The Colombian labor market has given pleasant surprises to the market in recent months, given that although a cooling in the generation of new jobs was expected in the middle of this year, reality has shown that it remains strong and has even reached levels not seen since before the pandemic. Nevertheless, This indicator would be close to having reached its maximum expansion point.
This is warned by the most recent Macroeconomic Outlook 2025 report from the Bank of Bogotá, which shows signs of cooling in job creation, in a context of higher labor costs and wage pressures and although the economy continues to grow at a moderate pace, analysts agree that the momentum in the labor market is beginning to run out after the post-pandemic rebound.
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In conversation with Portafolio, Camilo Pérez, director of Economic Research at Banco de Bogotá He indicated that “we have already surpassed the peak of hiring in the labor market. The maximum was around 1.1 or 1.2 million jobs created in one year, during the first quarter of 2025.”
“Since then we have been losing momentum, and even in the most recent data, which is August, some important sectors such as commerce have already destroyed jobs, close to two hundred thousand,” added the economist.
Job creation would grow less strongly in the coming months.
Image from ChatGPT
This statement goes hand in hand with the report’s figures, which confirm a moderation in job creation during the second half of the year and show that the net creation of employed people, which had rebounded strongly in 2023 and 2024, is beginning to lose traction due to rising labor costs and regulatory uncertainty.
Rising labor costs
The Banco de Bogotá study highlights that recent changes, derived from the reduction in working hours, the entry into force of the labor reform and the increase in the minimum wage, have increased hiring costs and, due to this, this new scenario has led many companies to rethink their personnel strategies.
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A survey cited in the report, carried out by Fenalco, shows that an important part of the business sector plans to adjust its payrolls to face the increase in costs; while among the most mentioned measures are the reduction of temporary jobs, the freezing of hiring and the automation of processes to offset the salary impact.
“We have a hypothesis, and that is that higher labor costs are taking their toll. The increase in
minimum wage, the labor reform that came into effect and the reduction in hours to work make labor costs more expensive, and we believe that this is what has been affecting the dynamics of those employed more recently,” Pérez said.
Job creation would grow less strongly in the coming months.
Image from ChatGPT
The Bank estimates that employment will continue to grow, but at a slower pace and that although the national unemployment rate remains close to 9%, it is not unreasonable to anticipate moderate rebounds. in the coming months, especially if restrictions on private contracting persist.
Services support employment
To better explain their perspective, the Bank of Bogotá reviewed how employment generation is composed and highlighted that despite the general cooling, services continue to be the main engine of job creation. For them, this sector, which includes commerce, education, health and professional activities, absorbs more than 50% of the employed population, consolidating itself as the largest contributor to national employment.
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“Growth in the economy is occurring, above all, in services. Being a labor-intensive sector, it demands more work, and that has allowed hiring to continue growing, although at a slower rate. That is why we still see good unemployment figures,” said Camilo Pérez.
According to calculations by the Bank of Bogotá, the traditional sectors (agriculture, construction, manufacturing industry and commerce) lose share in the total number of employed people, while services and the public sector gain weight. This structural transition responds to a post-pandemic change in which the Colombian economy depends more on urban work and less on primary production.
Job creation would grow less strongly in the coming months.
Image from ChatGPT
The report also highlights the role of the public sector in the stability of the labor market and states that in recent years, the central administration and territorial entities have sustained employment through the hiring of administrative and social services personnel. However, in 2026 the dynamics could change, due to the restrictions imposed by the Electoral Guarantees Law, which limit the involvement of personnel.
“Surely we will continue to see good unemployment figures for now. But next year there will be an electoral panorama that may generate some uncertainty. Although there will be hiring by the Government, there may also be freezing of contracts due to the guarantee law. That will have an impact on the labor market,” said this expert.
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In this context, they closed by warning that high salary adjustments in 2025 and 2026 They could maintain inflationary pressures in services, making it difficult for the price index to converge towards the goal of the Bank of the Republic, since these pressures could translate into higher interest rates for a longer period of time, which would impact the credit and contracting capacity of companies.
“Job creation continues to be important, people continue to be hired, almost 400 thousand new jobs in August compared to a year ago. But it must be recognized that the speed is no longer the same, and structural factors weigh more and more,” indicated the Director of Economic Research at Banco de Bogotá.
Job creation would grow less strongly in the coming months.
Image from ChatGPT
For now, the general balance remains positive and Colombia maintains a low unemployment rate in historical perspective, formality improves and services sustain employment. However, the outlook for 2026 is complicated and the rising cost of labor, electoral uncertainty and fiscal limitations could cause the upward employment curve to begin to flatten.
As Camilo Pérez concludes, “we do not see a relevant deterioration yet, but the labor market has already given its best in this cycle”, so the challenge in the coming months will be to prevent this ceiling from becoming a brake on economic recovery.
DANIEL HERNÁNDEZ NARANJO
Portfolio Journalist
