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As long as the rate of economic growth remains low, Brazil will tend to specialize in the production and marketing of low value-added goods, with limited technology content and dependent on the low cost of labor. In this sense, economic activity growth may demand more workers, but the profile of employed workers tends to be associated with low compensation and precarious work conditions, not always accessible to highly educated and professionally qualified workers.  In a continental country like Brazil, where more than 2.3 million people enter the job market each year, the national economy must grow at least 5% per year to absorb this population. Without it, competition in the job market, even for the simplest positions, will end up driving a reduction of wages and mass unemployment.

Structural Unemployment in Brazil

Marcio Pochmann[1]


Unemployment recently became an integral part of the active cycle of the Brazilian workforce’s general trajectory. As a matter of fact, until the 1980s open unemployment – besides being residual in the Economically Active Population – was basically concentrated in the segments traditionally identified with the most vulnerable groups of the active population (youth, women, Afro-Brazilians, all generally with a low level of education).

From the 1990s on, though, the unemployment rate grew rapidly, following with the degradation of the general conditions of work production in Brazil. In that sense, unemployment not only remains high – about three or four times higher than rates recorded in the 1970s and 1980s – but also radically changed the nature of its presence inside the workforce.

As there are no longer any social segments that are immune to the risk of unemployment, it is expanding beyond traditional groups that are vulnerable within the workforce. Paradoxically, as a country that still has low levels of education among the population, Brazil started facing the fastest expansion of unemployment in the most educated segment of the Economically Active Population, thus feeding the anomaly of the brain drain phenomenon: in short, the emigration of the population with the highest education and professional qualification.

Thus, part of the efforts that families and individuals make to improve the quality of the workforce supply ends up internally despised, causing intellectual unemployment and the export of qualified workers to other nations that may adequately incorporate them.

In this context, the involuntary idleness of the workforce manifested itself in new ways over the last two decades. On one hand, traditional unemployment is associated with the level of general economic activity, and thus reaches almost two-thirds of the total jobless workers in the country; on the other, structural unemployment acquires a growing dimension, marked by the longevity of the idleness of the workforce associated with the country’s model of insertion in the global economy. In short, one notes that periodical unemployment may be easily reverted by increasing the rate of productive activities, while structural unemployment requires important changes within the standard relationship to globalization.

Currently, structural unemployment presents three distinct forms in Brazil. The first is repetitive unemployment, usually concentrated in youth, and related to growing difficulties in transitioning from the school system to the job market. Obstacles to career-building for some age segments of the active population lead to occupational instability and recurrent unemployment.

The second form is conversion unemployment, usually associated with older segments of the population (25 to 45). Even with higher education, the worker who faces a break in his career because of unemployment tends to show more difficulty in returning to an equivalent labor situation, with the probability of structurally going back to unemployment, be it because of changes in the production organization and work management, or because of increasing competition within the job market.

Lastly, the third form is exclusion unemployment, strongly associated with the profile of people over 40 years of age. Once a previous contract- generally a wage contract- is interrupted, the worker finds almost insurmountable obstacles to land a job that is compatible with his or her previous experience, even if s/he has better education. Age prejudice becomes relevant in hiring decisions.[1]

In this framework, it is imperative to recognize the more complex significance in Brazil of the relationship between education level, economic development and involuntary idleness of the workforce. In a way, structural unemployment is associated with two different sets of problems, which end up converging. The first relates to the economic sphere (macro and micro). In macroeconomic terms, the quantity and composition of unemployment in a given country are connected not only to the rate of national economic expansion but also to the model of insertion in the global economy.

As long as the rate of economic growth remains low, Brazil tends to specialize in the production and marketing of low value-added goods, with limited technology content and dependent on the low cost of labor. In this sense, economic growth may demand more workers, but the profile of employed workers tends to be associated with low compensation and precarious work conditions, not always accessible to highly educated and professionally qualified workers (repetitive and exclusive unemployment).

In microeconomic terms, the educational level and situation of the unemployed is related to the companies’ functional and organizational structure, especially when there is a disconnect between new forms of production and job organization. Within existing chains of production in Brazil, it seems that a system of wild competition and spurious outsourcing of labor is favored over a regime of functional and organizational cooperation, which turns the quest for higher productivity into a result of degrading work conditions and not of a synergic increase of investments (repetitive and conversion unemployment).

The second set of problems is related to the sphere of education. In a developing country, it is a paradox to produce knowledge while increasing the professional qualifications of workers, who often end up working in rich countries.

This happens because productive activities in the country do not fully utilize the results of investments in science and technology to their advantage. More often there is a clear separation between the worlds of knowledge and production.  However, these are consolidating, as there is a growing interest in buying technology abroad instead of fostering local generation.

For these reasons, the prevalent misalignment between economic and educational spheres tends to indicate a continuity of structural unemployment in Brazil.[2] Its main characteristics will be considered below.

Structural Unemployment in Brazil

Structural unemployment in Brazil may be analyzed from two perspectives. The first one relates to the significant quantity of involuntarily idle labor since 1990, while the second refers to changes in the profile of those unemployed, no longer concentrated – almost exclusively – within the so-called vulnerable segments of the population. The situation of mass unemployment and the anomaly of intellectual unemployment and the brain drain will be briefly presented below.

Mass unemployment

Brazil already currently suffers from a grave lack of stability as seen in the high national open unemployment rate, as measured through the parameters of the Pesquisa Nacional por Amostra de Domicílios.*

The current rate of national unemployment is practically 40% above that of 1995, when Brazil reached monetary stability. Before that, the national open unemployment rate in Brazil was 2.4 times less than in the 1980s and 3.8 times less than the second half of the 1970s.

In the last two decades, not only did the national open unemployment rate grow dramatically in the country, but the number of involuntarily idle workers did as well. In 2005, for instance, Brazil recorded a contingent of 8.9 million workers who could not find a job, not even for an hour, during the period in which IBGE’s** national research was performed.

Graph 1

Brazil – Open Unemployment Rate Evolution

(% of Economically Active Population)

Source: IBGE/PNAD’s data adjusted by the author

A comparison with 1995, when monetary stability began in the country, shows that there was a contingent of 4.4 million fewer unemployed people. In 1989, previous to the beginning of the experiment with neoliberal policies, the unemployed contingent was 6.9 million fewer than in 2005.

Graph 2

Brazil – Evolution of the Number of Unemployed

(in thousands)

Source: IBGE/PNAD’s data adjusted by the author

Finally, a comparison with the final year of the cycle of national industrialization (1980), when the average economic growth was around 7% per year, the total number of unemployment was 7.9 million fewer than in 2005. Undeniably, the presence of low economic growth in the country, paired with neoliberal policies and the passive and subordinated insertion of Brazil in the global economy, constituted a new context of massive and structural unemployment.

In spite of the absolute and relative gravity of unemployment – with no parallel in any other Republican period – there is a notable change in the profile of the unemployed in the country. Although there is no labor segment immune to involuntary idleness, it is clear that some social groups tend to make up a larger portion of unemployment.

Intellectual Unemployment Anomaly

Opposing global trends that require longer schooling and higher professional qualification, as a component of a set of necessary requirements to reduce the risk of unemployment, Brazil keeps generating an increased rate of workforce idleness precisely in the population that has more years of schooling. On one hand, there is an important increase of the number of years at school in practically all age groups in the population.

In 2004, for instance, the Brazilian population had an average 6.6 years of schooling, while in 1993 the average was just 5.1, i.e., an increase of almost 30% in the number of years of schooling for the entire Brazilian population.

Graph 3

Brazil – Evolution of Average Years of

Schooling – 1993 and 2004

             (10 years or more of age)

Source: IBGE/PNAD’s data adjusted by the author


On the other hand, one notes that, in spite of the effort to increase schooling for the entire population during the last decade, unemployment grew dramatically for the segment with higher education. In 2004, for instance, 60.2% of unemployed (8.3 million workers) had graduated from high school, while in 1995 only 37.7% of all unemployed (4.5 million) had up to eight years of schooling.

In the case of those unemployed that had a college degree, their numbers tripled in the same period (98,000 in 1995 and 247,000 in 2004). In 2004, there were 1.7 illiterate and unemployed people for each unemployed person with 15 or more years of schooling, while in 1992 illiterate people counted for 3.6 to each unemployed person with a college degree.

Graph 4

Brazil – Variation in the Number of Unemployed by Years of Study) between 1995 and 2004

(in %)

Source: IBGE/PNAD’s data adjusted by the author


For an increase of 83.2% in the number of unemployed people between 1995 and 2004, the increase of illiterate unemployed was only 15.5%, while for those with the least number of years of schooling (1 to 3 years) there was a decrease in the total number of unemployed. Because of that, the national economy is characterized by the anomaly of an intellectual unemployment larger than the unemployment of
workers with low education.

Graph 5

Brazil – Relationship between Unemployment Rate and Education Level in Selected Years

 (in %)

Source: IBGE/PNAD’s data adjusted by the author

In the 1970s and 1980s in Brazil, a higher education guaranteed a lower risk of unemployment. For the workforce segment with 12 or more years of studies, for instance, the national unemployment rate was 44.6% less than the one for workers with up to eight years of schooling.

In 2004, the national unemployment rate of the segment of the Economically Active Population with higher education exceeded the rate for workers with a lesser number of years of study. Because of this, the relationship between the national unemployment rate for the segment with schooling equivalent to Ensino Básico and the national unemployment rate for the segment with schooling equivalent to Ensino Médio e Superior* started decreasing from the 1990s on.


Graph 6

Brazil – Relationship between Unemployment Rate and Education Level in Selected Years

Source: IBGE/PNAD’s data adjusted by the author

Thus, in 2004 the national unemployment rate for the segment of the Economically Active Population with an education level equivalent to Ensino Básico was almost half of the workforce with schooling equivalent to Ensino Médio. Fifteen years before (1989), the relationship was practically equivalent between the unemployment rates among workers of Ensino Básico and Médio.

The same change is noted in the relationship between the unemployment rates for workers with Ensino Básico and Superior. In that sense, structural unemployment tends to converge toward those workers who are better educated.

                This situation, however, is an anomaly specific to Brazil in the last two decades. According to international experience, mainly regarding developing countries that contemplate increasing investment in new technologies, unemployment converges inexorably to workforce segments with the least education.

                 In Germany, for instance, the unemployment rate of the workforce with schooling equivalent to Ensino Básico grew 3.3 times in the last two decades, while the unemployment rate of the EAP with college or university grew 2.6 times, according to OCDE (Employment Outlook, various years). Also in the United States there was  a smaller growth of unemployment for the workforce segment with higher education (the unemployment rate grew 2.3 times for workers with middle school education, and 1.9 for workers with college or university education).

Graph 7

Relationship between Unemployment Rate and Education Level in Selected Countries, 2000

Source: OCDE, 2001

Because of that, the relationship between the unemployment rate for the workforce with Ensino Básico and that with Ensino Médio e Superior increased. In the United States, for instance, the unemployment rate for workers with basic education was almost four times as high as the rate verified for workers with college or university education, while the workforce segment with basic education showed an unemployment rate twice as large as that for the workforce segment with middle school education.

Brain Drain

In Brazil, the phenomenon of brain emigration toward rich countries became notable in the last two decades. With no prospect for decent jobs and an improved life, a portion of the youth ends up pressuring the Department of Immigration in developed countries, in search of decent work and a better quality of life.

                The unfavorable situation in the job market for those who have higher education in Brazil helps us to understand the motives that especially drive young people to go abroad in search of what they cannot abundantly find here. In 2004, for instance, the average salary of a college level worker was 1.5 times higher than the average salary of the elementary school level worker. In 1995, it was two thirds higher.

                     What’s more, it is also notable that the unemployment rate increased much more for those with higher education. In 2004, for instance, the unemployment rate for workers with a college degree was more than 25% above that of 1995, slightly above the increase of the unemployment rate for workers with elementary school education.

Graph 8

Brazil – Evolution of Work Compensation and Unemployment Rate by Years of Schooling

between 1995 and 2004

Source: IBGE/PNAD’s data adjusted by the author

There is undeniably something bizarre going on in Brazil. How can we comprehend a better education without a better salary, in real terms, and lower unemployment?

It so happens that education, although fundamental to being able to compete in the job market, is not enough, by itself, to assure a decent job and a dignified salary. Other variables are at stake, such as the rate of economic growth and the way Brazil is inserted in the global economy.

In a country with continental dimensions such as Brazil, where more than 2.3 million people enter the job market annually, it is necessary that the national economy grow at least 5% per annum just to absorb all the human population. Without it, competition in the job market, even for simple positions, ends up leading to salary reduction and mass unemployment.

The type of economic growth must also be considered, as there is a kind that implies the production of services and goods of low unit value and little technology content, generating job positions that require a low cost of labor. But there is also economic growth associated with the production of high value-added goods and services, high technology content, and is intensive in well remunerated jobs.

In a country of low schooling (below seven years of schooling), the emigration of the segment of the population precisely with higher education is an enormous contradiction, as it implies the failure of national efforts to promote education. According to the census (IBGE) in the period 1991-2000, the balance between immigration and emigration was negative, as more than 1.3 million Brazilian youth left the country.

 

Graph 9

Brazil – Evolution in the Number of Students Abroad between 2003 and 2006

(in thousands)

Source: BELTA

In the first half of the first decade of the twenty-first century, it is estimated that between 140,000 and 160,000 Brazilians emigrate each year. In the year 2006 alone, estimates indicate that around 70,000 Brazilians left the country to study abroad, especially in countries like the United States, Canada, the United Kingdom, Australia, New Zealand, and Spain, among others.

For a nation born basically out of immigration, Brazil is already becoming, at the beginning of the twentieth-first century, a nation of emigrants, shown by a negative balance between entrance and exit of residents. It is not a matter of containing or depressing the production and export of primary goods, nor of containing the advancement of studies abroad.

But it appears fundamental for the country to invest in sectors committed to the production of high value-added goods and services, increasing technology content, as well as articulating with their job market the departure and return of young Brazilian students. Thus Brazil will be able to alter the profile of its passive and subordinate insertion in the global economy, and then compete for strategic markets such as new materials, biotechnology, chemistry, and microelectronics, among others. However, this requires another macroeconomic policy, one that can break the current cycle of the “financialization” of wealth, which only blocks the perspective of inclusion through decent work.

 

 

 

 

 

 

 

 



* T.’s N.: Literally, “Ensino Básico” means Basic Education, corresponding in Brazil to eight years of schooling, and “Ensino Médio e Superior” means Middle and Higher Education, corresponding to high school and college/university.


[1] See FREY, L. La disoccupazione nel lungo periodo: cause e conseguenze, Bologna: Il Mulino, 1997; and CROMPTON, L. et al. Changing forms of employment. London: Routledge, 1996.

[2] See OCDE. Étude Economique de l’OCDE, Brésil 2000-2001. Paris: OCDE, 2001; HORTA, C. & CARVALHO, A. Globalização trabalho e desemprego. Belo Horizonte: C/ Arte, 2001; POCHMANN, M. O emprego na globalização. São Paulo: Boitempo, 2001.

* Translator’s Note: National Research through Home Sample.

** T.’s N.: Instituto Nacional de Geografia e Estatística, or National Institute of Geography and Statistics.


[1] Professor at the Economics Institute (IE) and researcher at the Center for Union Studies and Labor Economy (CESIT) of the State University of Campinas (UNICAMP), (pochmann@eco.unicamp.br.