Brazil Discovers How To Increase Employment With Near-Zero Economic Growth
Brazil may be living in a labor bubble.
Not because labor costs are rising; they should be rising. Brazilian workers are in demand and have spent generations earning peanuts. The government, and private sector, are finally catching up.
But in the process of rising wages there is rising employment. Call it a job market bubble, but Brazil has discovered how to keep lowering unemployment data even when economic growth is a measly 0.2 percent.
<cite class="box_byline clearfix" style="margin: 0px; padding: 0px; border: 0px none; outline: 0px none; font-size: 0px; vertical-align: baseline; background-color: transparent; max-width: 175px; box-shadow: 1px 1px 6px #b8b8b8;">Forbes Staff</cite>Brazil announced Thursday that the country’s May unemployment rate was just 5.8 percent, a decrease of 0.2 percentage points against April 2012, and a 0.6 percent decrease over May 2011. According to the Brazilian Institute of Geography and Statistic, the unemployed population (1.4 million persons) was stable in relation to the previous month, but actually posted a drop of 7.1 percent against May 2011 (or 107,000 fewer unemployed).
How the country managed to do this is unclear. Brazil’s first quarter growth was under half a percent. And recent Central Bank data has the economy growing less than the U.S. economy, under 2 percent growth over the last 12 months. By comparison, the U.S. economy is expanding, but the labor market is stable to contracting. Meanwhile, the Brazilian economy is contracting, but the job market is stable to increasing the number of new hires.
Brazil’s employed population (23 million) recorded a 1.2 percent increase compared to April, and a 2.5 percent increase over the previous year, for a total of 554,000 additional jobs. The number of workers with a formal employment contract, rather than a cash only arrangement, popular in Brazil’s large and informal domestic workers and other household services segment, did not change in relation to April (11.2 million). In the annual comparison, there was an increase of 3.9 percent added to Brazilian payrolls, accounting for additional 427,000 jobs with a formal employment contract.
No changes were recorded in the real average income over the previous month, however. Average monthly income is R$ 1,725.60 ($850), but rose 4.9 percent compared with May 2011.