Hiring of formal workers should slow down in the 4th quarter, says Inter

With one of the lowest unemployment rates since 2014, the labor market numbers for October, released this Wednesday (30) by the Brazilian Institute of Geography and Statistics (IBGE), surprised expectations for the month.

The set of available data, however, includes signs that the hiring of formal workers, one of the main drivers behind the strong recovery in employment, should begin to lose strength from the last quarter of the year, according to the team’s analysis. economics of Inter.

Figures from the Continuous National Household Sample Survey (Pnad) by the IBGE revealed that the country’s unemployment rate stood at 8.3% last month, considered the moving average for the three months ended in October. It was the lowest proportion for the month since 2014.

“If the deceleration of the Caged observed in October is consolidated in the coming months, the Pnad should also show a lower variation in the number of formally employed people still in the last quarter of the year, which is in line with the strong deceleration already observed for the market of informal work”, said Inter in a report to clients.

According to the bank, the difference in methodology between the two main labor market surveys in the country may explain the gap: the General Register of Employed and Unemployed, Caged, takes into account only the creation and closing of formal vacancies, while the Continuous Pnad is broader and accompanies all forms of work.

In addition, Caged data are monthly, while Pnad results, although also released monthly, consider the average numbers of the previous three months.

“The PNAD data are released in quarterly moving averages, which tends to smooth the series”, explains Inter. “Historically, changes in trends in the Caged anticipated changes in the PNAD by an average period of two to three months”, he adds.

Released on Tuesday (29), the October Caged pointed to the net creation of 159.5 thousand new jobs with a formal contract, in a strong deceleration compared to the 277.39 thousand vacancies registered in the previous month.

Inter also highlights the fact that, according to the PNAD, informal jobs are decreasing, while it is the hiring of formal employees that has been driving the continuous drop in unemployment pointed out by the survey,

“The reduction in the unemployment rate in the quarter is due exclusively to the formal labor market. While the contingent of workers with a formal contract grew by 0.95%, the informal employed population decreased by 0.8%”, points out the report.

“Declines in the stock of informal jobs generally precede a deterioration in the labor market as a whole, indicating a likely slowdown in the pace of growth in the formal sector in the coming months.”

This happens because the dismissal of unregistered workers is much simpler and less costly than that of registered employees. For this reason, they are usually the first to be fired in times of uncertainty, working as a kind of thermometer for the rest of the job market.