Informality pulls unemployment down in quarter to June

Brazil’s unemployment rate fell to 8 percent in the quarter ended June, according to data from the latest monthly household sample survey conducted regularly by the Brazilian Institute of Geography and Statistics (IBGE). 

This is the lowest rate for a rolling quarter ending in June since 2014, and represents a decrease of 0.8 points compared to the previous quarter, mainly due to the increase in people employed in informal activities.

In the same period of 2022, the unemployment rate was 9.3 percent, and there were 1.4 million more unemployed than now, with the contingent of people without an activity reaching 8.6 million.

The total number of employed workers grew by 1.1 percent compared to the previous quarter, reaching 98.9 million Brazilians — a figure mainly driven by the 2.4 percent growth in the group of people engaged in informal activities compared to the first three months of the year. As a result, the informality rate rose to 39.2 percent of the employed workforce, against 39 percent in the year’s first quarter.

The number of people employed in the public sector also rose by more than 445,000, to 12.2 million, while the number of people formally employed in the private sector changed very little.

The average real monthly income remained stable in June at BRL 2,921 (USD 618), but was 6.2 percent higher in an annual comparison, which also led to a growth of 7.2 percent in the mass of real income of the employed contingent compared to June 2022.

According to IBGE research coordinator Adriana Beringuy, this behavior in the second quarter shows a return to normality in the sector’s statistics, as the quarter ending in June historically brings a decrease in the unemployment rate compared to the first quarter of the year, when many temporary contracts are terminated, and more people are looking for new opportunities. 

Those who do not have a job and are not looking for opportunities do not enter the unemployment statistics.

Analysts still see some resilience and growth in the labor market in the face of a depressed base influenced by the pandemic, but believe that the pace of new job opportunities will slow in the second half of the year. The situation will only change when the cut in interest rates kicks in, i.e., when companies, mainly small and medium-sized, resume accessing credit lines on more accessible terms.

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