May job creation in Brazil tops expectations, but wages continue to stall

job creation wages stall Alf Ribeiro/Shutterstock.
Photo: Alf Ribeiro/Shutterstock

Brazil added 277,000 net formal jobs in May, well above market expectations for the month, according to official data. As a result, the number of Brazilians with a formal contract rose by 0.67 percent in the month, to 41.7 million. However, while hirings advanced, entry wages continued to decline, down by 0.94 percent in May to BRL 1,898 (USD 360).

The services sector, which is the backbone of the Brazilian economy, was the main driver of new hirings, adding almost 120,300 jobs. But all other sectors (retail, industry, construction, and agriculture) and all regions also posted positive numbers.

The Labor Ministry celebrated the data as proof that economic growth has resumed.

But wages are trending down at a moment when the price of essential goods and services, such as transportation and food products, continues to soar. Inflation in Brazil has been in the double digits for the past nine months. Over 77 percent of families are in debt while 29 percent are defaulting on said late bills and payments.