According to the data of the Work market published by the INDEC last week, the rate of Unemployment fell to 5.7% in the third quarter of the year. In any case, the cooling of activity will have an impact on employment data and various private studies warn of greater growth in informal work for the first months of 2024.
The fall in purchasing power and the strong recession will impact the labor market in 2024. In any case, analysts estimate that a moderation in inflation starting in the second quarter of next year, while a possible flexibility in the labor market could “incentivize future hiring.” Although for that, they clarify, a rebound in the level of economic activity is necessary.
In this regard, a report by the consulting firm Ecolatina stated that “The sharp loss of purchasing power, especially in the first months of the year, will lead to an increase in participation in the labor market“More people will look for a job to shore up eroded family income.”
“At the same time, The strong recession will surely lead to loss of formal employment in some sectorsespecially those most dependent on internal demand – among which would be construction, as a result of a growing cost in dollars and the eventual paralysis in public works -”, the firm detailed.
Unemployment would rise to 8%
Although they clarified that this “potential mass of unemployed will not necessarily imply a substantial increase in unemployment.” “Even in a critical scenario, It is expected that part of the loss of formal employment will migrate towards informal and self-employed jobs, characterized by being of lower quality. This change, although not desirable, may be a factor that contains the increase in unemployment, which would rise to the 8% area.”highlighted from Ecolatina.
Meanwhile, they pointed out that the threat of unemployment and the transition to a lower quality of work “may be no small effect in moderating salary demands during the coming months.”
“This whole combo will result in the main characteristics of the labor market not being modified with the change of government. There will be more people working or looking to do so to complement the meager income and the quality of employment will continue to decline, since it is possible that formal workers will move into informality or self-employment.the consulting firm concluded, and highlighted that the flexibility of the labor market “could be an incentive that ends up representing an improvement in formality, but its effect will have to wait for the economy to grow again.”
Employment: outlook for 2024
Aldo Abram, executive director of the Freedom and Progress Foundation, said that if the reforms proposed by the Government advance, it is possible that inflation will slow down and activity will rebound starting in the second quarter of next year. And, with this, an improvement in the labor market would be reflected.
“If the Government manages to demonstrate that it has governability and that it can change the course of the country, because it also has the support of the rest of the leadership to do so, the reality is that everything we have seen so far, which has increased informality, will most likely continue in the first months of next year“, said the economist to Ámbito.
“If the course can be changed, I would expect that towards the second quarter we will see inflation that begins to decelerate and towards the middle of the year, we are probably seeing an economy that is beginning to recover,” Abram explained.
And he concluded that “an economic recovery encourages investment, job creation and, given that a labor reform is being sought that encourages hiring employees, I believe that the trend we have observed so far will be strongly reversed.” “On the one hand, inflation impoverishes people and forces more family members to look for work, even if it is informal. And the disincentive that current labor legislation generates to hire an employee and also the recession that is being experienced. If that is reversed, it could be expected that we will see the decline in informality starting in the middle of next year.”.
Source: Ambito
