Development Distribution in Honduras’s Labor Market
Part 2 of our 2026 Labor Series
Introduction
Honduras’s labor market illustrates a different dimension of development distribution than Costa Rica. While Costa Rica has increasingly concentrated higher productivity activity in particular regions and sectors, Honduras has a labor market characterized by large differences in participation, income, sectoral employment, and the type of work available to different groups of workers. The latest figures from Honduras’s National Institute of Statistics (INE) show an economy in which employment has expanded, but where substantial differences remain in how workers participate in economic activity and the income generated by that activity (INE, 2025).
A Large Labor Force, Uneven Participation
Labor-Force Participation by Age in Honduras
Labor-force participation rate by age group, 2025
Labor-force participation was highest among people aged 30–59 and substantially lower among younger and older workers.
Honduras had an estimated population of 10.05 million in 2025, of which approximately 7.36 million, or 73.3 percent, were aged 15 or older and therefore considered part of the population of working age (INE 2025). The country's labor force consisted of approximately 4.29 million people, equivalent to 58.2 percent of the working age population. The number of employed people reached 4.08 million, an increase of 9.4 percent from 2024 (INE, 2025). The aggregate employment figures, however, conceal a substantial gender difference. Men accounted for 59.6 percent of the labor force in 2025, compared with 40.4 percent for women. The labor-force participation rate was 76.4 percent for men and 43.1 percent for women, producing a gap of around 33 percentage points (INE, 2025). The difference also appears across age groups. Participation among people aged 30 to 59 was 69.7 percent, compared with 55.9 percent among those aged 15 to 29 and 36.1 percent among people aged 60 and older (INE 2025). Honduras therefore has a labor market in which participation is distributed unevenly before differences in employment type or income are considered.
Employment Is Concentrated Across a Few Sectors
The composition of employment provides another measure of development distribution. In 2025, commerce accounted for 23.2 percent of employment, followed by agriculture at 21.9 percent, manufacturing at 13.5 percent, and construction at 9.3 percent. Together, these four activities accounted for 67.9 percent of employment (INE, 2025). The distribution is particularly significant because these sectors represent very different economic activities. Commerce includes a large number of small businesses and self-employed workers, while manufacturing is more closely connected to formal production and international trade. Agriculture remains heavily concentrated in rural areas, while construction is predominantly male and sensitive to investment cycles. The gender composition of these sectors is also highly differentiated. Women represented 54.3 percent of employment in commerce and 76.2 percent of employment in accommodation and food services. In contrast, they represented only 10.5 percent of agricultural employment and 1.4 percent of construction employment (INE, 2025). The result is a labor market in which economic participation is not only divided by sector, but also strongly differentiated by gender.
The Rural Income Gap
Labor Income and Development Distribution in Honduras
Average monthly employment income, 2025 (Honduran lempiras)
Rural average employment income was approximately 43% below the urban average.
Average employment income for workers with higher education was more than three times that of workers without formal education.
Geography adds another layer to the distribution of labor income. Among workers reporting employment income, the average monthly income in 2025 was approximately L9,682. The urban average was L11,725, compared with L6,681 in rural areas. The rural average was therefore approximately 43 percent below the urban figure (INE, 2025). The difference was also visible within employment categories. Average income for private-sector employees was L9,776 nationally, compared with L12,038 in urban areas and L6,552 in rural areas. Self-employed workers averaged L8,491 nationally, with an urban average of L10,104 and a rural average of L6,513 (INE, 2025). Agriculture illustrates the same geographic and sectoral distinction. INE estimates indicate that average income among people working in agriculture, livestock, forestry, and fishing increased from approximately L3,015 in 2021 to L5,510 in 2025 (INE, 2025). Despite this increase, agricultural earnings remained substantially below the national average for workers reporting employment income. This creates an important distinction between employment and the economic value associated with different forms of employment. A worker can be employed while remaining in an activity with relatively low average earnings.
Underemployment and the Quality of Employment
Unemployment alone provides an incomplete picture of Honduras's labor market. The national unemployment rate declined from 8.6 percent in 2021 to 4.9 percent in 2025. At the same time, however, the INE recorded more than 2 million people with some form of employment problem in 2025, including unemployed people, workers experiencing insufficient working hours or income, and members of the potential labor force (INE, 2025). The largest component was underemployment associated with insufficient income. Approximately 1.36 million people fell into this category, while another 328,000 were classified as underemployed because of insufficient working time. The resulting rate of underemployment due to insufficient income was 33.4 percent in 2025, compared with 34.8 percent in 2024 (INE, 2025). This distinction helps explain why a declining unemployment rate does not necessarily imply a corresponding convergence in labor-market outcomes. A person can move from unemployment into employment while remaining in a position with relatively low income or insufficient working hours. The Inter-American Development Bank's Better Jobs Index similarly treats employment quantity and employment quality as distinct dimensions, measuring labor-market outcomes through participation and employment on one side and formality and adequate earnings on the other (IDB, 2024).
Education and Income
Differences in educational attainment are also reflected in labor income. According to the 2025 EPHPM, average monthly employment income increased substantially with educational attainment. Workers without formal education had an average income of approximately L5,472, compared with L7,306 for those with basic education and L18,995 for workers with higher education (INE, 2025).The difference between the lowest and highest categories is more than threefold. This relationship does not establish that education alone determines earnings. Sector, occupation, location, experience, and other characteristics also influence income. Nevertheless, the figures show a strong association between educational attainment and the distribution of labor income in Honduras.The structure of the working-age population makes this particularly relevant. In 2025, 56.3 percent of Honduras's working-age population had basic education as their highest level of attainment, while 21.2 percent had secondary education and 11.3 percent had higher education (INE, 2025).
Development Distribution
Honduras's labor market therefore reveals several overlapping distributions of economic activity. Participation is substantially higher among men than women. Employment is concentrated in commerce, agriculture, manufacturing, and construction. Rural workers report substantially lower average incomes than urban workers. Agricultural employment remains large relative to the sector's average income. And a significant share of workers experience insufficient income despite being classified as employed. These patterns help distinguish employment from the broader distribution of economic activity. Honduras's unemployment rate reached 4.9 percent in 2025, its lowest level in the INE's 2021–2025 series. Yet the same labor-market survey records substantial differences in participation, earnings, sectoral concentration, and underemployment (INE, 2025). Development distribution is therefore visible not simply in whether Hondurans have work, but in the sector in which they work, the region in which they live, the amount they earn, and the level of education associated with their employment. For Honduras, these differences provide a useful lens for examining how economic activity is distributed across the labor force and how aggregate improvements in employment coexist with persistent variation in the economic returns to work.
Sources
Instituto Nacional de Estadística (INE). 2025.Cifras del Mercado Laboral EPHPM Julio 2025. Tegucigalpa: Instituto Nacional de Estadística.
Instituto Nacional de Estadística (INE). 2025.Encuesta Permanente de Hogares de Propósitos Múltiples, EPHPM 2025. Tegucigalpa: Instituto Nacional de Estadística.
Instituto Nacional de Estadística (INE). 2025.Serie de Indicadores 2016–2025. Tegucigalpa: Instituto Nacional de Estadística.
Instituto Nacional de Estadística (INE). 2025.Sector Agropecuario en Honduras: Mercado Laboral y Dinámica Económica. Tegucigalpa: Instituto Nacional de Estadística.
Inter-American Development Bank (IDB). 2024.Better Jobs Index 2024: Quality of Employment in Latin America: Between Informality and Insufficient Wages. Washington, DC: Inter-American Development Bank.
International Labour Organization (ILO). 2024.Global Employment Trends for Youth 2024: Decent Work, Brighter Futures. Geneva: International Labour Organization.
International Labour Organization (ILO). 2024.¿Cómo cuidamos en Honduras? Servicios de cuidado en los departamentos de El Paraíso y Comayagua: La calidad del empleo que generan y su impacto en la inserción laboral de las mujeres. Geneva: International Labour Organization.
International Labour Organization (ILO). 2026.Honduras: ILOSTAT Country Profile. Geneva: International Labour Organization.
