Brazil Could Lose Nine Million Jobs in 2020, Says Study

RIO DE JANEIRO, BRAZIL – The job market has not often been as vulnerable as it is today. With the economy in decline, indebted companies and the closing of small and medium-size companies, 2020 should be a year of job cuts. In Brazil, at least nine million formal jobs should be lost this year, a tremendous figure.

The unemployment rate is expected to reach an unprecedented 18.7 percent, according to study by the Getúlio Vargas Foundation (FGV), something that has not been seen since at least 1992. Last year, there were approximately 12.6 million unemployed in the country – the unemployment rate closed at 12 percent. On average, each percentage point of unemployment corresponds to about one million jobs lost, hence the dramatic projection for 2020.

A complex uncertainty scenario adds to the negative projections. Economic rebound is intrinsically dependent on a significant improvement in the public health crisis – and, for the time being, it is unclear when this will occur. With the rapidly spreading coronavirus infection in most of the country, measures to reopen the economy tend, at this time, to stray from the desired results.

“Unless the spread of the virus is controlled, there is no point in allowing trade and other activities to operate, since consumers will likely avoid going to those locations to avoid contamination,” says economist Daniel Duque, of FGV, a labor market specialist.

Even after a certain return to normality, when the pandemic is more controlled, it will probably take at least a few months for companies to recompose their cash and feel comfortable enough to hire again. Until the end of the year, this is something that will unlikely occur, according to economists.

“In a scenario of declining GDP, which this year should contract by 6.5 percent, people in general spend less and, therefore, companies’ sales decrease,” says economist Helio Zylberstajn of the University of São Paulo.

The estimate is that the drop in family consumption will be directly impacted by this situation, with a retraction of eight percent. Companies’ investment, on the other hand, should drop 15 percent, according to FGV.

The mass of casual workers in Brazil, which reached 41 percent of the occupied population last year, represents another important turning point in this scenario. The report “Unemployed Brazil”, published in the latest issue of EXAME, contributed to shed light on this subject, crucial at a time when Brazil and the world are upside down.

Source: Exame