Itaú BBA - COLOMBIA – Labor market weakness persists in October

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COLOMBIA – Labor market weakness persists in October

Dezembro 2, 2019

Rising unemployment rate and a possible labor market reform are key discussion points in the current social protests

Falling participation and continued job destruction highlight a weak labor market in Colombia. The national unemployment rate rose 0.7pp over twelve months to 9.8%, driven by the rural component. Yet the urban rate also increased. by 0.2pp to 10.4%. The latter came in above the 10.1% Bloomberg market consensus and our forecast. Total employment fell 1.2% yoy in October, the seventh consecutive monthly drop. Meanwhile participation retreated 1.1pp from one year earlier. In the quarter ending in October, the unemployment rate stood 1.1pp higher than one year ago, at 10.3%. The loosening labor market, amid depressed consumer sentiment and the recent domestic events suggest some moderation of the upbeat consumption dynamism ahead.

Self-employment remains the primary job destructor. In the quarter ending in October, employment contracted 1.9% yoy (similar to 2Q19 and 3Q19), while the labor force fell a milder 0.8%. Self-employment fell 6.5% YoY in the quarter (in line with 3Q19), while private employment growth moderated to 2.9% (3.2% in 3Q19 and 3.6% in 2Q19). 

The rising unemployment rate and a possible labor market reform are key discussion points in the current social protests. We expect the unemployment rate to rise for the fourth consecutive year to 10.3% (9.7% for 2018), with risks titled to a further rise next year.
 

Miguel Ricaurte
Carolina Monzón



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