Brazil’s unemployment rate: 13.1%
Brazil’s new unemployment rate: What the numbers tell us

Brazil’s unemployment rate: 13.1%

The Brazilian Institute of Geography and Statistics (IBGE) has recently published the latest unemployment rate: 13.1 percent. It marks the third-straight quarter during which the number of unemployed workers has gone up. While there are seasonal reasons for this increase, as temp workers have been laid off, they don’t tell the whole story.

Unemployment rates indicate the health of an economy. In Brazil’s case, the rising unemployment suggests a loss of steam in the Brazilian recovery. It seems inevitable that Brazil will have a GDP growth smaller than expected. The 3 percent growth initially forecast by the government is now a longshot.

</p> <p>The government blamed the rising unemployment rate solely on seasonal factors. But in a recovering economy, the temporary workers hired for the holidays and Carnival would be absorbed by the job market. And that hasn&#8217;t happened.</p> <div class="infogram-embed" data-id="7b807f01-65cb-4bf1-a36d-edab54438c37" data-type="interactive"></div><script>!function(e,t,s,i){var n="InfogramEmbeds",o=e.getElementsByTagName("script"),d=o[0],r=/^http:/.test(e.location)?"http:":"https:";if(/^\/{2}/.test(i)&&(i=r+i),window[n]&&window[n].initialized)window[n].process&&window[n].process();else if(!e.getElementById(s)){var a=e.createElement("script");a.async=1,a.id=s,a.src=i,d.parentNode.insertBefore(a,d)}}(document,0,"infogram-async","//e.infogram.com/js/dist/embed-loader-min.js");</script> <h3>Vicious cycle</h3> <p>Most unemployed workers in Brazil are finding jobs in the <a href="https://blogs.oglobo.globo.com/eissomesmo/post/temer-omite-empregos-informais-e-assume-paternidade-de-transposicao-do-sao-francisco.html">informal market</a> &#8211; which is, by definition, unstable. Without much financial security, families are consuming less. Less consumption leads to layoffs. And there you have a vicious cycle.</p> <p>Brazil&#8217;s job market has been shrinking, except for a segment: jobs that pay up to BRL 1,908 &#8211; that is, two times the minimum wage. That is another sign that companies are still hesitating to hire more qualified workers.</p> <div class="infogram-embed" data-id="1f8fad2c-0720-49ef-b717-0907acfc5d51" data-type="interactive"></div><script>!function(e,t,s,i){var n="InfogramEmbeds",o=e.getElementsByTagName("script"),d=o[0],r=/^http:/.test(e.location)?"http:":"https:";if(/^\/{2}/.test(i)&&(i=r+i),window[n]&&window[n].initialized)window[n].process&&window[n].process();else if(!e.getElementById(s)){var a=e.createElement("script");a.async=1,a.id=s,a.src=i,d.parentNode.insertBefore(a,d)}}(document,0,"infogram-async","//e.infogram.com/js/dist/embed-loader-min.js");</script> <h3>Less money for the unemployment aid fund</h3> <p>President Michel Temer sent to Congress a project to allocate BRL 1.3bn to the so-called &#8220;Fund to Warrant Exports.&#8221; The money will be used to pay for debts owed to Brazilian banks by countries like Venezuela and Mozambique. The problem is that the Brazilian government signed off as guarantor of the loans.</p> <p>As these countries defaulted on their payments, it is now up to the government to cover them.</p> <p>The payments&#8217; deadline is May 8. President Temer hopes that Congress will approve the bill on Wednesday (May 2). In order to negotiate the vote, Temer has hastened his return to Brasília from a trip to Minas Gerais.</p> <p>Since Congress approved a spending cap for the federal government back in 2016, the money has to come from elsewhere in the administration. The chosen source was the unemployment aid fund. In its bill to Congress, the presidency stated that the BRL 1.3bn in reallocated funds will not actually impact the unemployment aid fund, as there would be some room to maneuver in the budget.</p> <p>While the House Speaker&#8217;s office has scheduled a vote for May 2 at 5 p.m., it is not certain that there the minimum quorum for a sitting will be present. Congressmen decided to extend the Labor Day holiday until May 8.

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MoneyApr 30, 2018

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