The unemployment rate is one of the most important economic indicators. It affects the economy by affecting the spending power of consumers. When the unemployment rate is high, consumers have less money to spend, which affects the economy.
In which a much more modest growth of the economy is expected, the situation of the labor market also causes concern, and for the experts, this year could be marked by a lower generation of jobs, and by a new growth in unemployment, rate that could return to double-digit terrain.
Added to this situation is the 16% increase in the minimum wage, as pressure for formal employers, plus the new rules of the game that some companies face after the new tax.
Ivan Jaramillo, a researcher at the Labor Observatory of the Universidad del Rosario, explained that, as a possible recession is expected, “a natural effect of containment of employability rates is inherited, which in October (9.7%) and November (9, 5%) had closed in single digits”.
According to the expert, due to the devaluation, the slowdown in GDP and the high levels of inflation, this “progressive improvement” would be slowing down, which will depend to a large extent on active policies and the maintenance of certain generation support programs of employment.
“Inflation and devaluation impact confidence, and therefore job creation. Production costs increase, there are more barriers to creating new jobs,” Jaramillo said.
Stefano Farné, director of the U. Externado Labor Market Observatory, agrees. He assured that expectations are lower in the face of lower growth, which will surely affect job creation.
“In recent months, salaried employment continued to grow very well, which is a good indicator because it reflects the commitment of private companies. But since there is a slowdown, employment growth will also slow down, added to job losses in the public sector, ”he said.
In the latest BBVA Research projection updates, the bank estimated that the unemployment rate in 2023 will be 11.2%, while for 2022, they calculate 10%, and in the case of urban unemployment, this would be 12% this year. above the indicator of 10.5% estimated for the end of 2022.
From the bank, it is expected that this year the GDP will grow 0.7% and that the economy will reduce its capacity to create new employment and will be more concentrated in the informal sector, affecting the capacity of private consumption.
“We believe that in 2023 jobs will be created, close to 200,000 jobs, but we also think that some formal employment will be destroyed and some informal employment will be created,” explained Juana Téllez, chief economist at BBVA Research. Colombia.
On the other hand, Banco de Bogotá, Gustavo Acero, senior economist at Economic Research and Market Analysis, highlighted that the outlook for this year was not so favorable.
Acero assured that the labor market has shown an important recovery in relation to the decrease in the unemployment rate in 2022. However, he pointed out that the employment and labor supply and demand indicators have not shown the same recovery.
“We are seeing a stagnation in the level of employment, which, although it is recovering compared to the pre-pandemic level, is far from that long-term trend. It is possible that the unemployment rate will stabilize, with marginal improvements, but that there will also be the destruction of jobs ”, he indicated.
In an interview with Portafolio, the director of Fedesarrollo, Luis Fernando Mejía, recently said that there is already a deterioration in the generation of employment and, therefore, an increase in the unemployment rate, since the seasonally adjusted unemployment figure (the one that isolates calendar effects to compare it with the previous months) in October was 10.5%, and that of November was 10.8%.
According to Mejía, in 2023 “we will surely have less dynamic job creation due to a growth that could be substantially below that of 2022, and it is likely to have a deterioration in the unemployment rate,” an indicator that according to Mejía it will be even higher than 11%.
In relation to the increase in the minimum wage for this year, which was set at 16%, there are also perceived risks.
Bancolombia highlighted in a recent report that, given the context of marked economic slowdown, it is foreseeable that some companies “must react by reducing their current or expected payroll”, and that the new value of the minimum wage would encourage hiring with informal schemes.
