Brazil’s latest unemployment figures, released by the Brazilian Institute of Geography and Statistics, was filled with records — none of them positive. In just three months, the coronavirus pandemic erased jobs that Brazil took almost three years to create, and left more than half of economically active Brazilians without a job, with social isolation crashing into the fragile cornerstone of economic recovery: the gig economy.
In the three-month span ending in April, 21 percent of informal jobs were cut, leaving 2.4 million people without means to provide for themselves and their families. As a result, only 49.5 percent of the workforce is currently enrolled in any sort of professional activity, the lowest level on record. To compound these woes, underemployment jumped to 27.5 percent, meaning 30 million people were left idle, or without sufficient hours.
Despite the grim results, unemployment rose to 12.9 percent, slightly better than the median of 13 percent predicted by a survey compiled by newspaper Valor Econômico, which included projections varying from 12.4 percent to 14.8 percent. As things stand, 12.7 million Brazilians are unemployed.
According to Josilmar Cordenonssi, a finance professor at Mackenzie University in São Paulo, there is more than one way to analyze the job apocalypse caused by the pandemic in Brazil. While unemployment tends to rise at a slower pace than other economic indicators in a crisis — due to the costs of firing formal employers — the pandemic is increasing the rate of workers labeled as “discouraged,” that is, those who have given up on finding a job. Indeed, the share of Brazilians in that situation has increased by 15 percent, to 5.4 million people. Now, they make up 5 percent of the overall workforce, another unwelcome record.
“Unemployment rates only measure those who don’t have a job but are looking for one. But right now there is a feeling that it is pointless to even seek a position, as many companies have interrupted their activities,” Mr. Cordenonssi told The Brazilian Report. “The coronavirus emergency salary is helping to diminish the effects of unemployment and avoid social unrest.”
First to fall, first to rise
After a 7.5-percent drop in the quarter, the number of formal workers also reached its smallest historic level, with 31.1 million people in registered employment. While the percentage drop is one-third of that seen in the informal market, this does not mean the market is holding strong, nor that we will see a fast recovery, explains Mr. Cordenonssi.
“Informal jobs recover much faster and should be the first to get back on track because the cost of hiring is much lower. Business owners that are not fully formal may hire informal employees as they see an increase in demand,” he said.
If confirmed, this scenario will be reminiscent of the meager recovery in the job market seen in 2018-2019, suggesting that unemployment in Brazil will be persistently high for the foreseeable future.
For Mr. Cordenonssi, who believes the unemployment rate won’t fall below 10 percent in the next two years, that also happens due to a disconnect between companies’ needs and the qualification of the workforce.
“We’ll have demand for qualified workers after the pandemic and the large part of our workers are not qualified,” he explained. “Depending on how fast the economy recovers, companies may feel inclined to hire inexperienced workers and train them, but this seems a bit too optimistic.”
This article was originally published on The Brazilian Report on June 30, 2020.