After positive four months, economists expect pace reduction in job creation
06/21/2023
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Rodolpho Tobler — Foto: Leo Pinheiro/Valor
The strong job creation with formal employment contracts in the first months of this year is explained by the recomposition of the workforce by sectors of the economy that lost jobs amid the Covid-19 pandemic. This explains the increase in formal job creation at the beginning of the year, according to a survey by the Fundação Getulio Vargas’s Brazilian Institute of Economics (Ibre-FGV), carried out for Valor based on the General Register for Employed and Unemployed (Caged), from the Ministry of Labor.
Between January and April, just over 705,000 jobs were created, particularly in construction, food services, transportation, and administrative services, as well as education and health. There was an increase of 1.66% since last December.
The positive surprises of the first months of the year were also influenced by the dynamism of the agribusiness in the first quarter. However, after the generation of formal jobs in the four months, economists expect the pace to slow down in the coming months.
“With the pandemic increasingly off the radar, the economy is dictating the pace of the labor market,” said Rodolpho Tobler, a researcher at FGV Ibre.
For this year, no decrease in occupancy is expected compared to last year, but neither is the same progress expected for 2022. “The scenario for 2023 is still more one of organic reorganization, of readjustment of the areas most affected by the health crisis,” said Mr. Tobler. The country could generate a little more than 1 million formal jobs this year, indicate some estimates made by economists.
After services, with about 435,000 jobs created in the four months, the construction sector stood out with a little more than 120,000 jobs. Hiring was driven by public works, amid the consolidation of investments in infrastructure.
Another highlight is the manufacturing industry, with the opening of a little more than 103,000 formal jobs. In this case, the largest volume is in food and beverages, in the wake of the growth of agribusiness. Agribusiness boosted the GDP in the first quarter by growing 21.6% compared to the last three months of 2022.
“We also attribute this [job performance in the food industry] to the increased availability of household income, which ends up driving the consumption of income-sensitive goods that have greater essentiality,” said Rodolfo Margato, an economist with XP.
Agribusiness also influenced transportation and warehousing, another highlight of this year. Agribusiness is not one of the segments that generated the highest absolute number of job positions, but it showed one of the highest increases in December and April. The 41,000 job openings generated in this period represented a positive variation of 2.5% since last December.
However, the largest variations in the period took place in construction and the public administration, defense, and social security sectors, and education, with increases of almost 5%.
In terms of the number of formal jobs created among the services, education stood out (102,000) followed by administrative activities, transportation, and health. In education, 2023 is the first school year that is “100% normalized,” which explains the “mini-boom,” said the researcher from FGV Ibre.
According to economists’ evaluation, the growth of the labor market from now on — not only its recomposition — will depend on a better scenario than the one presented. But the GDP result, the slowdown in inflation, and the fiscal framework bill are factors that bring “clarity” to the horizon, reinforcing expectations for the reduction of key interest rates by the Central Bank.
“These are positive signs that can contribute to the decision to hire. But this effect is expected to happen towards the end of this year,” said Mr. Tobler. “Next year we will see a stronger improvement.”
Mr. Assis, an analyst at Tendências Consultoria, reiterates that the contractionary monetary policy is expected to keep industrial production stable in the coming months, thus limiting hiring in the period. The industrial and service sectors, such as information and communication, which are sensitive to the deterioration of financial conditions, will likely also lose momentum until the last months of 2023.
Trade is also expected to continue to face a challenging scenario, especially in the durable goods segment due to unfavorable conditions in the credit market. High interest rates and high defaults are cooling down the dynamism of the segment, affecting even workers outside the formal universe.
When the economy returns to have a stronger impact on the labor market, which is expected for 2024, old problems related to employability will intensify. One of them is the lack of skilled labor — which the productive sector estimates will cost Brazil an additional R$160 billion. Added to this is the growing challenge posed by technological advances in various sectors of the economy, as they change the needs of those who hire.
According to Rogério Caiuby, an executive advisor of the Competitive Brazil Movement (MBC), an initiative of the productive sector that calculates the Brazil Cost, there is an urgent need to formulate public policies and mobilize productive sectors and areas of education to avoid a “blackout” of labor in Brazil in a few years, especially if the tax reform is approved, which could give impulse to the economy.
“We have a demographic problem: we are no longer a country with a growing population. The number of people leaving the labor market is equal to the number entering,” he said. “It’s almost like a growth limiter.”
Mr. Caiuby defends the spread of vocational-technical education, saying that initiatives must focus on three target groups: informal workers, young people in high school, and professionals who need retraining in occupations most affected by the digital transformation.
Informality alone accounts for 40% of the workforce, he recalled. According to the MBC’s assessment, this represents an opportunity to attract this group of professionals to formal positions, in which wages are usually higher, in areas where the productive sector is expected to invest in the coming years.
*Por Érica Polo — São Paulo
Source: Valor International