The government’s plan to tackle youth unemployment

. Nov 12, 2019
youth unemployment Photo: Pedro Ventura/ABsb

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Good morning! We’re covering the latest government attempt to crack youth unemployment. How Jair Bolsonaro tries to hurt the press. And the unraveling of the Bolivian crisis. (This newsletter is for platinum subscribers only. Become one now!)

The government’s plan to tackle youth unemployment

President Jair Bolsonaro launched a program aiming at reducing youth unemployment levels.

It allows companies to pay fewer benefits and social contributions when hiring youngsters in their first professional position.</p> <p><strong>Why it matters.</strong> One-third of people between 18 and 29 years old is out of the workforce. Since 2012, this age group lost almost 15 percent of its income, despite studying more than previous generations.</p> <div class="flourish-embed" data-src="visualisation/913544"></div><script src=""></script> <p><strong>Lost millennials?</strong> In Brazil, 23 percent of Brazilian young people are neither working nor studying, earning them the moniker “Neither-Nor.” In the rest of the world, this slice of the population goes by the acronym “NEET,” that is, someone “<a href="">Not in Education, Employment, or Training</a>.” This group is usually made up of underprivileged young people and women.</p> <p><strong>Government goals. </strong>The Bolsonaro administration <a href="">hopes</a> to create 1.8 million new jobs by December 2022.</p> <p><strong>Yes, but … </strong>There is little evidence to support that by lowering employers&#8217; dues, they will hire more. Brazil&#8217;s 2017 labor reform is proof of that. Despite being hugely pro-business, it failed to stimulate the job market in a country where demand has stalled and business owners have become risk-averse.</p> <p><strong>Microcredit.</strong> The government also wants to stimulate microloans, which make up only 0.2 percent of Brazil&#8217;s credit pool.</p> <p><strong>Questionable sources of financing.</strong> To finance these measures, the government will slap a 7.5-percent tax on workers on unemployment insurance.</p> <hr class="wp-block-separator"/> <h2>How Jair Bolsonaro uses ad money to punish his &#8220;media enemies&#8221;</h2> <p>The federal government has drastically reduced how much it spends on advertising on TV Globo—Brazil&#8217;s most-watched TV network, which is considered a &#8220;foe&#8221; by President Bolsonaro. Instead, Record and SBT, who draw much smaller audiences—but have been docile and open to government propaganda—are getting a bigger share of the pie.</p> <div class="flourish-embed" data-src="visualisation/913629"></div><script src=""></script> <p><strong>Why it matters.</strong> Since taking office, Mr. Bolsonaro has made several changes aiming at running media companies he doesn&#8217;t like out of business—which he acknowledges himself.</p> <p><strong>Bolsonaro v. the media.</strong> Between January and March, Mr. Bolsonaro recorded one attack on the press every three days. In August, <a href="">the President lifted requirements</a> for publicly-traded companies to publish their earnings reports in newspapers—saying the move was &#8220;retribution&#8221; for how the media has treated him. A couple of weeks ago, after Globo reported on a possible connection between the president and the assassination of Rio City Councilor Marielle Franco in 2018, Mr. Bolsonaro launched an explosive tirade against Globo, threatening not to renew its public concession to operate TV frequencies.</p> <div class="flourish-embed" data-src="visualisation/913634"></div><script src=""></script> <p><strong>Picking sides.</strong> President Bolsonaro has cozied up to Record and SBT ever since the electoral campaign, and both stations have operated as pro-government propaganda machines. During Independence Day celebrations, Mr. Bolsonaro attended official pageants flanked by the owners of the two stations.</p> <p><strong>Not the only.</strong> In fairness, Mr. Bolsonaro is not the only one to use ad money to boost friendly media companies, despite paltry audience numbers. The Workers&#8217; Party had a similar strategy, pouring money into struggling local newspapers—essentially making them a streamline of pro-government discourse.</p> <hr class="wp-block-separator"/> <h2>Evo Morales leaves Bolivia, as turmoil continues</h2> <p>After resigning on Sunday following threats from the Armed Forces, former Bolivian President Evo Morales left the country for Mexico, where he will be given political asylum. But Bolivia&#8217;s turmoil is far from over, with Mr. Morales&#8217; supporters taking La Paz with cries for a civil war.</p> <p><strong>Why it matters.</strong> Bolivia has been one of the countries with the highest sustained improvement in social indicators. Its fall into a state of near civil war is a new chapter in an ongoing crisis in Latin America. It will only enhance polarization in the region and reduce cooperation among states.</p> <p><strong>In a nutshell.</strong> As president of South America&#8217;s second-poorest country, Evo Morales reduced poverty rates and increased revenues from natural gas—the lifeline of the Bolivian economy. But he didn&#8217;t resist the temptation of perpetuating himself in power, managing to get a Supreme Court decision to allow him a fourth term. According to the Organization of American States, the government tampered with the election to avoid a runoff—and as protests erupted, the military gave Mr. Morales an ultimatum: either he resigned or he would be removed by force.</p> <p>How complex is the situation? This tweet, by foreign affairs professor Oliver Stuenkel, says it all:</p> <figure class="wp-block-embed-twitter wp-block-embed is-type-rich is-provider-twitter"><div class="wp-block-embed__wrapper"> <blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Was Evo Morales one of the greatest presidents in Bolivian history? Yes<br>Was he, particularly after 2016, an autocrat, undermined democratic institutions &amp; tried to steal an election? Yes<br>Had he lost control of the country? Yes<br>Was he ousted in a coup d&#39;état? Yes</p>&mdash; Oliver Stuenkel (@OliverStuenkel) <a href="">November 11, 2019</a></blockquote><script async src="" charset="utf-8"></script> </div></figure> <p><strong>What happens now.</strong> In Washington D.C., the OAS will discuss <a href="">the Bolivian situation</a>. Brazil and Mexico are expected to take opposite sides in the meeting, with Brazilian authorities rubbishing talk of Mr. Morales being the victim of a military coup.</p> <p><strong>Brazil-Bolivia gas pipeline.</strong> No less than 96 percent of Bolivian exports to Brazil concern natural gas. Petrobras was waiting for the Bolivian election to be over to close a deal with the neighboring country over a <a href="">massive shared gas pipeline</a>—which would reduce natural gas prices in Brazil. The current pact expires on December 31.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <p><strong>Bolsonaro&#8217;s party.</strong> President Bolsonaro should announce the creation of a new political party today, reportedly to be called &#8220;Alliance for Brazil,&#8221; bearing a striking resemblance to the party of the military dictatorship: the National Renewal Alliance. But his current group, the Social Liberal Party, will move heaven and earth to prevent Mr. Bolsonaro from rallying his troops in time for the 2020 municipal elections. They will try to expel defecting members of Congress and take their seats, while also creating task forces to challenge in courts every step of the creation of the president&#8217;s new party. <a href="">We explained the hoops Mr. Bolsonaro will have to jump</a>.</p> <p><strong>Forecasts.</strong> According to the Focus Report, a weekly survey by the Central Bank with top-rated investment firms, markets have kept their GDP growth forecast at 0.92 percent. Analysts, however, raised their predictions for the inflation rate at the end of the year, from 3.29 to 3.31 percent. The market continues to expect further cuts in Brazil&#8217;s Selic benchmark interest rate, from the current 5 to 4.5 percent—which would be a new all-time low.</p> <p><strong>Infrastructure.</strong> The São Paulo state government announced that Spanish construction group Acciona has signed a contract to finalize Line 6 of the São Paulo metro system. The works have been halted since 2016, after the construction companies responsible for the project were severely hit by Operation Car Wash and didn&#8217;t have enough cash flow to finish the works—which is only 15 percent ready, after BRL 1.7 billion spent.</p> <p><strong>When to arrest?</strong> As conservative politicians push to approve a constitutional amendment allowing for prison sentences to be carried out before all appeals are exhausted—which could send Lula back to prison—left-wing parties are trying to propose a middle-ground solution. That would come in the form of a proposal previously floated by Supreme Court Chief Justice Dias Toffoli: convicted felons would start serving their sentences after two lost appeals, having their cases analyzed by the Superior Court of Justice, the second-highest tribunal in Brazil. But while the opposition&#8217;s whip count is insufficient, their strategy is to stall any vote on the matter.

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