Brazil’s Unemployment Rate Falls

By Felicia Bryson, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Figures released on Thursday reveal that Brazil’s unemployment rate has been cut almost in half since 2003. The survey conducted by the Brazilian Institute of Geography and Statistics (IBGE), a governmental institution, showed that in contrast to last year’s January rate, unemployment has decreased by 1.1 percent, which translates into 15.6 percent less Brazilians out of work.

Out of the six largest metropolitan cities, Rio de Janeiro had the second lowest unemployment rate with 5.1 percent. Bahía had the highest rate at 10.7 percent, while the lowest rate was found in Porto Alegre at 4.2 percent.

Since President Dilma Rousseff took office on January 1st, Brazil’s minimum wage has risen by 5.3 percent to R$545 (US$326) compared to January 2010.

Brazilian labor unions demanded it be boosted to R$580, however, each increase adds to a significant burden on the federal budget. The minimum wage is tied to social security benefits and other government programs, a fact the president is well aware of.

Brazil has been notorious for being one of the countries with the highest levels of income inequality in the world, so this comes as good news which some accredit to former President Fernando Henrique Cardoso who stabilized the currency with his Real Plan and thus brought an end to Brazil’s high inflation.

Further reforms were continued by Luiz Inácio Lula da Silva’s administration, such as the payment of its debt to the IMF (International Monetary Fund). By paying back US$15.5 billion in 2005, two years ahead of schedule, Brazil managed to rise up and to start competing with other big world players.

“But the take off really happened later with the external sector. Mainly China’s high demand for goods that Brazil produces such as raw material and agriculture. What is very interesting is that the increase in employment was mainly in the formal sector (‘proper’ jobs with contracts).”, explains Dr. Maria Carolina da Silva Leme, economics professor at the FGV (Getúlio Vargas Foundation).

This being the main reason for economical growth in Brazil and thus the increase in employment, some obstacles to Brazil tackling its unemployment still remain. There are many industry sectors that are desperately searching for employees, such as oil companies like Petrobras and scientific institutions such as the University of São Paulo.

As The Economist reported recently, Brazil produces half a million graduates and 10,000 PhDs a year and yet still has problems to attract scientific researchers. “What economists believe in general, is that excess of government regulation acts against employment. There is a very important debate about changing employment laws in Brazil in order to make them more flexible.”, says Dr. da Silva Leme.