrowing costs and continued uncertainty across Europe. Businesses remain cautious about expanding payrolls, particularly in sectors exposed to slowing domestic demand and fragile export markets.
Economists say the simultaneous fall in employment and unemployment is rare and often signals discouragement among job seekers. When people stop believing that suitable work is available, they may withdraw from the labour market, masking underlying weakness. Italy has long struggled with low participation rates, particularly among women and younger people, and the latest data suggests these structural challenges remain unresolved.
The rise in inactivity is especially concerning given Italy’s ageing population. With fewer people of working age and more retirees, the country depends heavily on keeping as many adults as possible engaged in the labour market. A growing pool of inactive individuals places additional strain on public finances and limits potential economic growth.
Government officials have previously pointed to reforms and investment plans aimed at boosting employment, including incentives for hiring and training programmes linked to EU recovery funds. However, critics argue that progress has been uneven and that many jobs created in recent years have been low paid or short term, offering limited security and discouraging long term participation.
Trade unions have warned that persistent uncertainty and weak wage growth are pushing workers to give up on job searches altogether. They argue that improving job quality, not just job quantity, is essential to reversing the trend. Without better pay, stability and career prospects, they say, inactivity will continue to rise even if headline unemployment appears to improve.
Analysts also note that regional disparities remain stark. Southern Italy continues to lag behind the north in both employment opportunities and participation rates, reinforcing long standing economic divides that have proven difficult to address.
The latest figures underline that Italy’s labour market challenges go beyond simple unemployment rates. While fewer people are officially jobless, fewer are working and more are stepping away from the labour market entirely. Economists warn that unless confidence, job creation and participation improve together, the apparent easing in unemployment risks hiding a more troubling loss of economic momentum.
