Industrial productivity fell 1.5% in the first quarter, the CNI said

Labor productivity in Brazil’s manufacturing industry fell by 1.5% in the first quarter of 2022 compared to the last quarter of 2021, according to a study by the National Confederation of Industry (CNI).

On the other hand, the survey shows that on a like-for-like basis, hours worked increased by 2.2%, more than the 0.8% increase in volume produced.

The confederation explained that the reopening of the labor market from 2021 with the advent of the vaccine created more vacancies in the industry, which was reflected in the increase in working hours due to having more labor.

However, cyclical factors meant that fewer raw materials and inputs were reaching factories, justifying the fact that increased working hours in industry did not lead to increased productivity.

“Economies are still recovering from the effects of Covid-19 and are now suffering from the consequences of the war in Ukraine. In Brazil, the shortage or high cost of raw materials has become one of the biggest challenges for the industry since the second quarter of 2020, given the effects of the pandemic,” said Samantha Cunha, CNI’s industrial policy manager.

Cumulative productivity loss reaches 10% over the third quarter of 2020, the latest increase in the index, further away from pre-Covid-19 crisis levels.

War and Covid-19

The war in Eastern Europe, cited as one of the main problems of industrial productivity, has intensified the restrictions on inputs for production, which have already been adversely affected by the effects of the epidemic.

According to CNI, several manufacturing sectors such as food, electronics and automobiles have been affected by the conflict in Ukraine. In addition, the confrontation has also caused a deficit or an increase in the cost of investment.

“The conflict has highlighted difficulties in obtaining inputs and raw materials, in addition to price increases and logistical difficulties such as unavailability of ships, containers and increased freight rates,” the study noted.

Another factor that has exacerbated supply disruptions in manufacturing chains is China’s “zero Covid” policy, which has forced the Asian country to adopt lockdowns in key manufacturing and trading hubs in the region.

Finally, the CNI emphasizes that productivity must recover to epidemic levels, returning to a low growth trajectory.

“Sustainable productivity growth depends on overcoming Brazil’s structural inefficiencies, such as low investment in research and development,” the confederation said.

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