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Brazil’s unemployment hits new records, but worse is yet to come

unemployment brazil Brazil's unemployment rates are at record highs — but worse is yet to come. Photo: Felipe Queiroz/Shutterstock

Back in June, Economy Minister Paulo Guedes proudly said that the worst was behind Brazil, and that the country would “surprise everyone” with its recovery. However, four months on, his affirmation seems difficult to justify. According to the Brazilian Institute of Geography and Statistics (IBGE), the unemployment rate for September rose to 14 percent — the highest level on record since the firm began recording data.

This means that there are now 13.5 million unemployed people in Brazil, more than the population of São Paulo, the country’s biggest city. The delayed rise in unemployment rates can be explained by a phenomenon highlighted several times in recent months by The Brazilian Report — the official unemployment rate only counts those who are seeking jobs.

</p> <p>With the dreadful economic conditions at the height of the Covid-19 pandemic, and with social isolation measures of various degrees in force around the country, a huge segment of Brazilians simply stopped looking for work. Either they feared breaking isolation and becoming infected with the coronavirus, or they refused to embark on job searches for positions that, in all likelihood, did not even exist due to the economic crisis.</p> <p>What we are seeing now is the result of people returning to the workforce and struggling to find employment. According to IBGE data, 1.3 million people began seeking work between August and September — judging by the employment results, roughly half of them have been unsuccessful.</p> <h2>Inaccurate job figures</h2> <p>In recent months, the Brazilian economy has perhaps been given some false hope by <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/09/30/brazil-creates-more-jobs-but-unemployment-still-goes-up/">formal job creation results</a> indicated by the General Register of Employed and Unemployed Persons (Caged).</p> <p>Caged is the leading survey of formal employment in Brazil and it depends entirely on information provided by companies. However, data suggests that a large number of <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/07/28/brazil-loses-1-2-million-formal-jobs-in-first-half-of-2020/">firings</a> have gone completely under the radar, as many companies have simply failed to submit employment data.</p> <p>These gaps were highlighted by economist Daniel Duque, researcher at think tank Fundação Getúlio Vargas, in an article entitled &#8220;<a href="https://blogdoibre.fgv.br/posts/evidencias-da-subnotificacao-de-desligamentos-do-caged">Evidence of under-reporting of dismissals on Caged</a>.&#8221;</p> <p>Mr. Duque states that the number of companies providing information to be used in Caged has progressively decreased <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/05/27/covid-19-crisis-scraps-860503-formal-jobs-in-april-alone/">since April</a>. From January through March, around 850,000 enterprises submitted employment records; as of April, this number fell to 550,000, rising to just 610,000 in August.</p> <p>The researcher ponders that companies may have closed or &#8220;gone into hibernation&#8221; without informing the government of its total number of hires and dismissals — while those who remain in operation are showing positive net results for job creation.&nbsp;</p> <h2>Echoes in Argentina</h2> <p>A worthwhile comparison comes south of the border in Argentina, a country which took a <a href="https://brazilian.report/latin-america/2020/09/26/world-longest-lockdown-avoid-coronavirus-disaster-argentina/">different approach toward the Covid-19 pandemic</a> and even used the chaos in Brazil as an example to strengthen isolation measures.</p> <p>However, at this juncture, it seems that neither the Brazilian or Argentinian governments have any positive results to back up their methods of dealing with the coronavirus crisis. Both countries are still reliant upon emergency income programs to avoid full-scale collapses, made necessary due to the high number of informal workers on both sides of the border.&nbsp;</p> <p>Similar employment dynamics have been seen in Argentina, with millions leaving the workforce during the pandemic and a delayed rise in unemployment in recent months.</p> <p>This shows that regardless of the way they approached the Covid-19 pandemic, both governments will have to face similar challenges in order to recoup their respective labor markets.

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Renato Alves

Renato Alves is a Brazilian journalist who has worked for Correio Braziliense and Crusoé.

Aline Gatto Boueri

Aline Gatto Boueri is a data journalist. She has had her work published by Gênero e Número, Universa UOL, Marie Claire, Projeto Colabora, among others.

Euan Marshall

Originally from Scotland, Euan Marshall is a journalist who ditched his kilt and bagpipes for a caipirinha and a football in 2011, when he traded Glasgow for São Paulo. Specializing in Brazilian soccer, politics and the connection between the two, he authored a comprehensive history of Brazilian soccer entitled “A to Zico: An Alphabet of Brazilian Football.”

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