Italy's labour market has reached a new high. In July 2026 the number of employed people rose to 24.37 million, up 2,000 on June and 307,000 (+1.3%) on a year earlier; in the second quarter the figure had already reached 24.363 million, the highest level since 2004. The employment rate was unchanged on the month at 63.2% and up 0.8 points year on year. The annual increase covers both genders: the number of employed women rose by 162,000 to 10.4 million, and that of men by 145,000, staying just below 14 million at 13.98 million.
Unemployment fell to 5.8%, down 0.1 points on the month and 0.9 points on the year, a historically low level and well below the 10% recorded at the start of 2021: 1.49 million people were looking for work, 14,000 fewer than in July 2025. The improvement comes with a note of caution on younger workers, where the unemployment rate rose to 18.9%, an increase of 0.2 points.
The fall in inactivity among 15-64 year olds, down to 12.168 million (307,000 fewer than a year earlier and 17,000 fewer than in June), suggests that part of the population previously outside the labour force has moved closer to job search. The inactivity rate, however, was unchanged at 32.8%, higher than in the rest of Europe and with a marked gender gap: 41.6% for women against 24.2% for men.
Growth is driven by stable contracts. Permanent employees number 16.583 million (+303,000 year on year) and self-employed workers 5.301 million (+85,000), while fixed-term employees fell to 2.486 million (-82,000). The age breakdown tempers the optimistic reading: over twelve months employment rose by 364,000 among the over-50s and by 96,000 among the under-25s, while the 25-34 (-79,000) and 35-49 (-152,000) age groups lost jobs. Part of the increase reflects demography and longer working lives rather than a generational turnover.
Quarterly data confirm the trajectory. In the second quarter the seasonally adjusted employment rate reached 63.1%, the highest since the series began, with 24.363 million people in work (155,000 more than in the previous quarter and 246,000 more than a year earlier) and a seasonally adjusted unemployment rate of 5.6%. Hours worked, the measure of labour input, rose 0.3% on the quarter and 1.3% year on year, against GDP growth of 0.2% quarter on quarter and 1.0% year on year.
The structural gap remains. In the first quarter of 2026 Italy's employment rate stood at 62.8%, some 9.3 points below the OECD average of 72.1% and among the lowest in the area, with particularly wide gaps for women and young people. The comparison needs care over the reference populations: Eurostat puts the EU employment rate at 76.4% in the second quarter of 2026 for the 20-64 age bracket, while the Italian and OECD figures refer to 15-64 year olds, so the two measures are not directly comparable.
Participation is where Italy lags. At 63.2%, the employment rate remains about 8 points below the European Union average, and the gap widens for women: the female employment rate is stuck at 54.5%, among the lowest in Europe. In the second quarter 2.901 million women were not looking for work for family reasons, against 108,000 men, while discouraged workers, those who have stopped searching because they believe they will not find a job, numbered 644,000, down 14.2% year on year. Closing the gap with the rest of Europe depends largely on this pool, and especially on its female component.
Household incomes remain the weakest link. The OECD expects Italian real wages to fall 0.9% in 2026 and to grow only 0.2% in 2027, with inflation forecast at 3% this year and 2.2% next year. In the first quarter of 2026 real wages were up 1.3% year on year but remained 6.1% below their level in the first quarter of 2021, the widest shortfall among large OECD economies. Andrea Garnero, an OECD economist, notes that Italian nominal wages are lower to begin with, so real incomes go under water as soon as inflation rises. Gross average pay is around 33,492 euros, roughly 15% below the European average.
The picture is therefore a two-speed one: employment at record levels and unemployment at lows coexist with an employment rate still far from the European average, low female participation and real wages that have not recovered the ground lost since 2021. For Italy, the resilience of incomes rather than the headline number of jobs will decide whether the labour market record translates into consumption and growth.
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