Job bonanza, or joblessness

Maria Tereza Fleury , Professor of International Strategy at FGV

Unemployment is one of the themes that mobilizes different societies worldwide. It is an issue of political campaigns with varied ideological hues, an important thermometer of social and economic conditions of a country.

The Economist magazine recently published an article in which they depict a favorable scenario in which the rich world is enjoying an unprecedented employment bonanza, not only in the USA where unemployment rate is at  3.6% (the lowest in the last 50 years) but also in two thirds of the OECD countries.

A decade after the 2008 crisis, the developed world is beginning to enjoy the benefits of reforms and economic recovery, in parallel with the demographics and technologies. Those do not stem from immediate measures taken by any particular government (even though politicians claim acknowledgment for such favorable setting ), but from medium term changes.

It is a cyclic phenomenon, economists comment.  However, the truth of the matter is that those countries are living a favorable moment with economic growth, especially in the service sector, demographic changes with more women in the job market, more flexibility for hiring staff and, last but not least, improvements in education. Even digital technology has contributed as job offer and demand match more easily.  

That situation contrasts with countries like Brazil, where the unemployment rate is reaching staggering levels, around 12.4%. In 2008, Brazil, as well as other emerging countries, successfully surfed through the recession, thanks to domestic market growth. The 2014  recession and the ensuing downturn over the last few years reverted that positive scenario and unemployment has grown significantly.

A recent study from IPEA* reveals that over the last 10 years, employed workers’ education has expanded, reflecting not only education upgrades but also the admission of a younger population, displaying a higher educational level compared with those who retired. The downside is that employment is still concentrated in jobs where automation is more likely to materialize.

The perception of the seriousness of such issues in Brazil was evident in the previous weeks’ demonstrations embracing different political colors. In the march supporting President Bolsonaro’s administration, what brought people together in several  Brazilian cities was both the manifestation in favor of social security reform (a theme that is hardly ever backed in public demonstrations) and the fight against corruption. In student demonstrations in opposition to the government, namely the Ministry of Education, the agenda was the cuts in public funding for education.

In sum, reforms such as the one in social security, which contribute towards a better economic scenario even in the medium term, and also the need for investments in education, are in the Brazilian agenda. The example set by developed countries shows how job creation is a consequence of medium term policies that address structural aspects; they should be a country’s rather than an incumbent administration’s  project.

*IPEA – Mercado de trabalho – conjuntura e analise, Abril 2019.

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