Brazil’s unemployment shows no signs of swift recovery

. Dec 18, 2018

One of the most negative results of Michel Temer’s presidency can be found in Brazil’s unemployment rates. In 28 months in the job, Mr. Temer has overseen an increase in the number of Brazilians without work, reaching dangerous peaks in early 2017 and very slowly decreasing since.

Prospects for Jair Bolsonaro’s government are not much better. IBGE figures show the current level of unemployment at 11.7 percent (higher than when Dilma Rousseff was removed from office in mid-2016) and consultancies and financial institutions reckon it will take until 2021 for the rate to return to single figures.

</span></p> <p><span style="font-weight: 400;">Forecasts are for slow recovery next year, with the average 2019 rate expected to be 11.5 percent, and unemployment is only set to drop to 10 percent by the very end of 2020.</span></p> <p><span style="font-weight: 400;">The recession of 2014-2016, the longest in Brazil’s history, drove unemployment up to 13.7 percent by the first quarter of the recovery. The average unemployment rate during Dilma Rousseff&#8217;s presidency was 7.66 percent, reaching as low as 6.2 percent at the end of 2013.</span></p> <h2>Brazil struggling to get back on its feet</h2> <p><span style="font-weight: 400;">While the <a href="">economic recession</a> brought Brazilian employment levels into this hole, the subsequent slow recovery has made it desperately hard for the country to dig its way out. </span></p> <p><span style="font-weight: 400;">GDP growth has happened at a snail’s pace since the country exited recession in 2017. Only in the final quarter of last year did Brazil witness growth of more than 1.5 percent. Experts were optimistic that GDP would resurge this year, initially predicting an annual growth of 3 percent in 2018, but these forecasts were reduced to just 1.3 percent.</span></p> <p><span style="font-weight: 400;">The 2017 labor reform, signed into law by Michel Temer, has not helped matters either. Designed to stimulate employment, there are points of the reform which have yet to be fully clarified by Congress, leading to companies slowing down their recruitment, fearing legal insecurity.</span></p> <h2>Get out from under the table</h2> <p><span style="font-weight: 400;">Four out of every 10 employed Brazilians work in informal jobs, that is, unregistered labor without any benefits or protections. While unemployment is decreasing, this move is overwhelmingly pushed by the informal sector. The number of people in formally registered employment has actually increased since last year, and an employment boost based on informal jobs is not a sustainable one.</span></p> <p><span style="font-weight: 400;">Jair Bolsonaro’s government, guided by future Minister of the Economy Paulo Guedes, has set itself a goal to create 10 million new jobs across the four-year term, with 6 million coming in the first two years. Considering current economic trends, that appears to be impossible. Only 444,400 were created over the last 12 months, and economic growth would have to be huge to get anywhere near Mr. Bolsonaro’s target.</span></p> <p><span style="font-weight: 400;">Over ex-president Luiz Inácio Lula da Silva’s eight years in charge, Brazil created 13.4 million formal jobs, and that was backed up by impressive and uninterrupted GDP growth.</span></p> <p><span style="font-weight: 400;">The hope of the Jair Bolsonaro government is that a pensions reform would be the stimulus needed to stamp unemployment down into single figures. A reform which is agreeable to financial agents and employers would see confidence boosted and recruitment ramped up.

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