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Tags: Rousseff | Brazil | jobless | unemployment

Rousseff's 'Priority' for Brazil Suffers as Jobless Rate Jumps

Thursday, 19 November 2015 05:35 PM EST

When Brazil’s Dilma Rousseff was sworn in for her second presidential term in January, she proclaimed that maintaining jobs and raising salaries were her “greatest priority.” Months later, real wages are falling and — even with people leaving the workforce — unemployment has spiked to its highest in more than six years. How does all this look on the ground?Firing the young

Companies’ least experienced employees are often the first to get the ax. The jobless rate for people ages 18-24 climbed to 19.5 percent in October, from 11.8 percent in the same month last year, according to government data that tracks employment in six Brazilian metropolitan areas.More part-timers

Adapting to the slowdown and cutting costs translate into hiring more part-time or short-term employees, who generally don't receive the same perks as full-timers, according to Prolancer, a company that connects firms with freelancers. In the first nine months of the year, employers using the service contracted with nearly double the number of people versus the same period of 2014.Talent migration

Amid the recession, Brazilians have become more disposed toward seeking work abroad, according to Catho, a job placement service. Even without the prospect of a raise, promotion or any other benefit, 11.5 percent of people would take the leap, almost triple the level in 2013, according to the most recent survey of 23,011 people in June and July.

"People have gotten used to a certain level of consumption in Brazil, and it's only now dawning on them that that may not be sustainable," said Thomas Trebat, director of Columbia University’s Global Center in Rio de Janeiro, said by phone. "They had jobs that paid two times the minimum wage, and now they're struggling to get one that earns one minimum wage, so sacrifices have to be made."Real wages fall

Inflation-adjusted wage gains Brazilians have enjoyed for the past decade are no more, and in fact have begun reversing. The formula for increases to the minimum wage, which helps boost salaries across the board, is equal to the prior year’s inflation plus economic growth from two years prior. With 2014 gross domestic product virtually flat and contractions projected for both 2015 and 2016, the economy won’t help boost income above inflation.Climbing unemployment

Economists surveyed by Bloomberg expect the unemployment rate in the six metro areas to climb, averaging 9 percent next year. Brazil's nationwide jobless rate, which lags the other index and tracks even higher, was already near that level in the three months ending in August.

"There’s going to be slack in the labor market and therefore the ability for workers to claim real growth in their wage negotiations tends to be zero," said Jankiel Santos, chief economist of Haitong in Brazil. "People are going to be happy just keeping their jobs, and therefore aren’t going to fight for wage increases. They’ll be happy to have a wage."

© Copyright 2022 Bloomberg News. All rights reserved.

When Brazil's Dilma Rousseff was sworn in for her second presidential term in January, she proclaimed that maintaining jobs and raising salaries were her "greatest priority."
Rousseff, Brazil, jobless, unemployment
Thursday, 19 November 2015 05:35 PM
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