Brazil unemployment rises to 12.6%, working population plummets

(C) Reuters. FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) in Rio de Janeiro

By Jamie McGeever

BRASILIA (Reuters) – Brazil’s unemployment rate rose to its highest level in just over a year due to the coronavirus crisis, official figures showed on Thursday, as a record number of people left the workforce, pushing labor force participation to an all-time low.

Although the 12.6% unemployment rate was lower than economists had expected, other indicators such as the number of people leaving the workforce and the underemployment rate point to a weaker labor market than the headline figure suggests.

The 12.6% headline jobless rate in Latin America’s largest economy in the three months to April was the highest since early last year, but notably lower than the median forecast in a Reuters poll of 13.3%.

This comes a day after separate figures showed that Brazil lost a record 860,503 formal jobs in April, the biggest monthly fall in employment since comparable records began nearly 30 years ago.

Thursday’s figures from government statistics agency IBGE showed that 89.2 million people were in work, down almost 5 million or 5.2% from the preceding three-month period, both record declines.

That pushed the labor force participation rate down to a record low 51.6%, with a record 70.9 million people now out of the workforce.

“Of the 4.9 million fewer people in work, 3.7 million were informal workers. There was also a record fall in the number of formal private sector workers … which now stands at 32.2 million,” said IBGE research analyst Adriana Beringuy.

The number of Brazilians officially out of work stands at 12.8 million, and the number of underemployed rose 8.7% to a record 28.7 million, IBGE said. The underemployment rate jumped to 25.6%, also a record.

The labor market is likely to deteriorate further. Central bank president Roberto Campos Neto said he expects the unemployment rate to rise above 15%, while economists at Citi reckon it will near 18%.