Letter IEDI n. 1033–COVID-19, industry and employment
This Letter IEDI is based on the IBGE Continuous PNAD (PNADc/IBGE) microdata and updates the monitoring of manufacturing employment carried out regularly by the Institute.
The impacts of the new coronavirus pandemic on employment have been intense. In Q2/20, the number of employed persons in the private sector as a whole, as well as in the industry, reached its lowest level since the beginning of the PNADc/IBGE, in 2012. Compared to last year, 10.7 million jobs were lost in the private sector; in the industry, the figure reached 1.1 million.
This is equivalent to a 13.1% decrease in employment in the private sector (or -13.4% excluding the manufacturing industry) between the second quarter of 2019 and the same period of 2020. In manufacturing, however, the decline was less intense: -11.1%.
Out of the 24 industrial sectors analyzed, 20 saw employment falling. For being labor-intensive, which makes social distance difficult, clothing was the sector with the greatest loss (-22.1% compared to Q2/19), accounting for about 30% of the total decline in the manufacturing industry. Non-metallic minerals (-21.3%), wood products (-19.8%) and tobacco (-19.4%) also stood out, among others.
The performance of formal jobs was slightly less adverse, reflecting: their higher dismissal costs, their more teleworking-friendly nature, the higher share of more qualified employees, as well as the efforts of companies and government for their preservation, with the design of emergency programs in face of COVID-19. In the private sector as a whole, formal employment fell 9.4% compared to Q2/19. Once again, the drop in the industry was smaller: -8.5%.
As was expected, the real earnings of the employed population had a significant reduction in the private sector as a whole (-7.1%) but, also in this respect, the performance of the industry helped to reduce overall losses. The decline in industrial real earnings was half the fall in the other private sector activities— -3.6% versus Q2/19— and well below the reduction in important sectors such as construction (-13.3%), retail trade (-8.3%) and services (-7.4%).
This negative performance of labor income, which is the basis of household consumption, was driven by the reduction in occupation, as there was a significant increase in real average earnings in all sectors, including the industry. For the private sector as a whole, the increase was +6.8% in the year-over-year comparison and for the industry, +8.8%.
This performance, however, suggests that the pandemic affected mainly low-income jobs, causing the average to increase both in comparison with the second quarter of 2019 and in relation to Q1/2020.
The PNAD continuous data analysed in this Letter IEDI show that the industry, although not completely shielded, managed to cushion the negative impacts of COVID-19 on private sector total employment. The industry fired fewer workers, notably in formal jobs, and mitigated the contraction of total labor earnings.