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Covid-19 makes life even harder for Brazilian interns

. Sep 03, 2020
job market interns Image: Kozhedub NC/Shutterstock

Before the Covid-19 pandemic hit Brazil, the situation for young professionals joining the job market was already far from ideal. After emerging from what was then the worst recession in Brazil’s history, the country was grappling with double-digit unemployment levels and a growing amount of unregistered informal labor. The coronavirus crisis has come along to make this outlook even worse, while also dismantling one of the most common entryways into professional careers: paid internships.

The São Paulo Company-School Integration Center (CIEE São Paulo), a non-profit organization focused on student internships, noted a

fall of nearly 36 percent in internship vacancies for the first half of 2020. When analyzing the data through a regional lens, the plunge in opportunities hit 42 percent in Brazil&#8217;s Center-West region.</p> <p>A tentative recuperation has been underway since, but results for August are set to remain 40 percent below pre-pandemic levels, according to CIEE’s national operations superintendent, Marcelo Gallo. “We are seeing a recovery since June, but <a href="https://brazilian.report/newsletters/brazil-daily/2020/05/14/high-debt-levels-prevent-v-shaped-recovery-for-brazil/">it’s not going to be V-shaped</a>,” says Mr. Gallo.&nbsp;</p> <p>As we have explained on <strong>The Brazilian Report</strong>, these figures corroborate the hypothesis that the Covid-19 is creating a <a href="https://brazilian.report/business/2020/06/24/pandemic-could-create-an-entire-lost-generation-in-brazil/">lost generation in Brazil</a>.&nbsp;</p> <h2>Implications for the job market</h2> <p>While being first and foremost an important early step on the career ladder, internships also serve as teaching and networking opportunities for young professionals, meaning that the loss of these positions may result in stunted career growth across the job market. Mr. Gallo also points out that a lack of availability of internships may delay graduations, with students temporarily dropping out of education until positions become available.</p> <p>For education companies, this can be a big deal. Kroton, one of the biggest private higher education firms in Brazil, the dropout ratio jumped from 6.8 percent in Q2 2019 to 8.1 percent a year later. Cogna group, Kroton’s holding, ended the second quarter with losses of <a href="https://s3.amazonaws.com/mz-filemanager/e1110a12-6e58-4cb0-be24-ed1d5f18049a/d97ccb4f-1023-4adf-b823-394150027287_release%20-%202t20.pdf">BRL 140 million</a>, a 152 percent drop versus 2019 results.</p> <p>Furthermore, these programs in Brazil work as crucial sources of income. A recent CIEE study with over 17,000 Brazilian students found that two-thirds contribute to their household income using their remuneration from internships, which average at around BRL 700 (USD 130) a month — roughly two-thirds the national minimum wage. Students use this money to help pay for tuition fees, transport, and meals.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/3646571" data-url="https://flo.uri.sh/visualisation/3646571/embed" aria-label=""><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p>According to Brazilian law, students are allowed to work for up to 30 hours a week on paid internship contracts that may last for up to two years. While they are regulated by law, internships are not classified as formal employment, meaning students are not entitled to workers&#8217; benefits typically found in registered contracts. As a result, companies do not need to pay severance to interns, nor pay social security taxes on their salaries, leading many firms to prefer internship programs as a form of cheap labor.&nbsp;</p> <h2>Transition to a new normal</h2> <p>For Mr. Gallo, the offer of internships should pick up as the economy recovers, which he conditions to the distribution of an effective Covid-19 vaccine. But with the rise of remote working appearing to be a permanent trend, the model of internship programs will have to undergo adjustments.</p> <p>“We believe that the best working model for interns is a hybrid one, with remote and in-person activities so they can interact with colleagues and supervisors, as this social relationship is important for their professional development,” notes Mr. Gallo.&nbsp;</p> <p>Lawmakers are also trying to remediate the development losses caused by Covid-19. Senators Mara Gabrilli and Rodrigo Cunha have recently <a href="https://www12.senado.leg.br/noticias/materias/2020/08/13/projeto-amplia-estagio-profissional-de-dois-para-tres-anos-durante-pandemia">proposed a bill</a> to extend internship contracts from two to three years for as long as the public health emergency persists.&nbsp;</p> <p>“Many youngsters will lose nearly a year of their lives. It is only fair that the deadlines are extended so they can recover from the losses and get life back to normal,” wrote the senators.

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Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Before joining The Brazilian Report, she worked as an editor for Trading News, the information division from the TradersClub investor community.

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