COLOMBIA – Economic reopening supports employment recovery in July

Job creation reflected the economic reopening

Vittorio Peretti & Carolina Monzón


The unemployment rate surprised to the downside in July, as the economy recovers amid the advancing reopening and the normalization of business operations after the protest action earlier this year. The urban unemployment rate fell 9.7pp over one year to reach 15.0% in July (7.8pp down in June), well below the Bloomberg market consensus of 16.5% and our 17.0% forecast. Urban employment increased 2.4% MoM/SA, exceeding the 1.2% labor force gain. On the national scale, the unemployment rate fell 5.9pp over 12 months to 14.3% in July (5.4pp drop in June). The falling unemployment rate is unfolding amid improving labor market participation, rising to 60.4%, from 59.7% in June (63% average in 2019). Overall, total employment sits 5.8% below pre-pandemic levels, improving from the -8% recorded in June (and 26% trough in April last year).  

Job creation in the quarter reflected the economic reopening. Total employment in the quarter ending in July increased 15.7% yoy (+2.8 million jobs). Private salaried posts increased 19.2% YoY (1.3 million new jobs), but still remains 10% below levels at the close of 2019. Meanwhile, self-employment increased 16.0 YoY (also contributing 1.3 million new jobs), sitting 5% below pre-pandemic levels. By sector, commerce (+608 thousand posts), hotels and restaurants (+317 thousand new jobs), and entertainment activities were the key drivers in the quarter, reflecting the effect of the full economic reopening. 

The monetary and fiscal stimuli, vaccination advances and a benign global environment will support an activity recovery that would likely support the labor market. We expect the unemployment rate to average 14% this year, down from 16.1% last year, but risks tilt to an even lower rate if the labor force recovery continues to lag.

Vittorio Peretti 
Carolina Monzón