Brazil’s unemployment rate is at an all-time low, at 5.6% in the third quarter, according to third-quarter Pnad data released by IBGE this Friday. But national numbers obscure the contrast in the country’s labor market reality. People in Pernambuco face high double-digit unemployment rates (10%) and people in Bahia 8.5%, while residents of Espirito Santo, Rondonia, Santa Catarina and Mato Grosso experience full employment, with unemployment rates between 2.3% and 2.6%. Regional differences have always existed, but the data now show that states in the North and Northeast have been less able to benefit from a booming job market than states in the South, Southeast, and Midwest to narrow the gap. The third-quarter numbers also show that these states with less active job markets will be the first to feel the effects now that the economy has started to cool.
– Northern and northeastern states had a shorter period of time to respond to the warming job market. We have seen improvement in recent quarters. However, the third quarter statistics show that momentum has been lost as the indicators have stabilized, and that unemployment remains at a relatively high level in some sectors of the federation, assesses Vitor Hugo Miro, associate researcher at the FGV Ivre Northeastern Development Research Center.
Janaina Feijo, a researcher in the field of applied economics at FGV Ibre, explains that there are a series of factors that influence this performance, which are related to the regional context, production structure and even political issues, which makes it more difficult for the northern and northeastern states to create jobs.
– These are regions that are less dynamic and have fewer companies. The South and Southeast have more interconnected markets, less friction, infrastructure, better connectivity, and issues related to logistics and capital flows. There is also the issue of human capital. Frictional unemployment can occur if workers are not trained to match market demands. Educational level affects the informalization rate, which in turn affects the level of unemployment.
Milo said efforts are being made to overcome educational deficiencies in the region, especially in primary education, highlighting the example of Sobral, which is being followed in several municipalities in the northeast. However, he points out that there are still bottlenecks in secondary education. The problem of lack of training and economic dynamism interact. Miró points out that changing this reality and bringing the statistics of each Brazilian state closer to the labor market will be impossible without public authorities and consistent medium- to long-term measures.
– Currently, it is difficult to retain even the most talented workforce, as they move on to positions in companies in other parts of the country as they advance in their careers, he notes.
When looking at labor market indicators nationally, the differences between states become even more pronounced. For example, when it comes to data measuring underutilization, Brazil’s average is 13.9%, but the extremes are found in Piauí (29.1%), Sergipe (26.5%), Bahia (26.2%), Santa Catarina (4.4%), Mato Grosso (6.0%), and Espirito Santo (6.1%).
When it comes to the self-employed population, the northern and northeastern states once again have rates above the national average of 25.3%. In Maranhão state, which has the highest rate, self-employment accounts for more than a third (33.1%) of employment, and the same is true in Para and Amapá states, at 29.9% and 29.1%, respectively. The lowest percentages were in the Federal District (17.5%), Acre (19.3%) and Goias (21.5%).
Check the unemployment rate by federal unit.
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