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The ongoing March Pnad captures only the beginning of the crisis, but already brings important signals about what lies ahead
The labor market data published this Thursday (04/30) by the Brazilian Institute of Geography and Statistics (IBGE), despite capturing only the beginning of the new coronavirus pandemic in Brazil, already bring worrying signs about the effects of the crisis. at work
Between February and March, unemployment in the country increased from 11.6% to 12.2%, according to the Continuous National Survey of Household Sampling (Pnad). The survey uses moving quarters as a time parameter; therefore, the 12.2% rate refers to the period from January to March, while the 11.6% rate, to the three months between December and February.
The first case of covid-19 in the country was confirmed on February 26, and quarantine decrees in states like Rio and São Paulo began to appear in the second half of March.
Therefore, the April data should give a clearer picture of how the likely recession that is looming is manifesting in the labor market.
But the figures for the quarter up to March already indicate the effects that quarantine measures, considered necessary for the health system to attend to seriously covid-19 patients, will have on employment.
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Below, we explain three of them.
First retraction of the labor force in the historical series.
In the quarter that ended in March, the total number of workers employed or looking for work fell 0.2% in relation to the same period of the previous year; This was the first drop in this comparison since the start of the historical Pnad Continuous series in 2012.
For Naercio Menezes Filho, professor and coordinator of the Insper Public Policy Center, this may be the first indication of something that is expected to happen during the pandemic: in the face of a negative shock in the offer of vacancies, since many companies are on the doorstep closed, people decide not to look for work.
The economist Thiago Xavier, who follows the labor market in Trends Consulting, points out that this factor had a direct influence on the performance of the unemployment rate, which grew, but within the seasonality patterns of the period, and was even less than the registered between January and March 2019, 12.7%.
“The unemployment rate generally picks up this time of year, but for different reasons,” he says.
Given that only those actively seeking work are among the unemployed, the 177,000 who left the labor force during this period, despite not being working, do not enter the group of unemployed, but are inactive.
Therefore, the exit of people from the labor force must “maintain” the increasing unemployment rate, and the indicator, by itself, may not perfectly reflect the gravity of the situation.
The Trends baseline scenario, for example, contemplates an unemployment rate of just over 14% by the end of 2020. Bradesco’s expectation, in turn, is that the rate will reach 15% in December.
“The impact is so great and so sudden that it will change the way in which the analyzes of the labor market are carried out. We will have to analyze other concepts, other indicators,” says Menezes Filho.
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The negative impact of the crisis on income should be more visible in future research publications
The contraction of the labor force is reflected in another important indicator, highlights Bradesco economist Ariana Zerbinatti: the participation rate.
This is the relationship between the economically active population and the population of working age: consider who is in the labor market among people of that age. This proportion suffered a sharp reduction between February and March, going from 61.8% to 61%, he says, discounting the seasonal effects.
“In comparison, this level is very close to the lowest level in the historical series, in mid-2014, when the labor market began to show the effects of the slowdown and, later, of the economic retraction.”
Reduction of informality.
Another point that draws attention in Pnad Continua is the 0.9% drop in employment without a formal contract, the first retraction in 45 months compared to the same period of the previous year.
The reduction was so significant that the proportion of this type of hiring in total decreased.
In “normal” times, a drop in the level of informality in the labor market is generally good news, because it means an increase in formal jobs, which gives workers access to the social protection system, such as unemployment and retirement.
In this case, however, it points out what economists have highlighted since the start of the pandemic, that the most vulnerable segments will be those that will feel the most negative effects of the crisis, and sooner.
“This is another thing that is lost if you only look at the aggregated data,” reflects Xavier.
This is because, in general, employment grew 0.4% in the annual comparison. “But the categories linked to informality have already fallen,” he adds.
In this sense, Zerbinatti points out that, despite having a lower level of social protection, “informal employment was important in the last recession, since it mitigated the increase in the unemployment rate and generated income.”
Sunday Camila / Piratini Palace
Freelancers are more vulnerable to the negative effects the pandemic will have on the economy.
In this scenario, adds Menezes Filho, measures such as emergency income (payment of R $ 600 to low-income informal workers) “are essential to avoid a social tragedy.”
“There are millions of workers who will not have access to unemployment insurance or job support programs,” he adds, referring, in the latter case, to flexible working hours with reduced wages, an attempt to avoid layoffs. .
The reduction in informality may also explain why, despite the deterioration of some indicators, income grew by 0.8% compared to January-March 2019.
With the dismissal of workers who receive lower wages, this variable may reflect a statistical effect of the change in composition (given that the labor force now has a higher proportion of workers who, in general, have a higher average income) and therefore, it would not be good news.
An indication in this regard is the 10% drop in the average income of the category “employer without CNPJ”, which includes, for example, the street vendor who owns a position who has an assistant.
Domestic workers’ incomes also decreased significantly, 2.5% compared to the same period last year.
Fall in domestic employment, accommodation, food and construction.
Domestic employment, in fact, was the activity that fell the most in the quarter that ended in March.
In relation to the same interval in 2019, 137 thousand lost their jobs, which represents a decrease of 2.2% in the contingent of these workers.
This is another indicator that indicates the impact of the crisis on the most vulnerable groups. In the specific case of housewives and housewives, many employers gave up the service without, however, maintaining the payments: a
investigation
Held in mid-April by the Locomotive Institute noted that, since the start of the pandemic, this contingent reached 39% of the total.
The accommodation and food area, in turn, registered the first drop in the volume of employees since the survey began in 2012.
In this sector, affected by the unemployment of the tourist industry and the temporary closure of bars and restaurants, the retraction was 1.3%, which means the loss of 70 thousand jobs.
Construction, on the other hand, a segment that in many cities has been excluded from quarantine operating restrictions, but which may be feeling the effects of the cooling of economic activity, has also been suspended. Employment fell 2.1%, minus 138 thousand vacancies.
Continuous data collection, carried out monthly in households in all regions of the country, was affected by the pandemic. The investigation began over the phone, with a series of difficulties gathering information.
IBGE launched a
technical note
This Thursday he reported that he requested the Institute’s Research and Quality Coordination Office to study the impacts on the unemployment rate and the usual average income.
“The studies show that with respect to the indicators calculated for the first quarter of 2020, there was no significant increase in the coefficients of variation,” the text continues, indicating that the data for the period are considered statistically reliable.
Another important indicator of the labor market, the General Register of Employees and Unemployed (Caged), has its disclosure suspended. The latest data presented was for December.
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