Réunion Island's unemployment rate jumped to 19% of the active population in Q2 2026, a three-point increase in one year, according to INSEE data released Monday. Behind the figure lies a double mechanism: the collapse of subsidised employment contracts and a sharp rise in business insolvencies.
Three points up in twelve months
In Q2 2025, the island's unemployment rate stood at 16%. A year later, it reaches 19% — more than double the national average of 8.3% recorded by INSEE for the same period. The deterioration is sharp and rapid, even as Réunion's economy remains «better oriented than the national trend», according to the statistical institute.
Subsidised contracts: the primary culprit
The main cause identified is the steep fall in «Parcours emploi compétences» (PEC) contracts. By June 2026, only 4,700 people benefited from the scheme — 3,400 fewer than the previous year. This reduction follows a «sharp cut in national funding dedicated to subsidised contracts». The result: public sector employment fell 0.9% on the quarter and 1.1% year-on-year, representing around 1,000 jobs lost in the public sector.
Private sector stable, but fragile
Private salaried employment holds up overall (+0.7% year-on-year), driven by retail (+0.6% quarterly), hospitality (+0.9% annually), and notably information-communication (+4.3%). But this sector momentum does not offset the losses. Construction, transport, and temporary work each shed around 100 jobs quarterly. Apprenticeships fell 5.4%, or 700 fewer apprentices.
1,240 business failures in a year
The picture darkens further on the business side: insolvencies rose 18% over twelve months, affecting 1,240 companies. The construction sector in particular is recording its lowest new-build starts since the early 2000s — a leading indicator that points to further job losses in the months ahead.
Why it matters
Réunion has structurally carried a high unemployment rate (18–20%) for decades, but the current pace of deterioration — three points in a year — is unusual. It highlights a critical vulnerability: the island's dependence on state support for employment. When the state cuts its funding envelopes, the numbers deteriorate immediately. The sustainability of Réunion's employment model, heavily reliant on public procurement and national schemes, is a pressing question ahead of the 2027 budget discussions.