The job market sees the departure of poorer and younger people – 07/08/2023 – Market

“It wasn’t worth it anymore”, explains caregiver Janice Souza, 32, resident of Vitória da Conquista (BA). Fired during the pandemic after working for the same family for ten years, she suddenly found herself without the income on which a child depended.

“The boss didn’t want anyone outside, so as not to bring the virus into the house. When the pandemic passed, she said she didn’t need me anymore. I was even recommended for other services, but they all paid little and were far from home, I spent most of it on transport and someone to take care of my son. I decided to wait until the offers improved.”

Lower-income, less educated and younger workers were the ones who contributed the most to the loss of participation in the labor market since the Covid-19 pandemic.

In the comparison between the fourth quarter of 2019 and the first three months of this year (the most recent data for this level of detail), the loss of participation among workers coming from households with labor income per person of up to R$ 325 was 5 .37 percentage points.

Considering the breakdown by income group, of the 2 percentage points of decrease in the total participation rate, the lowest income group contributed with -1.75 points.

In that same comparison, the participation of the highest income groups even rose, despite the difficulties imposed by the health crisis. It increased by 1 percentage point for those earning between R$3,901 and R$6,500.

In the comparison by level of education, the losses between the end of 2019 and the beginning of 2023 are 3.02 percentage points for workers with incomplete primary education and 5.63 points for those with elementary education and not finished high school.

In the same period, losses ranged from 1.74 percentage points to 1.5 points for workers aged 30 to 39 years and 14 to 17 years, respectively.

The survey was based on data from the PNAD (National Household Sample Survey) Continuous, from IBGE (Brazilian Institute of Geography and Statistics) and compiled by researchers from FGV Ibre (Brazilian Institute of Economics, Getulio Vargas Foundation).

Economist Fernando de Holanda Barbosa Filho, who led the study, assesses that the sharp drop and subsequent recovery in the participation rate was concentrated on the poorest and least educated workers and is due to the effects of the pandemic on the labor market.

With the reopening after the critical period of the pandemic, the bleeding of the participation rate was a little more balanced between income groups.

The participation rate shows the labor force —people employed plus those who are unemployed—in proportion to the working-age population, those aged 14 and over.

A lower participation rate means a reduction in the number of people working or looking for work. The fall also ends up masking the unemployment data, as the unemployment rate becomes lower.

After reaching 63.4% in the quarter from December 2019 to February 2020, shortly before the pandemic, the indicator had a negative record in the period from May to July 2020, hitting 56.7%. With the advancement of vaccination and the reopening of shops and services, it rose to 62.7% from July to September 2022, but dropped again, to 61.6% in the first quarter of 2023.

Unemployment in the first quarter of 2023, according to the IBGE, was 8.8%. If the participation rate had remained at the pre-pandemic 63.4%, another 3.4 million would have been in the workforce and unemployment would then have been 11.3%, according to the researchers’ estimates.

As of 2022, the departure of these groups from the labor market may be linked to the increase in the real value of the Bolsa Família program —which rose to BRL 600 at the end of the Jair Bolsonaro government and was maintained at that level by President Luiz Inácio Lula da Silva (PT), evaluates the researcher.

According to the government, beneficiary families will receive at least BRL 600. Those with children up to six years old receive an additional BRL 150 per child since March 2023. To receive the benefit, the main rule is that the family has monthly income up to BRL 218 per person.

“One hypothesis is that people are waiting for a better offer to leave home to work, this in a way reduces the job offer. It already existed in theory in relation to Bolsa Família, but it seems more visible after the change in the level benefit”, says Barbosa Filho.

He points out that the available data are not sufficient to prove the relationship between the increase in the benefit and the loss of participation of workers with lower income range, but it indicates that recipients are well represented in this group that is leaving the labor force.

For the specialist in poverty and inequality and director of FGV Social, Marcelo Neri, there is evidence that proves the increase in salary for years of study and level of training at the bottom of the workforce, where Bolsa Família beneficiaries are. “But there is still a lack of evidence that deals with an increase in the participation rate of these groups. It would be necessary to study the effects of these more generous benefits.”

“Another important aspect to emphasize is that the groups with less schooling and lower wages are the most vulnerable, in more fragile occupations and with a greater risk of dismissal. They end up leaving the job market”, says Barbosa Filho.