One year on, Brazil’s labor reform fails to create jobs

When Michel Temer took office in May 2016, he promised to push through reforms. During the months that Congress debated whether or not to impeach his predecessor Dilma Rousseff, Mr. Temer gathered support from economic elites by promising to follow a radical pro-business agenda, a break from the excessive state interventionism that marked Ms. Rousseff’s tenure and helped push the Brazilian economy into its worst recession on record. The Crown jewels were two reform bills: one to overhaul Brazil’s pension system and a labor reform. While the former never made the light of day, the former came into effect one year ago, in November 2017.

The reform was surrounded by controversy. Though those on the left of center dubbed it “the end of Brazil’s Consolidation of Labor Laws, the reform has faced little resistance from labor courts across the country and has been thoroughly enforced. However, its results are by no means what was promised.

Over the past 12 months, Brazil has generated 372,748 new formal...