Unemployment rates remain an important indicator of the health of the global economy. Late last year, international organisations such as the International Monetary Fund (IMF) and the International Labour Organisation (ILO) provided data that shows a significant gap between countries with minimum and maximum unemployment. Some regions are recording historically low rates, while in others the employment problem is reaching crisis proportions. Let's take a look at where progress has been made and where countries continue to struggle with challenges.
↑ Record low unemployment: Thailand, Singapore and Switzerland
According to the IMF, Thailand has one of the lowest unemployment rates in the world at just 1.1%t. This rate is due to the high proportion of informal employment. Workers are forced to accept any job, as stable unemployment benefits are virtually non-existent in the country. In addition, low productivity is offset by over-employment.
Singapore, with an unemployment rate of 1.9%, is also in the lead. A small population combined with strong investment in education and vocational training allows for effective labour market management. In addition, the lack of unemployment benefits in the city-state acts as an incentive for employment.
Switzerland holds one of the best positions in Europe - 2.3%. Here the low unemployment rate is ensured by an ageing population and a high proportion of underemployment. In addition, strict rules for counting the unemployed, including only those who are registered with the employment services, make the rate even lower.
↑ Sustainable economies with low unemployment: Japan, Germany, the Netherlands
Japan maintains one of the lowest unemployment rates in the world at 2.5%, which is close to pre-pandemic levels. However, this result is mainly due to demographic factors: an ageing population and low birth rate create a labour shortage. To cope with the labour shortage, Japanese companies are actively investing in advanced technologies, including artificial intelligence and robotics. These measures help compensate for human labour, but also raise questions about the future of the country's employment market.
Germany, with an unemployment rate of 3.3%, has shown stability despite the economic difficulties of recent years. This rate remains historically low, although unemployment reached 11% in 2005. The situation is attributed to demographic ageing, with the mass retirement of the baby boomer generation leading to a shrinking working-age population. The working-age population in Germany is projected to shrink by six million by 2035, which could create further challenges for the labour market.
The Netherlands maintains a robust economy with unemployment at 3.9%, slightly above the pre-pandemic 4.4%. The country actively supports part-time employment, flexible labour contracts and self-employment, which keeps unemployment low even in the face of demographic changes. In addition, the high level of women's involvement in the economy and investment in human capital development contribute to stabilising the labour market.
↑ Average unemployment rate: Russia, USA, Ireland
Russia, with an unemployment rate of 3.1 %, shows a historically low rate. Experts attribute this to the mobilisation of the able-bodied population and significant military spending, which stimulates the economy. However, significant brain drain and migration are creating huge challenges for the future labour market.
In the US, the unemployment rate is 4%. The main factors here are an ageing population, reduced immigration and insufficient availability of childcare facilities, which slows the return of parents to the labour market. Ireland, on the other hand, currently maintains an unemployment rate of 4.4%, which is below pre-pandemic levels. This has been possible thanks to investment in infrastructure and stabilisation of the economy.
↑ Challenges for Southern Europe and Latin America
Southern Europe remains a region with high unemployment rates, despite gradual improvements in recent years. Spain, for example, shows an unemployment rate of 11.6%, which is better than the 2019 figures (14.1%). However, youth unemployment remains an acute problem, with 26.7% of young people unemployed. The main reasons are the weak productivity of small businesses, the prevalence of temporary contracts and low skills.
In Latin America, the situation varies considerably from country to country. Mexico shows a low unemployment rate of 2.8%, but this figure is misleading. Most of the working-age population is employed in the informal sector, which reduces visible unemployment but leaves workers without guarantees and social benefits. At the same time, Brazil, with an unemployment rate of 8%, faces serious structural problems such as low labour productivity and a high tax burden that limits job creation.
Another interesting example is Chile, with an unemployment rate of 8.7%, which is above pre-pandemic levels. Chile's problems lie in its dependence on copper exports, as well as the weak integration of young people in the labour market. High levels of informal employment and rising immigration also add to the strain on the economy. These examples emphasise that in Southern Europe and Latin America, success in reducing unemployment requires long-term and structural reforms.
↑ Crisis regions: Africa, Middle East, Ukraine
South Africa has one of the highest unemployment rates at 33.5%, more than three times higher than most other countries. This is due to historical problems such as the apartheid legacy, low levels of education and tight labour market regulations. An unattractive investment climate, high transport costs and ineffective tax policies exacerbate the situation, leaving little room for job growth.
Sudan has the highest unemployment rate in the world at 49.9%, more than double the pre-pandemic rate of 22.1%. The civil war that started in 2023 has devastated the country's economy and completely undermined the labour market. In addition, international sanctions and political instability make the situation almost hopeless for millions of the country's residents.
Ukraine faces an unemployment rate of 14.5%, well above the pre-pandemic level of 8.5%. The loss of jobs and destruction of infrastructure as a result of the military conflict has led to a sharp decline in employment opportunities. In addition, mass migration of the population, both internally and externally, has increased the strain on the economy. According to the ILO, the unemployment rate peaked at 24.5% in 2022 and current rates remain high due to uncertainty and instability.
↑ Conclusion: The global unemployment picture
This year's ranking of countries by unemployment rate demonstrates how different approaches to tackling employment vary from one part of the world to another. Some countries, such as Thailand and Switzerland, are posting record lows, but this is not always due to high quality jobs. Others, like South Africa and Sudan, are facing severe crises reflecting underlying social and economic problems.
The global unemployment picture emphasises the importance of systemic reforms, investment in education and training, and stable economic policies. These factors help to sustain the labour market even in the face of global challenges. In addition, close cooperation between government and business can be a key tool for creating new jobs and adapting the labour market to modern realities.
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