First quarter of 2023 sees drop in labor market participation

There is a drop in the participation rate in the labor market in the first quarter of 2023, according to Fundação Getúlio Vargas, FGV IBRE.

The participation rate in the Brazilian labor market fell after the third quarter of 2022. The biggest drop is registered among groups with low education and lower per capita income from home-based work.

The Brazilian labor market participation rate corresponds to the labor force as a proportion of the working-age population. The rate fell sharply during the pandemic and gradually recovered.

This indicator is at the level of 61.6% in the January-March 2023 measurement. There was a peak of the indicator in July-September 20022, at 62.7% and, today, this index drops again.

The reduction in the participation rate represents a smaller contingent of people working or looking for a job, which may pose a risk to GDP growth.

According to FGV estimates, there is a substantial effect of the participation rate on the unemployment rate. With the participation rate fixed at 63.4%, which was the pre-pandemic average, there would be 3.2 million more workers in the workforce in the first quarter of 2023.