Unemployment is falling slowly, construction is responding better and the gender gap is narrowing

Unemployment is already overwhelming more than two and a half million Colombians. To be exact, 2,646,000 people were excluded from the labor market in May, according to figures published last Friday by the National Administrative Department of Statistics (DANE). In percentage terms, the rate, which fell by a symbolic 0.2% compared to the same month last year, reaches 10.3% of the active population. This is a stable result, but insufficient for an economy whose macroeconomic indicators are torn between residual optimism and a torrent of data with the needle still stagnant.

The radar signals received by analysts do not predict a strong recovery for this year either. Despite everything, the labor market added 463,000 new people in its interannual reading for May. Luz Magdalena Salas, vice president of the economic think tank Anif, applauds the good performance of construction, a niche that has been producing red numbers since last year: “It is very interesting to observe the correlation between job creation and economic activity. Let us remember that almost 7% of employment in the country is generated through construction and in the latest results it contributed 0.7%,” she says.

These numbers are in line with the good record seen during the first quarter of the year in the ‘civil works’ sector. Official statistics indicate that, after more than twelve months in intensive care, it finally had a growth of 16.9%. A sum of factors that begin to give economists tools to suggest that, although it is feasible that the worst headaches have already passed, the road to economic stabilization can still bring unforeseen events: “I do not believe that we are in the process of reactivation. We are, for now, in a process of landing from the crisis,” explains Andrés Álvarez, PhD in Economics and professor at the University of the Andes.

For its part, the division that has contributed the most to job creation in May is that of ‘artistic activities, entertainment and recreation’, a statistical mix of occupations that includes everything from sports shows to gambling to domestic jobs in Colombian homes. Its contribution of one percentage point to the labor market and other economic indicators often eludes another underlying debate related to gambling addiction: “It is a business that plays a supremely important role and that, unfortunately, one never sees fall. Betting houses, virtual casinos, continue to exert influence month after month on employment and growth data,” explains Luz Magdalena Salas. She adds that the opening of museum exhibitions and other artistic activities have also contributed to represent one percentage point within the number of employed people.

However, both the overall unemployment figure and the percentage rate in a country like Colombia are often far below the reality. Surveys try to capture the informality figures as best they can, a rate that reaches 55.6% of the total 23 million employed (about 12.81 million Colombians). In its latest measurement, the trend fell by a meager 0.1% for those who, deprived of the social shield of the State, work without contributing or receiving the obligatory benefits of the health system or pensions. “We must pay close attention to the labor reform. When there is more clarity, and the costs of hiring are known, employers should migrate with more confidence to formality,” says Luz Magdalena Salas.

In Colombia, the informal market is one of the biggest headaches for the system and its records do not vary much. When it comes to cross-checking data, 95% of the country’s business fabric is made up of micro-enterprises with very limited capacity to guarantee formal and stable contracts. For this reason, in sectors such as agriculture, there are many part-time workers, poorly paid, and lacking basic social security guarantees. Now the Executive’s labor reform has been criticized by broad sectors that point out the Ministry of Labor’s emphasis on a series of labor and union demands that come too late, without attacking informality and in a world marked by ‘semi-presence’ or teleworking.

“What is good news is that the total number of employed people has increased,” says economist and academic from the Universidad Javeriana Adrián Garlati. “What this tells us is that people are entering the labour market, but it is not enough yet to significantly lower the unemployment rate,” he continues. In his opinion, the end of the year will not be a “catastrophe”, but neither will it be a reason for celebration: “The boost will only come in 2025 and I believe that the unemployment rate will remain around 10%.”

It is worth remembering that during the second half of last year, unemployment went through a cycle of constant de-escalation, reaching single digits. With the turn of the year, however, all forecasts were thrown off course and 2024 opened with a sharp jump, from 10% at the close in December 2023 to 12.7% in January of this year. Since then, the decline has been slow and uninterrupted: “An interesting aspect is that the gender gap is narrowing. This is explained, in part, by the fact that unemployment among men is higher than that of women and more and more women are joining the market. It may also be related to the type of activities that are absorbing more employment, such as artistic and recreational activities. That gap, which a few months ago was at 5%, is now at 3.1%,” says Luz Magdalena Salas.

Finally, the factor that worries Andrés Álvarez the most is the situation of commerce: “It is a very important part of global employment, especially of low qualification, in Colombia. The signs of decline have already been seen and the unions, such as Fenalco, have done nothing but complain that sales are going very badly and that they need a day without VAT. And what can be seen in the DANE figures is that they were the ones that lost the most workers with 137 thousand fewer jobs in May.”

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