On July 31, Brazil woke up to positive unemployment numbers, with the rate of people out of work dropping from 12.3 to 12 percent. It may not seem much—and it isn’t—but in an economy struggling to get back on its feet after its worst recession on record, even slight progress is a reason for celebration. This was the fourth consecutive month with lower unemployment, a positive trend that started in March 2019 when the unemployment rate was at 12.7 percent. The total number of unemployed workers has also gone down by 4.6 percent. Nevertheless, the figures are still high, with some 12.8 million people out of a job.

</p> <div class="flourish-embed flourish-chart" data-src="visualisation/558049"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <p>On the same day the unemployment data was published, the Central Bank lowered Brazil&#8217;s benchmark interest rate to a record low of 6 percent. The move was aimed at encouraging companies to invest more and boosting consumption—which could, in theory, break the vicious cycle of stagnation and give the Brazilian economy a kick start. As we explained in our <a href="https://brazilian.report/newsletters/daily-briefing/2019/08/01/lower-interest-rates-revive-brazil-economy/">Daily Briefing</a> (for platinum subscribers), long-term effects will only be observed if structural reforms are carried out.</p> <h2>A closer look into unemployment according to region</h2> <p>Most observers focused on the overall unemployment numbers published by the Brazilian Institute of Geography and Statistics (IBGE). However, the agency also released fascinating figures exposing the difference in the labor market depending on the region of the country.&nbsp;&nbsp;</p> <p>In Brazil, over 80 percent of the population occupies just one percent of the land. The <a href="https://www.ibge.gov.br/apps/areas_urbanizadas/">map</a> below shows just how empty the Brazilian territory remains, with the red areas denoting municipalities or metropolitan regions with populations of over 100,000. </p> <figure class="wp-block-image"><img src="https://brazilian.report/wp-content/uploads/2019/08/Screen-Shot-2019-08-01-at-11.37.56.png" alt="" class="wp-image-21611" srcset="https://brazilian.report/wp-content/uploads/2019/08/Screen-Shot-2019-08-01-at-11.37.56.png 704w, https://brazilian.report/wp-content/uploads/2019/08/Screen-Shot-2019-08-01-at-11.37.56-300x266.png 300w, https://brazilian.report/wp-content/uploads/2019/08/Screen-Shot-2019-08-01-at-11.37.56-610x541.png 610w" sizes="(max-width: 704px) 100vw, 704px" /></figure> <p>Of course, this concentration of people creates many social, political, economic distortions. For the first time, Brazil&#8217;s statistics agency compared in detail how metropolitan areas and the countryside differ when it comes to the labor market.</p> <p>In only ten states, countryside unemployment is higher than the national average. Which, however, does not mean that labor conditions are better outside of the regional capitals. Almost two-thirds of people working informally are in the countryside, where the oversight of authorities is limited.</p> <p>&#8220;Being fired is a threat to any worker. When they are not protected by formal labor relations, they become much more exposed to economic vulnerability—as they will not have access to social security benefits,&#8221; says Cimar Azevedo, deputy director of research at Brazil&#8217;s official statistics agency.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/557944"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <div class="flourish-embed flourish-chart" data-src="visualisation/557985"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <h2>Underemployment and low income</h2> <p>Outside of major urban centers, workers have seen a massive drop in salaries. In eight states (almost a third of the country&#8217;s total), the average income in the countryside is less than half of what metropolitan area workers earn. A glaring example of that phenomenon is observed in the state of Espírito Santo, where someone working in the state capital Vitória makes, on average, BRL 4,653—against the average salary of just BRL 1,725 for rural workers.</p> <p>Underemployment—when people are employed at less than full-time or in jobs inadequate to their training or needs—is also more present in areas outside of major centers. Every state with an overall underemployment rate above the national average is in the North or Northeast regions, the poorest in Brazil.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/557999"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <div class="flourish-embed flourish-chart" data-src="visualisation/557994"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <p>

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MoneyAug 01, 2019

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BY Gustavo Ribeiro

Gustavo is the founder of The Brazilian Report, and is an award-winning journalist with experience covering Brazilian politics and international affairs. His work has been featured across Brazilian and French media outlets.