four states have lower rates than rich countries

Brazil is the country of extremes. One of the portraits is the unemployment rate. In some states, more than 10% of the economically active population is unemployed. In others, rates are close to or below the G7 average, a group that brings together some of the richest countries in the world.

In December, the average unemployment rate in the G7 countries (Germany, Canada, United States, France, Italy, Japan and United Kingdom) was 3.9%. In the same period, four Brazilian states had rates below this: Rondônia (3.1%), Santa Catarina (3.2%), Mato Grosso do Sul (3.3%) and Mato Grosso (3.5%). Two other states of the federation recorded unemployment below 5%: Roraima (4.6%) and Rio Grande do Sul (4.6%).

Meanwhile, IBGE data show that nine states of the federation ended the year with unemployment equal to or greater than 10%, and in some cases it could exceed 13%. On the national average, the rate at the end of 2022 was 7.9%, the lowest in seven years.

The coordinator of the IBGE National Household Sample Survey (Pnad), Adriana Beringuy, points out that a movement that influenced the drop in unemployment in the country, especially in 2022, was the recovery of the number of workers in trade and services activities.

However, after ten consecutive months of decline, the unemployment rate rose again at the beginning of this year. The average rate for the November-December-January moving quarter was 8.4%, in response to the slowdown in economic activity as of the last months of 2022. The IBGE has not yet released state data for 2023, which will only occur when the figures for the first quarter of the year.

Good moment for agribusiness helps MT and MS

One of the factors that contributes to low unemployment in some Brazilian states is agribusiness. Expectations are favorable for this year. Bradesco projects a 7% expansion in agricultural GDP and 1% in livestock GDP. And the Central Bank stresses, in its latest regional bulletin, that this should be reflected in the performance of other activities.

Mato Grosso and Mato Grosso do Sul live this situation. According to Lucas Assis, an analyst at consultancy Tendências, the low unemployment rates in these states are associated with the high level of employment (percentage of employed persons in the working-age population), above the national average.

“The relatively higher level of occupancy in these states is associated with the positive performance of local economic activity in recent years,” he says.

Between 2020 and 2022, according to estimates by Tendências Consultoria, the economies of Mato Grosso do Sul and Mato Grosso advanced, on average, 2.1 percentage points above the national GDP.

According to estimates by Banco do Brasil, Mato Grosso’s GDP grew 10.9% last year and is projected to expand 3.2% in 2023, well above the national average – which rose 2.9% in 2022 and should increase 0.9% in 2023, judging by the expectations gathered by the BC bulletin Focus.

Mato Grosso do Sul, affected by climate problems, grew by 1.7% in 2022. The projection for this year is 2.6%.

BB points out that, as of 2010, the industrial sector of Mato Grosso and Mato Grosso do Sul had significant growth, driven by the increase in agricultural production.

“Both regions stood out on the national scene, with Mato Grosso leading the industrial advance from 2014. After the Covid-19 pandemic, in 2020, there was a temporary slowdown, but both managed to recover quickly”, says a bank report .

Diversification makes life easier for SC and RS

In Santa Catarina, which has the second lowest unemployment rate in the country (3.2%), an asset is the extremely diversified economy, which helps to mitigate the effects of possible crises. It also has the second highest labor force participation rate (68.3%), second only to the Federal District.

In Rio Grande do Sul, with unemployment of 4.6% at the end of 2022, the diversified economy may have helped to alleviate the impacts of climate problems, which harmed segments directly or indirectly linked to agribusiness.

In Rondônia and Roraima, other factors explain the low unemployment. “The low unemployment rates in Rondônia and Roraima are associated with the reduced participation rate of the labor force, suggesting a relatively lower search for occupation”, points out Lucas Assis, from Tendências.

The economist also points out that Rondônia is one of the states with the highest proportion of self-employed workers, which suggests relatively deteriorated conditions in the local labor market.

Where unemployment is highest

On the other hand, there are states with unemployment rates above 10%, such as Acre (10%), Amazonas (10%), Paraíba (10.3%), Federal District (10.3%), Rio de Janeiro (11.4%), Sergipe (11.9%), Pernambuco (12.3%), Amapá (13.3%) and Bahia (13.5%).

These are rates higher than those of Turkey (9.8%), one of the poorest countries in the OECD and which was affected, in February, by earthquakes that killed thousands of people.

A structural issue influences the Northeast, Assis points out: “The activity groups most affected by the social distancing measures of the Covid-19 pandemic, such as accommodation, food, domestic services, employed proportionally more people. [no Nordeste]compared to other regions.

The North Region, in addition to having the highest rate of informality in the country, had the highest proportion of self-employed persons and the largest share of small businesses, whose maintenance of operations became particularly difficult in view of the interruption of supply chains. of supplies.

“Not by chance, the recovery of the job market follows relatively slower in the territorial units of greater economic vulnerability”, says the Tendências analyst.

Participation rate still not back to pre-pandemic levels

The labor market participation rate (share of people of working age who are employed or looking for work) remains below the pre-pandemic level.

In the quarter ended in December, this rate was 62.2%, against 63.5% in December 2019. The indicator was on an upward trajectory until the end of the first half of last year, when it reached 62.7%, but after recoiled.

Rodolfo Margato, an economist at XP Investimentos, believes that this dynamic may be partially related to higher income transfers from the government. As a result, there is less incentive to supply labor.

Beringuy, from the IBGE, says that, in addition to the participation rate being influenced by the dynamics of the labor market, there is a demographic component. “What is observed is a greater reduction in the participation rate among people aged 60 or over”, he says.

Compared to the pre-Covid period, the participation rate increased in only eight states: Pará, Amapá, Tocantins, Maranhão, Alagoas, Santa Catarina, Mato Grosso do Sul and the Federal District.