OECD Employment Outlook 2026: Italy
Table of contents
These country notes provide an overview of the labour market situation in each country based on data from OECD Employment Outlook 2026. This edition has a special focus on geographic disparities in jobs and incomes.
The OECD labour market remains resilient, with employment and labour force participation rates at record highs (72.1 and 76.7% in Q1 2026 on average across countries, respectively) and unemployment low by historical standards (4.9% in May 2026). However, there are increasing signs of weakening, including rising unemployment in many countries, slowing employment growth, and easing labour shortages. Due to the new surge in energy prices, real wages are expected to fall in many countries.
In Italy, the unemployment rate stood at 5% in May 2026 – a record low – and in line with the OECD average (4.9%). The unemployment rate declined by 1.5 percentage points (p.p.) over the past year, against an OECD pattern of rising unemployment in around two‑thirds of countries. Italy belongs to the small group of Southern European countries – alongside Greece, Portugal and Spain – where unemployment has continued to fall since.
Thanks to a particularly strong growth over the past two years, the employment rate reached a record 62.8% in Q1 2026 but remains 9.3 p.p. below the OECD average (72.1% in Q1 2026) – among the lowest across OECD countries. The difference compared to the OECD average is particularly pronounced among women and young people. In addition, the growth in the employment rate slowed visibly in the last year, in contrast with the sustained increase recorded in other Southern European countries.
Labour market tightness has eased and is now below pre‑pandemic records. However, structural shortages persist, reflecting population ageing, the digital transformation, the move toward carbon neutrality, and poor job quality in some sectors.
Real wages grew by 1.3% in Q1 2026 compared to a year before, mainly thanks to low inflation. However, they were still 6.1% lower than in Q1 2021, which is the largest gap among the large OECD economies (see figure below).
The recent surge in energy prices is pushing inflation up and real wages down again. Assuming that the sizeable disruptions from the conflict in the Middle East are limited to a relatively short period of time, real wages in Italy are projected to fall by 0.9% in 2026 and rise by only 0.2% in 2027, due to limited collective agreement renewals scheduled for 2027 and ongoing labour market slack.
Regional disparities in labour market outcomes are large across the OECD. In over half of OECD countries, employment rates in small regions vary by more than 20 p.p. These disparities do not simply reflect differences in who lives where, but also in the economic opportunities that regions have to offer, and they translate directly into disparities in living standards.
Where one lives shapes job opportunities and living standards. In Italy, the unemployment rate in the lowest-performing quintile of regions is more than four times higher than in the highest-performing quintile, against an OECD average of about two (see figure below).
Since the early 2010s, regional disparities in employment rates have narrowed by 10.4% relative to the national average, in line with most OECD countries. This reflects positive labour market developments in previously low-employment regions.
While workers in Italy do move from low- to high-employment regions, these flows remain far too small to meaningfully reduce persistent regional labour market disparities. In fact, since workers who leave low-employment regions are, on average, younger, more educated and more frequently in employment than those who stay behind. Inter-regional mobility can therefore reinforce regional disparities in labour market outcomes rather than reduce them.
Non-compete clauses – contract terms that prevent workers from moving to a competitor or starting a competing business – and related contractual restrictions are widespread across OECD labour markets. they covered about 30% of workers in 2025, and are increasingly used beyond highly specialised jobs. While firms may use such clauses to protect trade secrets or investments, evidence suggests they can reduce job mobility, weaken wage growth, slow knowledge diffusion and undermine productivity growth.
In Italy, according to employers, between 7% and 18% of private‑sector employees are currently bound by a non-compete agreement compared to an average of 20% to 30% across the OECD countries (see figure below).
Firms in Italy report an upward trend, suggesting growing reliance on contractual restrictions in the Italian labour market.
In Italy as in several other OECD countries, non-compete clauses have spread into parts of the labour market where the traditional justification – protecting sensitive information or high-value investments – appears weak.
In addition, about 30% of surveyed firms report knowledge of either no-poaching, wage‑fixing, or both occurring within their industry compared to 48% on average across the surveyed countries. This finding is aligned with – and lends support to – the increasing attention that the Italian Competition Authority is devoting to labour market conduct.
Contact
Andrea GARNERO (✉ andrea.garnero@oecd.org)
Glenda QUINTINI (✉ glenda.quintini@oecd.org)
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The full book is available in English: OECD (2026), OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, OECD Publishing, Paris, https://doi.org/10.1787/7e710f54-en.
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