Employment crisis over

According to the Brazilian Minister of Labor and Employment, Carlos Lupi, the effects of the economic recession on employment in Brazil have already been overcome.
The worst impact of the global financial crisis on Brazil's labor market occurred in December of 2008, with the net loss of 655,000 formal sector jobs. Effects had been felt since October, putting an end to a period of strong growth in formal employment that began in 2004.
December is usually a month with a lot of dismissals as temporary work contracts, particularly in sales during the year-end holiday period, expire. But in December 2008 job losses were more than double those of previous years.

There was still a net employment loss in January, but it was much smaller at 102,000 jobs, and in February there were 9,000 more jobs created than lost, a small net gain indicating a turning point in the trend, which was accentuated in March, figures for which are not yet complete, Lupi said.

As well as the figures showing the trend, the fall in applications for unemployment insurance and the hiring of workers in sectors like construction, education, health and other services demonstrate that "the crisis is over" in the labor market, the minister said.

However, Brazilian industry is still undergoing serious consequences from the global crisis. Steel production in the first two months of this year was down by 42.4 percent. The recovery of mining, steel and other sectors that depend heavily on exports is being delayed because the stockpiles of excess production accumulated over the last several months will only be used up over the months to come, depending on external markets. Meanwhile, production remains low.

A similar dynamic was seen in the automotive industry, which was hit hard by the sharp restriction of credit in the last quarter of 2008. The government cut sales taxes on vehicles, which allowed rapid recovery of sales and production.

Brazil's domestic market, strengthened by real increases in wages and a fall in inflation, was a key factor in mitigating the effects of the crisis, as was the devaluation of the national currency, the real, against the dollar, another effect of the depression.

Brazil is reacting differently to the global recession because of its internal demand and its relatively low dependence on international trade. Increasing the minimum wage in real terms, a policy adopted by the government of President Luiz Inácio Lula da Silva since it took office in 2002, and means that the food sector is relatively unaffected.

Lupi believes that: "The crisis has not affected, and will not affect, the base of the social pyramid," partly because the low degree of inflation due to the crisis has made food cheaper.

On the other hand, the fall in international prices of agricultural commodities was compensated by the depreciation of the real, so that farmers maintained their incomes in national currency, the minister said. The same was true of the footwear industry, which dismissed a large number of workers in 2008, but recovered international competitiveness thanks to the devaluation.

At the present moment, the employment situation in Brazil is overcoming the brief interruption in the strong growth it has shown over recent years, but the minister acknowledged there is a serious structural problem in the national labor market: the enormous job instability.

The net gain of 1.45 million jobs generated last year is the result of nearly 15.5 million hiring and 14 million firings, the minister said. Over one-third of the total number of people in formal employment loses their jobs each year, indicating the large proportion of temporary jobs.

The minister also concludes that another negative factor is the lack of education and training. In 2008, close to one million jobs were not filled because there were no qualified applicants.


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