Expansion of 1.3% over the same period in 2022 is the first since 2021; country remains below pre-pandemic levels, FGV Ibre shows
06/23/2023
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Fernando Veloso — Foto: Divulgação
Brazil’s productivity rate increased between January and March for the first time since mid-2021 driven by a bumber crop at the beginning of this year, data from the Regis Bonelli Observatory of the Brazilian Institute of Economy (FGV Ibre) show.
The metric that considers the actual hours worked rose 1.3% in the first quarter of 2023, compared to the same period in 2022. In the fourth quarter of last year, it was down 0.9% year over year.
Productivity per actual hour worked, which was at a similar level to the one seen before the Covid 19 pandemic, is now about 1.4% above it. However, FGV Ibre researchers urge caution in interpreting this performance, since the increase is due to the extraordinary productivity growth in agriculture.
“We don’t see any structural acceleration in the data,” said Fernando Veloso, coordinator of the observatory along with Silvia Matos, who also signs the study, and researchers Fernando de Holanda Barbosa Filho and Paulo Peruchetti.
If it were not for agriculture, the productivity per actual hour worked would have fallen by 0.8% year-over-year in the first three months of 2023, according to the researchers. The productivity per actual hour worked in agriculture increased by 23.5% in the first quarter of 2023, compared to the same period in 2022. In industry, growth slowed to just 0.6%, while services continued to decline, now of 1.1%.
“Productivity growth in agriculture is central to understanding what happened [to overall productivity] in the first quarter. There was no significant reversal in either industry or services,” Mr. Veloso said.
He notes that agribusiness accounts for about 8.5% of hours worked, while services account for more than 70%. “Although agriculture is a relatively small sector in terms of employment, the effect was large enough to affect the total.”
The actual hours worked can include, for example, illness, vacation, or workday reductions such as those made during the pandemic, as well as increases due to production peaks and compensation hours.
After strong year-over-year growth in the second quarter of 2020 — due to the composition effect caused by the pandemic, which took less productive workers further out of the market — the increase in the productivity per actual hour worked slowed until the first quarter of 2021. From there, as vaccination progressed and actual hours normalized, it turned negative, but losses declined each quarter until the end of 2022.
The other productivity measures, which consider the total usual hours worked and the number of people employed, also increased by 1.5% and 1.4%, respectively, on a year-over-year basis, after declining by 1.8% and 1.9%, respectively, in the previous quarter.
Productivity metrics are calculated in comparison with the value added to the economy, a variable that is close to GDP, but excludes taxes and subsidies.
The trends of convergence and deceleration in the growth of labor metrics, observed throughout 2022, continued in the first quarter of this year. There were increases of 2.7%, 2.6%, and 2.8%, respectively, in the number of people employed, the number of usual hours worked, and actual hours worked, in comparison with the same period last year.
Mr. Veloso points to the growth in the value added of agriculture in the first quarter, of almost 19%, compared to the same period in 2022. “It was an extraordinary growth, at the same time that there was a decline in the labor factor,” he said.
During this period, the number of people employed in agriculture decreased by 5.2%, while actual hours decreased by 3.8% and usual hours by 4.7%. “It’s fewer people working, fewer hours, and GDP is skyrocketing. This drives productivity in a direct way,” Mr. Veloso said.
Another way to analyze the dynamics of productivity indicators is from the seasonally adjusted series and, also from this point of view, there was a reversal to an increase or stronger growth between 2022 and 2023.
In the first quarter of this year, productivity per actual hour worked, per employed people, and per usual hour worked advanced 2.1%, 2.2%, and 2.1%, respectively, compared to the fourth quarter of 2022.
The growth in aggregate productivity reliant on agriculture dates back to the first quarter of 2017, according to researchers at FGV Ibre. At that time, productivity per actual hour was up 2.6% year over year, driven by the 28.5% increase in agribusiness. “Then this was reversed over time. We think something similar is happening now,” Mr. Veloso said.
Since last year, formal workers have dominated the progress of the employed population, but in the assessment of the FGV Ibre researchers, this is not yet reflected in productivity gains.
In April 2023, formal jobs were 7.2% above the pre-pandemic period, and informal jobs were only 1% above. Formal jobs are defined as those working in the private sector, civil servants, and domestic workers with a contract, self-employed with a business taxpayer number (CNPJ), employers with a CNPJ, as well as military personnel. Informal jobs are informal private-sector and domestic workers, self-employed without a CNPJ, employers without a CNPJ, and family helpers.
FGV Ibre is also calculating the total factor productivity (TFP), a measure of the efficiency with which the factors of capital and labor are transformed into production.
With the human capital adjustment, TFP per actual hour worked in the first quarter of 2023 is 1.7% higher than in the same period in 2022, and 2.4% higher than in the three months immediately before. However, it is still 2.5% lower than before the pandemic.
*Por Anaïs Fernandes — São Paulo
Source: Valor International