The formal market slows down and opens 253,000 jobs in October, the lowest balance in 6 months

The country registered the opening of 253,000 formal job vacancies in October, according to data released this Tuesday (30) by the Ministry of Labor and Social Security. The balance is the second in a row to show deceleration and represents the lowest result in the last six months.

The balance results from the difference between 1.7 million hires and 1.5 million dismissals, according to the Caged (General Register of Employed and Unemployed Persons). The month’s result was below that of October 2020, when the country was facing the first year of the Covid-19 pandemic.

Bruno Dalcolmo, executive secretary of Labor and Social Security, stated that companies had been hiring at a strong pace until now and that there was a limit to this expansion. For him, hiring now has a greater dependence on the dynamics of the economy.

“There isn’t a downturn, it’s a normal process because companies have hired heavily from last year until now, and there is a limit to that. Companies will not continue hiring ad infinitum. At some point, they start to depend on general dynamics of the economy,” he said.

“Of course, this is influenced by demand for products, exports, commodity values, business confidence, issues related to inflation. But this is normal economic dynamics. As opposed to a slowdown, what we are experiencing now is a process of normalization of hiring and dismissals, and that is very good,” he said.

According to the ministry, the lower balance in October compared to a year earlier is also explained by the increase in layoffs, as a result of the end of the Emergency Program for the Maintenance of Employment and Income (which allowed for a reduction in wages or suspension of employment contracts. work in exchange for a benefit, the BEm, paid by the National Treasury to the affected employee) —which is no longer in force.

Among the sectors that hired, the biggest decrease in percentage terms (compared to previous months) was observed in the industry, which had been opening more than 70 thousand jobs per month between August and September — and in October it hired 26,600.

According to the technicians, the industry’s numbers are influenced by the sugar-alcohol chain, since the sugarcane harvest has ended. In addition, they say, there is a seasonal and traditional behavior of the factories at this time — when they begin to close down the production of goods to be sold in commerce for the end of the year festivities.

On the positive side, the creation of jobs has been driven by services, a sector that opened 144.6 thousand jobs and is being boosted by the reopening of activities and by the advance of vaccination. The performance within the group was led by the administrative activities segments; accommodation and food; and transport, storage and mail.

Then came the sectors of commerce (70.3 thousand vacancies), industry (26.6 thousand) and construction (17.2 thousand). Only agriculture closed jobs in the month (cut of 5.8 thousand jobs).

Data from Caged also show a real fall of 4.3% in the average admission salary compared to October last year — to R$ 1,795.46. Since April, there has been a constant retraction in the indicator.

According to technicians, the movement is natural at the end of the year and tends to be reversed after January. In addition, they say, hiring temporary workers also ends up pulling wages down.

During the press interview, the ministry commented on adjustments to last year’s Caged data. Updated data at the beginning of the month showed that the balance for 2020 fell by almost half compared to the figure initially released by the federal government.

According to data released in January by the Ministry of Economy, the indicator had been positive at 142,690 jobs last year. After adjustments at the beginning of the month with numbers delivered by companies after the deadline, the balance shrank 46.8%, to 75,883 jobs created.

Dalcolmo stated that data from Caged, which had its methodology changed at the beginning of 2020, cannot show numbers that are not in the database and that companies have 12 months to adjust the information provided to the government.

Before announcing the Caged data, Minister Onyx Lorenzoni participated in the 93rd National Meeting of the Construction Industry (ENIC). At the event, he stated that the formal job market in Brazil should continue to grow and remain at around 2.5 million jobs created.

The minister also commented that the government intends to present, by the end of the year, a provisional measure or bill that creates the Voluntary Social Service, which should offer opportunities for young people and people over 50 in city halls.

“The Voluntary Social Service will be available to Brazilian city halls at the turn of the year. It is a simplified hiring system to break this vicious circle. In other words, young people or people over 50 go to a city hall, work a shift, receives the equivalent and has the mandatory qualification. If you spend one year in the program, at least two qualifications, if you stay up to two years in the program, four qualifications,” he explained.

Rodolfo Margato, an economist at XP, says that the formal job market in Brazil will continue to expand in the coming months, although net job creation should slow down. According to him, this scenario incorporates the gradual reduction in the number of contracts covered by the BEm and the cooling of hiring in the services and commerce sectors as of the beginning of 2022, in line with a scenario of timid economic growth (XP projects an increase in 0.8% for GDP next year, after rising close to 5% this year).

“Finally, we project a net creation of 2.87 million formal jobs in 2021. For 2022, we expect to add approximately 1 million formal jobs”, says Margato.