This increase in participation was mainly translated into employment: the number of employed people increased by 3.7% year-on-year, driven by considerable growth in formal salaried workers (almost 10% year-on-year), although more modestly in the case of informal workers (+2.6% year-on-year), the information comes from a report by Ecolatina.
However, a more detailed analysis reveals that the boost in formal wage earners is largely attributed to public employment, which increased 8.6% year-on-year, well above private sector jobs (+2.6% year-on-year). “In fact, jobs in public administration and education, which usually increase during the third quarter due to the formalization of positions, accounted for more than half of the total increase in employees”, the document states.
The factors that drove unemployment
The significant decrease in unemployment, which reached 5.7% of the Economically Active Population (EAP) – the lowest figure since the resumption of the series in mid-2016 -, and the magnitudes of these variations, suggest the possibility that much of the decline in unemployment and the expansion of employment is due to an increase in public employment.
Regardless of this, the report highlights that, during this last quarter, a persistent trend has been evident in the last two years: More people are entering the labor market, but they do so in a context of greater precariousness and, to a lesser extent, dependence on public employment.
What to expect for the new work landscape?
In the final stretch of the year, the impact on the labor market of the cooling of economic activity begins to be seen. “It is expected that the dynamics previously observed will not suffer substantial modifications”, warns Ecolatina.
As for 2024, several factors are expected to impact the labor market. On the one hand, The pronounced loss of purchasing power, especially in the first months of the year, will likely drive greater participation in the labor market, as more people will seek employment to support their depleted family income.
Simultaneously, the marked recession will surely cause a decrease in formal employment in some sectors, especially those most dependent on domestic demand, such as construction, affected by the increase in dollar costs and the eventual paralysis in public works.
Furthermore, prospects could become more complicated in the productive sectors most dependent on protection, which could suffer more as a result of greater trade openness.
However, this potential wave of unemployed “will not necessarily lead to a significant increase in unemployment,” the study warns. Even in a critical scenario, It is likely that part of the loss of formal employment “will shift towards informal employment and independent work, which tend to be of lower quality.”
However, The report highlights that, although this change is not desirable, it could be a factor that limits the increase in unemploymentbringing it around 8%.
Unemployment: the latent threat
Nonetheless, The threat of unemployment and this transition towards lower quality jobs may be important effects in moderating wage demands in the coming months. While this could help prevent excessive wage growth, the cost would be a further recession and a decline in purchasing power.
This set of factors will result in the main characteristics of the labor market not changing with the change of government. There will be more people working or looking for work to supplement modest incomes, and the quality of employment will continue to decline, since it is possible that formal workers move towards informality or independent work.
Reforms aimed at making the labor market more flexible could be a stimulus that, ultimately, “leads to an improvement in formality, although their effect will have to wait until the economy grows again,” he concludes.
Source: Ambito
