Covid-19 sees unemployment skyrocket in record time

. May 29, 2020
Unemployment skyrockets in Brazil as Covid-19 crisis worsens In two months, the coronavirus killed more jobs than the entire 2014-2016. Photo: Nelson Antoine/Shutterstock

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How the coronavirus is making Brazil’s unemployment jump. The attempt to recreate the Amazon Fund. And why support to Jair Bolsonaro is so resilient.

Unemployment: Coronavirus kills more jobs than past recessions

One day after the Economy Ministry released data on formal jobs, the Brazilian Institute of Geography and Statistics published new unemployment figures

—&nbsp;including workers on the informal job market, a large chunk of the Brazilian workforce. The rate of Brazilians without a job has gone from 11.2 to 12.6 percent between January and April. According to Itaú Unibanco, Brazil&#8217;s biggest private bank, the unemployment rate would be around 16 percent already if more people were actively looking for work — something that the pandemic has halted.</p> <ul><li>A total of 4.9 million people lost their job, and 3.7 million of them were from the informal market.</li><li>The average salary of the Brazilian worker has gone up between March and April, as positions that are informal or required less-skilled workers were the first to disappear.</li></ul> <p><strong>Why it matters.</strong> Brazil&#8217;s 2014-2016 recession, the worst on record until the coronavirus, destroyed 2.5 million jobs in two years. This crisis has scrapped more jobs in just <em>two months</em>.</p> <p><strong>Not only the virus.</strong> The impacts would have been smaller if the Brazilian economy was performing well in the first place, which was not the case. Brazilians have been steadily <a href="">losing purchasing power</a> for the best part of the last decade.</p> <p><strong>Rushed reopening.</strong> Many experts have warned that the recession and massive unemployment, coupled with the health emergency, could spark a humanitarian crisis. That is causing governors to reopen their economies too soon, despite all experts recommending lockdowns for large urban centers. In São Paulo, the country&#8217;s Covid-19 epicenter, 86 percent of cities where the infection curve is going up will be able to reopen stores on Monday. The chart below explains the rushed decision:</p> <iframe title="Most municipalities in São Paulo lost jobs in April" aria-label="Map" id="datawrapper-chart-rQe8P" src="" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="484"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(a){if(void 0!["datawrapper-height"])for(var e in["datawrapper-height"]){var t=document.getElementById("datawrapper-chart-"+e)||document.querySelector("iframe[src*='"+e+"']");t&&(["datawrapper-height"][e]+"px")}}))}(); </script> <hr class="wp-block-separator"/> <h2>VP trying to resuscitate Amazon Fund</h2> <p>Vice President Hamilton Mourão met with the ambassadors of Norway and Germany to try to reactivate the Amazon Fund, the billionaire fund created in 2008 to foster initiatives to preserve the rainforest. It was suspended last year, after Germany and Norway&nbsp;— its biggest contributors —&nbsp;decided to cut funds following overwhelming evidence that the Jair Bolsonaro administration was rolling back environmental controls and adopting a laissez-faire stance on land-grabbers and loggers.</p> <p><strong>Why it matters.</strong> The Amazon Fund was the biggest financial initiative to protect the rainforest, gathering money to fund conservation projects around the country. Resources were managed by the Brazilian Development Bank and then distributed to states, municipalities, and NGOs.</p> <p><strong>Image job. </strong>Mr. Mourão presented a plan to curb illegal land use and said he would recreate the Amazon Fund Steering Committee — this time without the presence of Environment Minister Ricardo Salles, who openly supports the economic exploitation of forests, to the detriment of the environment.</p> <p><strong>Tough sell. </strong>Just last week, a <a href="">video recording of an April 22 cabinet meeting</a> showed Mr. Salles telling his peers that, while the press is distracted with Covid-19, the government should seize the opportunity to “run the cattle herd” through the Amazon, “changing all of the rules and simplifying standards.”</p> <hr class="wp-block-separator"/> <h2>Not a dent in Bolsonaro&#8217;s support</h2> <p>At 43 percent, President Jair Bolsonaro&#8217;s rejection rates have never been higher, according to pollster Datafolha. Many factors help explain that rise: his government&#8217;s botched pandemic response (including the sacking of two Health Ministers), rising unemployment, the loss of his most popular cabinet member, ex-Justice Minister Sergio Moro, and evidence that he tried to shield his family from the Federal Police (including the disclosure of expletive-filled footage of an April cabinet meeting).</p> <div class="flourish-embed flourish-chart" data-src="visualisation/2609233" data-url=""><script src=""></script></div> <ul><li>More noteworthy than Mr. Bolsonaro&#8217;s rising rejection rates is the fact that his level of approval remains stable, at 33 percent of the electorate.</li><li>There is a <a href="">phenomenon</a> which has shown up in all recent polls: the president is losing support among richer, better-educated voters, but <em>gaining </em>ground among the poor, thanks to the government&#8217;s BRL 600 monthly emergency aid program. This strata&#8217;s fidelity will last as long as the aid does —&nbsp;which, according to the government&#8217;s own economic team, should not be long. Moreover, <a href="">one-third of applicants</a> still haven&#8217;t received their monthly payments.</li></ul> <p><strong>Why it matters.</strong> Like most presidents without a congressional majority, Mr. Bolsonaro is investing in his administration&#8217;s survival —&nbsp;rather than governability. He is making horse-trading deals with for-rent parties and catering to his most radical supporters. That is a strategy that doesn&#8217;t allow him to yield to other institutions, raising tensions to a dangerous level as the Supreme starts moving against him.</p> <p><strong>Article 142.</strong> On Twitter, Mr. Bolsonaro shared a text by a far-right legal scholar defending a self-coup as the Supreme Court &#8220;extrapolates its role.&#8221;</p> <blockquote class="twitter-tweet tw-align-center"><p lang="pt" dir="ltr">&#8211; Live com Ives Gandra: A politização no STF e a aplicação pontual da 142.<a href=""></a></p>— Jair M. Bolsonaro (@jairbolsonaro) <a href="">May 28, 2020</a></blockquote> <script async="" src="" charset="utf-8"></script> <hr class="wp-block-separator"/> <div id="buzzsprout-player-3644899"></div> <script src=";player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Stocks.</strong> Despite Brazil being the new coronavirus epicenter and stuck in political turmoil, Credit Suisse has recommended its clients to buy Brazilian assets. The bank believes there is considerable room for the Brazilian Real to bounce back, having been the worst-performing currency in the world this year. It also mentions that Brazil is in a better fiscal position than initially thought —&nbsp;and that commodity prices are up, which is positive for the country. However, Credit Suisse mentions the presence of Economy Minister Paulo Guedes as a &#8220;key factor.&#8221;</li><li><strong>Printing money.</strong> During a live broadcast held by investment bank BTG Pactual, Central Bank chairman Roberto Campos Neto said that the monetary authority will only consider the possibility of quantitative easing —&nbsp;that is, <a href="">printing more money</a>&nbsp;— if all other options fail, claiming that such a move is too risky in a country with a <a href="">history of hyperinflation</a> such as Brazil. The idea — initially tested by the U.S. Federal Reserve in 2008 — is indeed seen as a last resort, when interest is so low that monetary stimulus packages become ineffective.</li><li><strong>Shortage? </strong>&nbsp;Retailers&#8217; so-called &#8220;rupture index,&#8221; that is, when there is <a href="">shortage of a given product</a> on shelves, was never as high in Brazil: 12.7 percent. In 2019, it never crossed the 8-percent mark. But the index is more related to a change in the behavior of consumers, who are buying more units of their products of choice in order to diminish the number of trips to stores and avoid exposure to the coronavirus. That change happened even among online shoppers, to save time.</li><li><strong>Aviation.</strong> Latam Airlines&#8217; move to file for Chapter 11 bankruptcy protection in the U.S. will reportedly delay potential bailout programs for itself and all other carriers in Brazil (even if Latam&#8217;s Brazilian branch is not involved in the reorganization plea). The bailout program is a joint effort between public and private banks&nbsp;— and Latam&#8217;s Chapter 11 filing made private players jittery about the viability of Brazil&#8217;s airlines after the pandemic, Reuters reports.

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