Réunion Island's employment picture has turned red. According to INSEE's latest economic outlook published in September 2026, the island's unemployment rate has now reached 19% — three percentage points higher than a year ago and more than double the metropolitan French rate of 8.3%. The deterioration is hitting the public sector, businesses and construction simultaneously.
Public sector in retreat
Over the past year, Réunion has lost around 1,000 public sector jobs, a 1.1% decline in public employment. The main driver: a steep reduction in «Parcours Emploi Compétences» (PEC) contracts, a state-subsidised job integration scheme. The number of beneficiaries fell from 8,100 to 4,700 over twelve months — a net loss of 3,400 subsidised contracts.
The private sector is holding up better (+0.7% year-on-year, +0.1% in Q2 2026 alone), but apprenticeships dropped 5.4% with 700 fewer apprentices than a year ago. Total salaried employment on the island stands at 293,900 jobs.
Businesses under pressure
Beyond employment, activity indicators are worsening. Business failures surged 18% year-on-year with 1,240 cases recorded — versus just 5% nationally. New business registrations slowed 5% over the quarter. Construction suffered a brutal collapse: housing starts hit a 20-year low at 4,900 units (-21% year-on-year).
Why it matters
These INSEE figures paint the portrait of a Réunion economy under structural strain. The winding down of subsidised employment schemes, rising business failures and a collapsing construction sector point to a risk of economic decoupling that goes beyond a cyclical slowdown. For economic decision-makers and investors on the island, these signals call for a robust public policy response — at a time when the digital sector (€5.4M industry contract) is being positioned as tomorrow's growth engine.
Source: INSEE, Economic Outlook Note La Réunion, September 2026