As a chronicle of an announced news, the economic slowdown continues to strongly impact the labor market in Colombia, which has already gone from producing the number of jobs that are demanded to losing jobs, mainly in those sectors that have been in the red for over a year, such as construction and commerce.
This was recorded in the data presented by the Dane on the current employment situation, where it can be seen that the unemployment rate was 10.3% in June, a figure that marks a considerable increase compared to 9.3%. which was reached in the same period in 2023, with women being the most affected at this time.
For reading: Unemployment in June was 10.3% and completed nine months in double digits
In other words, 2.6 million Colombians are currently unemployed despite looking for work, which is an increase of 248,000 people. Also, if we take into account that the employed population only fell by 130,000 and that the working-age population rose from 39.5 million to 40 million, it is clear that the country is not producing the jobs that are needed.
Unemployment in Colombia
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Maria Claudia Lacouture, president of the Colombian-American Chamber (AmCham) regretted these results and said that it is increasingly evident that the country faces several important challenges that require immediate attention, to prevent this deterioration from continuing and to ensure that unemployment returns to at least single digits.
“We must highlight the gender gap and the young population between 15 and 24 years old as the most affected. Given this, once again, as we have repeatedly pointed out, we are facing a challenge of economic growth that directly impacts job creation and requires decisive action,” said Lacouture.
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For this expert, it is essential to implement concrete actions that promote coordination and generate relevance, certainty and trust. It is time to activate an economic reactivation based on a respectful consensus that involves all relevant actors.This reactivation must be short-term and feasible to guarantee tangible and sustainable results,” he said.
Gender gap
When comparing the unemployment rate by sex, it can be seen that for men it went from 7.7% to 8.4% in the measurement from June 2023 to June 2024, a variation that marks an increase of 0.7 percentage points.
However, for women the indicator went from 11.6% a year ago to 12.9% at this time, leaving an increase of 1.3%.
Informality.
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This means that currently, while there are only 1.23 million in the country of unemployed men (an increase of 110,000 people), despite looking for them, the registrations in the case of women are 1.38 million (130,000 more); showing that the deterioration is mainly impacting them.
Meanwhile, in the seasonally adjusted overview, the DANE reported that unemployment was 10.7% adding men and women, a figure that also marks an increase compared to May, when it had been 10.4%. Although there are no significant variations in this point, it should be noted that the country has completed nine months with double-digit unemployment.while projections indicate that this will continue in the coming months.
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It will continue to rise
Although things are not going well, the most worrying thing is that they will not improve soon. María Claudia Llanes, an economist at BBVA Research, warned that the country will enter a “calendar effect” that will influence the fact that there will be no reductions in unemployment, at least in the short and medium term.
Recession
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“Employment remains at high levels, at 23 million people, despite its annual fall in June, which was largely explained by the high comparison base in June last year, when employment was high. Going forward, it is expected that there will be other months this year with negative annual employment growth, since the comparison base, “Employment from last year remains quite demanding in the months of July to September,” he explained.
In turn, the president of Andi, Bruce Mac Master, called attention to the fact that, as has been noted for several months, the number of people who are outside the labor force continues to increase.
“Specifically, by June of this year, around 459,000 people had left the workforce. As we have mentioned, if this were not the case, the unemployment rate could be higher,” he stressed.
When reviewing the behavior of job creation and loss in Colombia by economic activity during June, the sectors of public administration (-172,000), construction (-129,000), professional and scientific activities (-110,000) and artistic activities (-106,000) were those that had the largest falls, all above one hundred thousand people, showing the new impacts generated by the slowdown.
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On the other side of the coin, industries with the greatest growth appear manufacturing (153,000), information and communications (124,000), which was a pleasant surprise this time, accommodation and food services (85,000), real estate activities (77,000) and financial and insurance activities (21,000). These significant increases were not enough to prevent an increase in unemployment in June.
Watch out for the rates
Another expert who joined this conversation was Jackeline Piraján, an economist at Scotiabank Colpatria, who was emphatic in saying that the labor market is reflecting that Colombia is going through a period of quite marked economic weakness, which mainly affects women and young people.
Interest rates
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“What is expected is that the Bank of the Republic will continue to cut its interest rates in the future. The deterioration of the labor market this month became more evident than in previous months and could imply that in the future, probably from September, The central bank will probably continue to lower interest rates at a faster rate,” Piraján said.
In this regard, he concluded by saying that “the deterioration of employment is an important call to economic policy authorities to think about reactivation plans”, recommending starting with the sectors that have been in the red for more than a year.
“The situation that is being seen today is that people are leaving the market “Workers are entering household occupations, meaning that households are increasingly dependent on fewer working people to survive, and this could continue to prevent Colombia from experiencing a significant upturn in consumption in the future,” he concluded.
For now, economic projections indicate that the unemployment rate will not return to single digits until mid-2025. However, for this to happen, the slowdown must stop and the trend of the sectors that are currently in the red must be reversed.
