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Two from “Brazil”: Which countries are close to full employment and which are lacking in work?

The unemployment rate fell 22 out of 27 federal units in the second quarter, bringing the national rate down from 11.1% (in the first three months of the year) to 9.3%, according to the IBGE. “It’s a major regression movement,” said the institute’s coordinator of household sample surveys, Adriana Beringuy.

However, the job market situation varies greatly across the country. Some countries show rates close to what is called “full employment”. This is a situation where, in theory, all job seekers can find one relatively quickly, which is reflected in unemployment rates typically between 3% and 6% – there is no consensus among economists on the most accurate rate.

This group includes states such as Santa Catarina and other countries with a strong agribusiness presence, such as Mato Grosso, Mato Grosso do Sul, Tocantins and Rondônia.

But at the other end of the scale are states where unemployment today exceeds 12% of the economically active population, and may exceed 15%. This is the case of Bahia, Pernambuco, Sergipe, Rio de Janeiro and Paraíba (see below).

Unemployment rate by state in the second quarter of 2022

condition Unemployment rate
SC 3.9%
MT 4.4%
Ms 5.2%
to me 5.5%
RO 5.8%
Public relations 6.1%
RR 6.2%
very funny 6.3%
he goes 6.8%
MG 7.2%
ES 8.0%
shovel 9.1%
SP 9.2%
IP 9.4%
EC 10.4%
A.m 10.4%
bad 10.8%
AL 11.1%
AP 11.4%
defender 11.5%
B.C.E. 11.9%
RN 12.0%
PB 12.2%
Royal Jordanian 12.6%
if 12.7%
Foot 13.6%
BA 15.5%

Countries Closest to Full Employment

Structural issues help explain why Santa Catarina is the unit in the union with the lowest unemployment rates. In the second quarter, the state’s unemployment rate was 3.9%, according to IBGE. This rate is lower than the average of the economies that make up the Organization for Economic Co-operation and Development (OECD), which was 4.5% in May. The Organization for Economic Co-operation and Development includes 38 countries, most of which are developed countries.

Pablo Bettencourt, consultant for the Federation of Industries of Santa Catarina (Fiesc), explains that the state’s economic structure is very diversified and characterized by a very strong industry, which accounts for nearly a quarter of GDP. “All regions have some kind of specialization and there is an expansion of new technologies in Blumenau, Florianópolis and Joinville. This sector is booming,” he says.

In the first half of the year, 84,400 formal jobs were created in Santa Catarina, 81% of which were in services and industry, according to the Public Register of Employees and the Unemployed (Caged). Despite the positive, the balance is lower than in the same period in 2021, when the state created 120,800 jobs.

The good functioning of the labor market is reflected in increased consumption. In Santa Catarina, extended retail sales increased 5.3% in the first half, compared to the same period in 2021. It was the fourth largest advance in the country. On the national average, the increase in sales was only 0.3%.

The other two states that occupy the country’s job market platform are in the Midwest. Mato Grosso, with an unemployment rate of 4.4%, and Mato Grosso do Sul 5.2%, both have a strong impetus from agribusiness, which in turn stimulates other sectors of the economy.

CONAP estimates that grain production in the 2021/22 cycle should grow by 17.7% in Mato Grosso and 14.2% in Mato Grosso do Sul, mainly due to productivity gains and higher commodity prices.

Trade is one of the sectors that benefits from agribusiness. While the national average volume of expanded retail sales grew just 0.3% in the first half of the year, compared to the same period in 2021, expansions in both states were 5.1% and 6.8%, respectively.

In both, the pace of job creation with a formal contract is faster than last year. In the first half of 2021, Mato Grosso’s economy created 44,900 jobs; In the same period this year, there were 50 thousand. At Mato Grosso do Sul, there were 26,900 in the first half of 2021 and 30,200 between January and June 2022.

Where is the most difficult to find work?

The situation is completely different in the Northeast, where it is difficult to find work. The highest unemployment rates in the second quarter were in Bahia (15.5%), Pernambuco (13.6%) and Sergipe (12.7%), although the index improved compared to the first quarter of the year.

The region also has the highest rates of underutilization of the labor force – an indicator that shows the percentage of unemployed, partially unemployed due to insufficient working hours and in the potential workforce in relation to an expanded workforce. Leading this ranking (see below) is Piauí, with insufficient use of 42.3%, followed by Sergipe (37.4%) and Bahia (34.9%).

Labor force underutilization rate in the second quarter of 2022

condition rate under use
IP 42.3%
if 37.4%
BA 34.9%
bad 34.3%
AL 33.6%
PB 31.2%
RN 30.8%
Foot 29.2%
EC 28.7%
B.C.E. 28.6%
shovel 27.3%
A.m 23.9%
AP 23.0%
defender 22.0%
Royal Jordanian 20.1%
to me 18.0%
SP 17.9%
MG 17.9%
ES 16.3%
very funny 14.9%
he goes 14.7%
RR 14.4%
Public relations 13.7%
Ms 12.3%
RO 11.2%
MT 10.1%
SC 7.0%

The Northeast is also ahead in terms of the percentage of disenchanted people – those who have given up looking for a job. The highest percentages regarding population in the labor force are in Maranhão (14.8%) and Alagoas (13.7%). Bahia has the absolute highest number: a disappointing 612.000. Across the country, 4.3 million people are in this condition.

The countries of the region also have, in relative terms, the lowest number of employees with formal contracts among the total employed in the private sector: in Piauí they represent 46.6% of the total and in Maranhão, 47.8%.

These two states are also among the five countries with the highest rates of unregulated trait in the country.

The slum rate of the working population in the second quarter of 2022

condition unofficial fee
shovel 61.8%
bad 59.4%
A.m 57.7%
IP 56.1%
BA 53.1%
Foot 52.9%
EC 52.8%
PB 52.2%
if 52.0%
AP 51.4%
RO 50.4%
B.C.E. 48.2%
RR 47.9%
RN 46.3%
AL 45.2%
to me 41.7%
ES 40.1%
he goes 39.5%
MG 38.7%
MT 37.2%
Royal Jordanian 36.5%
Ms 34.3%
very funny 32.8%
Public relations 32.2%
defender 31.2%
SP 31.1%
SC 27.2%

Despite these figures, the Central Bank highlighted in its latest regional bulletin, in May, that the economy of the Northeast maintained a positive performance at the beginning of 2022, with the continued progress of the industry. Data from the International Institute for Statistics and Information shows that in the first half of the year, industrial production in the region rose by 0.3% compared to the same months of 2021, driven by the good performance of Bahia.

On the other hand, shopkeepers feel the weak dynamism of the labor market: sales in extended retail decreased by 3.1% in Bahia and 5.3% in Pernambuco between the first half of 2021 and 2022. The exception is Ceará, where there was a 6.1% growth, which is Much higher proportion than the Brazilian average.

The scenario is different in services. In the three largest economies in the Northeast, sector growth has exceeded the national average. The increases were 10.6% in Bahia, 13.1% in Pernambuco, and 17.6% in Ceará, focusing on services provided to families, such as accommodation and food. Across the country, progress was 8.8%.

As for the Basel Accord, the recovery of the service sector, improvement in the labor market and the effects of the federal government’s income transfer programs should maintain economic activity in the region.

What do you expect from the job in the second semester

According to analyst Lucas Assis, of Tendências, the sharp drop in the Brazilian unemployment rate in the second quarter was caused by the greater dynamism of labor-intensive sectors, such as services provided to families, which grew by 36.2% compared to the first quarters of 2021 and 2022, according to IBGE.

Among the activities that grew the most were accommodation and food services, with an expansion of 38.1%. However, consulting offers one caveat: These are the jobs that tend to have low productivity and low productivity levels.

Expectations indicate that the pace of occupancy growth will weaken during the second half of the year. Tendências predicts that the number of unemployed will grow due to the delayed impact of higher interest rates, financial and political uncertainty, and a challenging international environment.

Itaú continues to detect a solid pace of growth in occupancy — it grew 6.2% in July compared to the same month last year, according to the bank’s own index — but it is showing the first signs of a slowdown. In the previous month, the expansion was 6.4%.

Another bank, MUFG Brasil, believes that the combination of the higher value of Auxílio Brasil – at R$600 through at least the end of the year – and lower inflation expected in the second half allow some economic growth to continue into the third quarter, allowing for additional job creation.

In addition, the bank estimates that there may be some temporary decrease in the number of people looking for work, which also contributes to a reduction in the unemployment rate (made up specifically by people looking for work).

For the last quarter of the year, MUFG sees an opportunity for weaker GDP to emerge, and some deflation may emerge from the cumulative rate hike. However, the outlook for employment is positive.

“We expect a further decrease in the unemployment rate, benefiting from seasonal job creation in the service sector due to holidays and Christmas sales,” the financial institution analysts note in a report.

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