Brazil has the biggest drop in unemployment among G20 countries, ranking shows

Brazil leads the ranking of G20 countries in falling unemployment rate. The country went from an unemployment rate of 13.1% in August 2021 to 8.9% in the same month this year, recording a drop of 4.2 percentage points.

The list prepared by Austin Rating at the request of the CNN Brasil Business brings Brazil in first place, followed by Spain (-2.2 pp), Turkey (-2.1 pp), Canada (-1.7 pp) and the United States (-1.5 pp).

The unemployment rate in Brazil was 8.9% in the quarter ended in August, according to the IBGE (Brazilian Institute of Geography and Statistics). The number represents a drop of 0.9 percentage point compared to the previous quarter, ended in May, and is the lowest level since the quarter ended in July 2015 (8.7%).

Data are from Pnad Contínua (Continuous National Household Sample Survey).

Austin Rating’s chief economist, Alex Agostini, highlights this decrease in the unemployment rate and projects further declines through the end of the year. “Now it is a seasonal period in which there is a lot of hiring and that is why we expect the rate to reach 8% in December”, predicts the person responsible for the ranking.

In terms of decline, Brazil was the country that fell the most in percentage points. Agostini explains that this happens because Brazil has a very strong volatility in employment. “The advance in vaccination provided an economic recovery, especially in the service sector, from the middle of this year until now. This sector is growing a lot and generating good jobs”, he highlights.

Reflection of the pandemic

In the view of Bruno Imaizumi, economist at LCA Consultores, if you compare the countries with the highest unemployment rate, Brazil is among them, that is, there is room for a sharp drop. “Even with this decline in the index, the level of unemployment in the country is still among the highest in the G20”, he points out.

Imaizumi explains that this phenomenon of falling unemployment rates is not exclusive to Brazil, despite being the one that is retreating more strongly. “One of the most important causes for this drop is the resumption of the pandemic and the acceleration of vaccination, which covered a portion of the adult population in the second half of 2021. It was during this period that the activities most dependent on the movement of people signaled a resumption in vacancies. employment”, he explains.

For the economist, the pandemic left marks on the job market around the world. “Historically, if we compare the average level of unemployment, the rates are lower than before the pandemic, because many people stopped looking for a job”, he says.

Another reason cited by Imaizumi regarding the decrease in unemployment rates in Brazil is the artificial stimulus and injection of public money by the federal government. “Several packages of measures were adopted, such as the advance of the 13th of the INSS, extraordinary withdrawal of the FGTS, the change in the ICMS rate now in the second semester, in short, which ends up helping to heat up economic activity. This drives consumption, which generates more vacancies in the market”, points out the economist.

Luciano Salamacha, professor of business strategy at Faculdade Getúlio Vargas, analyzes the reflexes of the pandemic. According to him, this period boosted employment in the country. “The unemployment rate was at very high levels even before the arrival of Covid-19. In August and September 2021, the number of unemployed was already lower than before the pandemic ”, he highlights.

From that date onwards, Brazil already showed a resumption in domestic production, heating up in entrepreneurship activity. Many people went into informality and have now begun to return to full employment.

The professor shows that some sectors are hot, as is the case of technology and services. “The vacancies linked to tourism moved the internal market, demanding more workers with a formal contract. As people cannot go abroad, Brazil has become the main destination. This scenario reactivates domestic consumption, mainly in bars, restaurants and entertainment, generating more and more jobs”, he concludes.