September 21, 2014
Gov’t: unemployment rises to 7.5 percent
Increase of 0.4% seen in first quarter as employment rate falls to 2005 level
The country’s unemployment rate rose 0.3 percentage points to 7.5 percent in the second quarter compared to the same three months of 2013, government data showed yesterday.
Unlike last year, when the second quarter saw a 0.7 percent drop in the jobless rate from the preceding quarter, the three months to June saw a 0.4 percent rise on the first quarter of 2014.
In the same year-on-year comparison, underemployment — when people are employed for 35 hours a week but seek to work more hours — dropped 0.3 percent to 9.4 percent, indicating that fewer people were out on the job market.
The amount of underemployed people not actively looking for satisfactory employment dropped a year-on-year quarterly 0.4 percent to 2.6 percent, while those on the hunt rose only 0.1 percent.
The employment rate for the entire Argentine population fell in the second quarter to 41.4 percent from 41.8 percent, the lowest since the first quarter of 2005, the INDEC national statistics bureau’s report showed.
The rate of employment compared with the total population paints a bleaker picture and suggests many more rely on irregular work or on government subsidies to make ends meet.
Further, the economically active population of 11.884 million people — comprised both by the employed and unemployed actively seeking a job — accounted for 44.8 percent of the total population of the 31 urban hubs surveyed in the second quarter this year, a drop on the 46.4 percent seen in the same period last year. This also likely reflects a decrease in the number of job seekers.
In the nationally representative cities assessed, unemployment clocked in at 890,000, rising 32,000 on the same quarter last year.
Hurt by declines in industrial output and consumer spending, the economy slid into recession in the first quarter, with last month’s technical default raising concern of the contraction worsening.
For economist and current PRO lawmaker Federico Sturzenegger, the employment issue was more generalized than just a sector-specific ailment, however.
“Small- to-medium sized companies, as well as the construction and services sectors are also having a very hard time,” he told the Herald.
Employers are not creating jobs due to a decrease in confidence about the economic climate, Sturzenegger continued.
Asked if he saw the default aggravating employment rates before the end of President Cristina Fernández de Kirchner’s final term in office, the congressman said it was likely, as the government had hedged its bets on a return to international credit lines, which now appears unlikely, at least in the short-term.
Analysts largely said the increase in unemployment is not surprising considering the state of the economy.
“A rise in unemployment would be expected with production and auto, auto-part, construction and other sectors stagnating, and revenue falling below inflation,” Centro de Estudios Sociales y Económicos Scalabrini Ortiz director Andrés Asiain told the Herald.
Asiain noted, however, that a 0.4 percent increase fell within the methodological error margin, arguably reducing its significance.
“Although people lost money during the first half of the year while their wages and benefits went unadjusted, hikes and adjustments in June allowed them to match price rises during the year, so consumption and economic activity could show signs of recovery in the next few months,” he added.
The economist warned that although the Central Bank’s interest rate drop could stimulate consumption, its effect on the black market “blue” dollar could undermine such benefits.
Private sector winces
INDEC’s report was published a week after the Labour Ministry said that registered private sector employment dropped 0.3 percent in the second quarter compared to the first three months of the year. Nonetheless, companies were able to employ 0.5 percent more people between May and June than during the same period of 2013.
According to the ministry, suspensions affected six out of every 1,000 registered private sector workers over the three months.
Many of these came in the auto sector, with car manufacturing output suffering another month of depletion in July, falling a whopping 31.4 percent on the same month of 2013 and 3.1 percent on June this year, according to the ADEFA auto factories’ chamber. Exports were 30 percent fewer than in June, and a staggering 38.7 percent than in July of 2013.
The sector brought the curtain down on a crisis-riddled semester with a 21.8 percent contraction and thousands of suspensions.
The monthly EMAE economic activity index, which is a close proxy for gross domestic product (GDP), plunged for the third consecutive month in May, INDEC reported in July, confirming the country has entered recession after the January devaluation of near 15 percent.
A decline in industrial output and weakness in consumption is seen to be hurting the economy, and the July 31 default could further aggravate job creation.
Although seemingly resolved through the renewal of a trade pact with Brazil and the unveiling of the Procreauto credit scheme for car purchases, the abrupt and sharp decline of the auto sector both in terms of production, domestic sales and exports was reflected in the contracting EMAEs of May, March and April.