Underemployment reaches 4.3 million and shows a job market that low unemployment does not reveal

The unemployment rate was 5.2% in the third quarter of 2026, the lowest level for a third quarter in 14 years. Behind the favorable number, however, there are 4.3 million people who work fewer hours than they would like and could work more. The data are from PNAD Contínua, released on Friday (10/30) by IBGE, according to Gazeta do Povo.

In the quarterly cut, the group of those underemployed due to insufficient hours rose 5.2%, equivalent to 214 thousand people, in relation to the second quarter of 2026. In comparison with the same period in 2025, however, it fell 5.4%. In other words, the reading changes depending on the chosen window: in the short term the pressure increased, while in the year the situation is less adverse.

The unemployment rate only considers those who do not have a job and are looking for a job. 2.5 million discouraged people are left out, a group that is not included in the official count because they are not looking for a job. This contingent grew 7.5% over the second quarter and fell 6.8% compared to the third quarter of 2025. If it were included, unemployment would reach 7.2%, around two percentage points above the published index.

The backdrop is the promulgation, in October, of the PEC that ends the 6x1 scale. The measured quarter ended shortly before the enactment, so the numbers do not yet capture any effects of the change. The proposal received favorable votes from both sides. According to Gazeta do Povo, part of the opposition, which was against changing the maximum working day, changed its stance because of popular approval and the electoral context.

Parliamentarians opposed to the change defended that the working day be defined by negotiation between workers and employers. The production sector, in turn, criticized the impact of the reduction on costs and productivity. The conflict, therefore, goes beyond worker well-being and involves who should define the rules and how much they cost companies.

The Continuous PNAD considers people aged 14 or over and defines the labor force as the sum of employed and unemployed people. It is on this basis that IBGE calculates the rates that the market follows.

What changes for the investor

For those who follow the stock market, interest rates and the dollar, the message is mixed. Low unemployment usually indicates a heated market, which supports consumption and company revenue. The rising underemployment and the advancement of discouraged workers suggest idle labor capacity that the traditional index does not show. If reducing working hours increases costs, as the production sector argues, labor-intensive companies may find their margins under greater pressure, an effect that should only appear in future surveys. This article does not recommend the purchase or sale of assets or project prices. Monitoring the next releases of the Contínua PNAD is what should guide your reading.

Automatically translated from Portuguese.