sbweb_2016_oct-4_brazil-labor-market-downturn_imageAccording to a recent study published by the Organization for Economic Cooperation and Development (OECD), in contrast to most OECD countries, Brazil is currently experiencing a deep economic downturn, and the latest projections expect this to continue well into 2017.

Political uncertainty is also affecting consumer and business confidence, leading to a persistent contraction in domestic demand.  The downturn is hitting the labor market hard. Employment rates in Brazil, traditionally above the OECD average, are expected to fall below the OECD average, to 57.9% in 2017.

Consequently, unemployment is set to rise further and is expected to reach 11.6% in 2017, compared to 6.2% across the OECD on average. Long-term unemployment is on the rise, but remains low by OECD standards.  The current downturn is also having an impact on the wages of workers, and a long period of strong and sustained growth in real wages has begun to unwind.

Young people who are neither employed nor in education or training (“NEETs”) risk being left permanently behind in the labor market – this risk is especially high for the relatively large share of low-skilled NEETs (i.e. those who have not finished upper secondary schooling). Many in this group live in households without any employed adults, suggesting that they are also at risk of poverty.  Effective policies are needed to reconnect members of this group with the labor market and improve their career prospects.

For many years now, youth unemployment and NEET rates have been high in Brazil, and the current crisis is expected to make the situation worse. Brazil has a high share of vulnerable youth in comparison to OECD countries: 10.6% of young people (aged 15-29) in Brazil are low-skilled NEETs, compared to 5.6% in OECD countries on average.

Despite considerable progress, gender gaps in the labour market persist throughout the world and are especially marked in emerging economies. While more women are working, they continue to have worse jobs than men. Too many women remain outside the labour force. While this may represent a choice for some, access to jobs is hampered for others as a result of a lack of high-quality and affordable childcare; scarcity of full-day schooling; and other barriers to employment. Amongst those in paid employment in Brazil, women earn 19.3% less on average than men.

*The 2016 edition of the OECD Employment Outlook provides an international assessment of recent labour market trends and short-term prospects, with a focus on vulnerable youth. It also contains chapters on: skills use at work; the short-term effects of structural reforms; and gender labour market gaps in emerging economies.

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