Brazilians still out of the formal workforce

. Mar 29, 2019
unemployment line sao paulo brazil Over 15,000 people lining up to apply for a job in São Paulo

When the clock struck seven on Tuesday morning, more than 15,000 people jostled for a spot in line to hand in their applications for a job vacancy in the center of São Paulo. Some had traveled for days and queued for over 24 hours looking for an employment opportunity. “I’m desperate,” said Bruno Gomes, a 42-year-old cook who said he would take any spot available. Such scenes have become common in Brazil, as unemployment rates refuse to go down.

According to the Brazilian Institute of Geography and Statistics (IBGE), the unemployment rate has risen for the second straight month, rising to 12.4 percent in the three months through February. Neither the markets nor companies expect things to get much better any time soon; forecasts for the Brazilian economy are repeatedly reduced and confidence indexes continue to go down.

</span></p> <p><span style="font-weight: 400;">Brazil lost 1 million active workers since November—and the active population amounts to 92.1 million people. This means that the labor market has stopped expanding, not even matching the slow growth seen in 2018.</span></p> <p><span style="font-weight: 400;">Here are the main findings published by IBGE this Friday:</span></p> <h2>13.1 million Brazilians out of a job</h2> <p><span style="font-weight: 400;">In the three months before November 2018, the unemployment rate was at 11.6 percent. One year ago, however, the rate was higher: 12.6 percent. According to Cimar Azeredo, a coordinator at IBGE, this hike was already expected, with seasonal jobs being cut after the holiday season. What is new is that the cuts are also reaching public servants—especially non-permanent teachers.</span></p> <p><span style="font-weight: 400;">The <a href="">industrial sector</a> cut 198,000 people, pointing toward an economic activity which remains pedestrian. The only sector that grew in terms of employed workers was transportation—which added 133,000 people since November. That, however, is mainly due to the boom of people working as drivers on ride-sharing apps such as Uber, 99 or Cabify.</span></p> <hr /> <p><img loading="lazy" class="alignnone size-large wp-image-15200" src="" alt="brazil unemployment data" width="1024" height="683" srcset=" 1024w, 300w, 768w, 610w, 1200w" sizes="(max-width: 1024px) 100vw, 1024px" /></p> <hr /> <h2>A record number of underemployed people</h2> <p><span style="font-weight: 400;">Adding up unemployed people, discouraged workers (those not actively seeking employment) and people working less than they would like, the number of underemployed people in Brazil has reached 27.9 million people—the highest number ever recorded.</span></p> <p><span style="font-weight: 400;">Over 65 million people over 14 years old are currently out of the workforce—neither working nor looking for a job. That number tends to grow in times of prolonged recession, as more people become discouraged.</span></p> <hr /> <p><iframe title="Job creation: 3-month average" src="//" width="600" height="400" frameborder="0" scrolling="no" aria-label="Column Chart"></iframe></p> <hr /> <h2>Informal employment</h2> <p>Data shows that 43 percent of Brazil&#8217;s workforce is found in the informal sector. High informality, of course, pushes salaries down—which can have a ripple effect in the economy.</p> <p>Another factor driving Brazilian workers&#8217; salaries down is the fact that, since the recession broke in 2015, most openings are for part-time jobs.</p> <hr /> <p><img loading="lazy" class="alignnone size-large wp-image-15206" src="" alt="unemployment brazil" width="1024" height="683" srcset=" 1024w, 300w, 768w, 610w, 1200w" sizes="(max-width: 1024px) 100vw, 1024px" /></p> <hr /> <h2>Individual companies</h2> <p><span style="font-weight: 400;">An increasing number of Brazilian workers are operating as individual companies. This type of contract reduces liability for employers, but restricts access to welfare and pension benefits. Among the causes identified for this rise is the phenomenon of </span><a href=""><i><span style="font-weight: 400;">pejotização</span></i></a><span style="font-weight: 400;">, which is the tendency of companies to hire workers as self-employed contractors instead of regular employees. Such a move was made easier from a legislative standpoint by the <a href="">2017 labor reform</a>, which allowed companies to outsource labor for all activities.</span></p> <p><span style="font-weight: 400;">&#8220;Between mid-2017 [when the labor reform was approved] and December 2018, the number of people hired as individual companies sharply increased in Brazil, from just over 4 million people to more than 4.5 million people,&#8221; say Daniel Duque and Juliana Damasceno, from the Brazilian Institute of Economics at think tank Fundação Getulio Vargas.</span></p> <p><span style="font-weight: 400;">At the same time, formal employment continued its steady decline. But the data doesn&#8217;t allow to establish a cause-effect relation between the two. Instead, it shows that over 20 percent of Brazil&#8217;s informal self-employed workers are actually migrating to the formal labor sector, albeit as individual contractors.</span></p> <p><span style="font-weight: 400;">If you&#8217;re looking for a silver lining, that&#8217;s perhaps it.

Read the full story NOW!

The Brazilian Report

We are an in-depth content platform about Brazil, made by Brazilians and destined to foreign audiences.

Our content is protected by copyright. Want to republish The Brazilian Report? Email us at