Unemployment in Brazil

Unemployment in Brazil

1.0 Introduction

Research by Buechler (2014) indicates that the rate of unemployment in Brazil increased by 0.9 percent in 2015 as compared to the level in 2014. According to the country’s statistical bureau, more than 9.1 million Brazilians were involved in search for an employment opportunity in October 2015 but did not obtain. The number represented a 5.3 percent increase as compared to the three previous months. As the number of the unemployment went high, the employed persons in the country remained at a constant level of 92.3 million inhabitants. The rise in unemployment was attributed to retired individuals going back to the labour market to boost the earning of households. A credible record shows that the level of unemployment in Brazil has been varying over the years. The country registered the highest number of jobless citizens on April 2004, represented by 13.1 percent. Brazil recorded the lowest joblessness level on December 2013 an equivalent of 4.7 percent.

2.0 Relationship between unemployment and the Brazilian economy

The changing rates of unemployment in Brazil create adverse effects on the country’s economy. As the number of unemployed rises, the level of employed continues to decline (Tompkins & Sternberg, 2007). The decrease of the employed individuals and increase in the degree of unemployment reduces the tax revenue of the country. The Brazilian government collects tax from the working people. The number of persons employed however are few leading to a negative impact on the economy. The working group only pays a portion of income as tax to the government as most of the employed receive less pay implying less taxes to the government (Brazil, 2013). The little revenue hinders the government operations such as the provision of medical services to the citizens and investments in the country’s infrastructure. A study by Tompkins and Sternberg (2004) indicates that the level of unemployment in an economy affects the security of the country. The unemployed people engage in criminal activities such as robbery to satisfy their daily requirements.

Research by Buechler (2014) shows that the level of individuals without occupations affects the gross domestic product of Brazil. Firms need a vast number of workers to produce a high quantity of goods services. The limited number of people working decreases the economy’s growth rate. Because of unemployment, the firms in the country produce fewer goods and services. Low growth rate in the gross domestic product affect the government taxation negatively and spending that creates an adverse impact on the country’s finance. More working people with the required skills are necessary for improving the financial growth of the country. Higher growth rate accompanied the low level of unemployed in 2013 resulting in a significant amount of tax collection and a positive impact on the government revenues. In 2004, the Brazilian economy faced adverse effect as a result huge percent of the unemployed. As Tompkins and Sternberg (2004) state, a negative relationship between unemployment and the economy’s growth rate exists i.e. as unemployment rises, the level of economic growth decreases.

Brazil (2013) reveals that the relationship between unemployment and welfare cost is positive. High level of unemployed people and a low number of workers means that more individuals will demand benefits from the government. In Brazil, the higher number of individuals in need of benefits from the government drains the finances in the economy. Brazil (2013) explains that it is because the government generates less revenue from the employed people through tax collection that is often limited and hence has to borrow extra money resources that may attract high-interest rates to finance the benefits demanded by the citizens. Also, as a result of unemployment, the government spends more resources in training the unemployed people on the necessary skills that can enable the individuals to access employment opportunities in the economy. The resources used drains the financial status of the Brazilian economy. The government can use the borrowed monies elsewhere for development purpose (Buechler, 2014).

3.0 Trend from the data sets

According to Brazilian Statistics Bureau, the rate of unemployment in Brazil was 7.6 percent in January 2016 and was the highest recorded since 2009. Research by Brazil (2013) indicates that the rate increased by 0.7 percent compared to the level of unemployment in December 2015 and by 2.3 percent compared the state of job lack in January 2015. As Tompkins and Sternberg (2004) argue the unemployment rate is estimated to increase even more. The data sets show that as the number of unemployed continues to grow, the employed remained stagnant at around 92.3 percent in 2016 as well as during the previous months in 2015. The work of Buechler (2014) suggests that increase in the unemployment rate is as a result of people who were previously employed trying to return to the labour market as a result of lower earnings and rise in inflation. The scenario forces individuals who had stayed out of the workforce market seek for an employment opportunity to boost the family earnings. The unemployment rate has exponentially increased over the last three months. On February 2016, the rate rose to 8.2 percent.

Data sets report that Brazil recorded the highest level of joblessness in April 2004. The lowest rate of 4.3 percent occurred in December 2013. The trend shows that unemployment rates increased in several months and decreased in others throughout the year. The data set below shows the rate of unemployment in Brazil over the last five years (Brazil, 2013).

 

 

 

Jan Feb March April may June July Aug Sep Oct Nov Dec
2010 7.2 7.4 7.6 7.3 7.5 7.0 6.9 6.7 6.2 6.1 5.7 5.3
2011 6.1 6.4 6.5 6.4 6.4 6.2 6.0 6.0 6.0 5.8 5.2 4.7
2012 4.7 5.5 5.7 6.2 6.0 5.8 5.9 5.4 5.3 5.4 5.3 5.9
2013 4.6 5.4 5.6 5.7 5.8 5.8 6.0 5.6 5.3 5.4 5.2 4.6
2014 4.8 5.1 5.0 4.9 4.9 4.8 4.9 5.0 4.9 4.7 4.8 4.3
2015 5.3 5.9 6.2 6.4 6.7 6.9 7.5 7.6 7.6 7.9 7.5 6.9
2016 7.6 8.2

 

4.0 Conclusion

From the unemployment study in Brazil above, it is clear that the high level of job lack adversely affects the functioning of the economy. Acute levels of unemployment reduce the GDP of the country’s Brazilian market environment because of low production levels by firms. The joblessness rate in Brazil has increased over the last four months consequently becoming a nagging economic problem.

References

 

Buechler, S. (2014). Labor in a globalizing city: Economic restructuring in Sao Paulo, Brazil. N.p.

Brazil. (2013). Inflation and unemployment doi: 10.1787/eco_outlook-v2013-1-graph132-en. N.p.

Tompkins, C., & Sternberg, K. (2004). Teen life in Latin America and the Caribbean. Westport, CT: Greenwood.

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