Government revises data again and the formal contract goes from positive to negative balance in 2020

The government revised the labor market data again in 2020 and the year, which until then registered the creation of 75.9 thousand jobs, started to present a net cut of 191.5 thousand jobs — putting an end to the government’s speech that there was an improvement in formal employment even during the pandemic.

This is the second time the 2020 data has undergone a significant revision. In early November, it was revealed that data updated by the government pointed to half of the creation of vacancies as originally released.

According to data released in January by the Ministry of Economy, the indicator had been positive at 142.6 thousand jobs in 2020. After adjustments with numbers delivered by companies after the deadline, the balance shrank 46.8%, to 75.9 thousand jobs created . Now, there was a review of over 267,000 vacancies – which turned the result for the year negative.

Economist Daniel Duque, from FGV Ibre (Brazilian Institute of Economics of the Getulio Vargas Foundation), says that the new data reveal that layoffs were underreported in the country during the pandemic and that the difference between Caged and IBGE data is now clarified (Brazilian Institute of Geography and Statistics) —which pointed out greater difficulties in the labor market. “This riddle is finally explained,” he said.

For him, the discrepancy in the information occurred both because of the implementation of the new Caged methodology (which now takes into account the data reported by eSocial, the system through which companies provide information to the government) and because of the pandemic.

“That [mudança metodológica e pandemia] creates the perfect scenario to have underreporting of layoffs when you close your business. I don’t think the government is to blame, but the euphoria that was propagated turned out to be inconsistent with the reality of the labor market,” he said.

For Duque, the change does not change his scenarios going forward, as he was already trying to disregard Caged as a basis for estimates.

The originally positive data was widely celebrated by the government, which celebrated the resilience of the labor market even as the pandemic hit economic activity hard.

In January, when releasing data for 2020, Minister Paulo Guedes (Economy) celebrated the positive balance of more than 100,000 jobs created. “On the one hand, emergency aid made the biggest direct transfer of income. And, on the other hand, the jobs program preserved 11 million jobs,” Guedes said at the time.

In July, Guedes also said that the IBGE was “in the age of the chipped stone”, in a criticism of the methodology of Pnad Contínua and the differences between the two surveys. Due to the restrictions in the pandemic, the institute started using telephone interviews to calculate the numbers.

For the Minister of Economy, data from Caged showed that Brazil was creating jobs “very quickly”. Guedes’ criticisms of IBGE were hit by analysts at the time.

According to the government, the new review was due to factors such as data delivered by companies after the deadline. According to the Ministry of Labor and Welfare, the adaptation of companies to the new format and the difficulty of informing data amidst the pandemic boosted the difficulties.

The ministry stated that the reprocessing of information led to a 1.1% increase in admissions in 2020 and a 2.9% increase in dismissals. “It is noteworthy that database revisions are natural, even more in transition contexts or in atypical situations such as a pandemic, being carried out by various bodies and statistical institutes around the world,” stated the folder in a note.

In an interview about the October data from Caged, the technicians commented on the adjustments in the numbers, but stopped commenting directly on the new changes in the 2020 result.

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

The changes are registered when the country registered the opening of 253,000 formal jobs in October, the lowest result in the last six months.

Dalcolmo said companies had been hiring at a strong pace so far, and that there was a limit to that expansion. For him, hiring now depends more on the dynamics of the economy.

“There is no downturn, there is a normal process that companies have hired heavily from last year until now, and there is a limit to that. Companies are not going to continue hiring ad infinitum. At some point, they start to depend on of the general dynamics of the economy,” he said. “As opposed to a slowdown, what we are experiencing now is a process of normalization of hiring and firing, and that is very good,” he said.

According to the ministry, the lower balance in October compared to a year earlier is explained by the increase in layoffs due to 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 in exchange of a benefit), which is no longer in effect.

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.