Letter IEDI n. 1109—Industry and the reaction of formal employment
Today's Letter IEDI analyzes the evolution of employment in the private sector in Q2/21, with an emphasis on industrial jobs, based on microdata from the recently released IBGE’s Pnad Contínua. Compared to a year ago, when the pandemic hit the Brazilian economy with force, total jobs in the Brazilian private sector rose 7%, which is equivalent to an increase of almost 5 million employed people compared to Q2/20.
The positive highlights were construction (+19.7%) and agriculture (+11.8%), which together accounted for 40% of the increase in the number of employed persons between Q2/20 and Q2/21, but all major sectors registered expansions: 6% in services, 5.1% in manufacturing industry and 4.7% in retail trade.
The biggest contribution of the industry to employment in Q2/21 was in occupations with a formal contract. As the sector is one of the most formalized in the economy (63% of its workforce), it was largely responsible for avoiding another quarter of decline in the private sector's total formal employment. Compared to the same period last year, industrial jobs with a formal contract grew 1.4% or 86 thousand more posts, offsetting the decline in other activities and allowing this type of occupation to remain virtually flat in the private sector as a whole (-0.2%).
In the different industrial branches, the positive evolution of employment was not unanimous. There was a decrease in total jobs in 10 of the 23 segments analyzed, that is, in 43% of them, despite the depressed base of comparison due to the pandemic in 2020. The biggest drop, of -27.3%, was registered by the pharma-chemical and pharmaceutical sector, but this case was an exception. As its activity was heavily pressured by the pandemic in 2020, it generated a high base of comparison, in contrast to the rest of the industry.
On the other hand, 13 segments, or 57% of manufacturing, increased their number of employees, with emphasis on cellulose, paper and paper products (+51.4% compared to Q2/20), machinery and equipment (+25.5%), non-metallic mineral products (+22.7%) and apparel and accessories (+20.9%).
The IEDI also assessed recent developments by aggregating industrial branches by technological intensity. In this case, the data are for employment with a formal contract. The segment of high technology intensity stands out, negatively, with a reduction of 20.1% in the number of workers, mainly as a result of the adverse result of pharma-chemical and pharmaceutical products (-29.2%). In contrast, there was a rise in employment in the medium-high technology industry (+7.6%), as well as in medium (+0.8%) and medium-low technology (+1.9%), although less significantly.
The negative aspect of the recent picture of industrial employment concerns the evolution of real income and total income, which act as the basis of household consumption. Compared to Q2/20, the actual effective income received by industry employees decreased 5.4%, suggesting a situation in which companies in the sector are still resorting to lay-offs and are not replacing the higher-paying jobs lost during the pandemic, especially in light of cost pressures arising from the scarcity of raw materials, the devaluation of the real, fuel and energy prices, etc. For the private sector as a whole, income was 2% up.
Thus, the real effective total income of the manufacturing industry remained practically stable, varying -0.2%, due to the favorable evolution of occupation. In the private sector as a whole, aggregate payment increased 9.1%, driven mainly by the service sector. After consecutive months of drops in employment and income, total income from services grew +13% in Q2/21, the first expansion in the year-on-year comparison since Q1/20 (+0.6%).