Unemployment in Réunion reached 19% of the active population in the second quarter of 2026 — three points higher than a year ago, according to INSEE. A shrinking public sector and rising business failures are casting a shadow over the year-end outlook.
Public Sector Pulls Back
The sharpest job losses this quarter came from the public sector, which fell 0.9% over three months and 1.1% year on year — around 1,000 positions eliminated. Non-market services, employing 127,600 people, shed 0.7% of their workforce. Construction declined a further 0.4% after a slight recovery in late 2025, while business services dropped 0.6%, losing roughly 200 jobs.
Private Sector Holds Its Own
Against this backdrop, private-sector employment held steady, edging up 0.1% year on year. Two sectors stand out: information and communication (+4.3%, around 200 new jobs) and retail trade excluding temporary work (+0.6%, approximately 200 jobs). Hotels and restaurants were flat over the quarter but up 0.9% year on year, supported by a 6% rise in hotel occupancy rates.
Business Failures Rising Four Times Faster than National Rate
Between July 2025 and June 2026, 1,240 businesses in Réunion filed for insolvency — 190 more than the previous year (+18%), compared with just +5% nationally. Meanwhile, only 3,960 new businesses were created in Q2, a 5% quarterly decline, pointing to a pause in entrepreneurial momentum.
A Widening Gap with Metropolitan France
Despite the employment challenges, hours worked actually grew 0.4% year on year in Réunion, compared with -0.7% on the mainland. Inflation came in slightly lower at 1.5% in June 2026, versus 1.8% nationally. Total salaried employment stood at 293,900 at end of June, down 0.2% on the quarter.
Why It Matters
With unemployment at 19% — more than double the national average of 8.3% — Réunion remains one of Europe's tightest labour markets. The contraction of public-sector employment, historically the engine of Réunion's job market, signals a structural shift. It weakens domestic consumption, strains social budgets, and raises the risk of skilled young people leaving for mainland France or other Indian Ocean territories.
Source: INSEE, Q2 2026 economic note, reported by Outremers 360 (October 2026).