Today, more new companies set up shop in Brazil than ever before. Congress looks to reinstate emergency aid, but markets are worried about how they plan to pay for it. Supreme Court Justice says government could be prosecuted for Manaus crisis.
Brazil sees an epidemic of entrepreneurship
The pandemic has driven the number of bankruptcies in Brazil to record-shattering levels. Still, never in history have so many new companies opened up for business. There were 3.36 million in 2020, taking the total tally of operating firms to 20 million, an all-time high. But the raw numbers could hide one aspect of this surge: most new companies created in Brazil are so-called “individual microentrepreneurs,” or MEIs.
- MEIs accounted for 77 percent of the businesses that opened their doors last year.
Why it matters. Instead of being proof of economic dynamism, the surge of individual companies reveals the rapid precarization of the labor market.
Irreversible trend? Brazil’s 2017 labor reform allowed companies to hire outsourced employees for their core business, as opposed to restricting this right to support staff. As a result, firms are more inclined to employ individual “businesses” rather than hiring formal workers.
- In legal terms, employers are simply...