Recession has hit Brazil. It is expected that more than 2 million Brazilians are likely to lose their unemployment benefits by June this year. Millions of Brazilians have participated in street demonstrations and many have lined up in front of an employment agency in downtown Sao Paulo, Brazil earlier this month. This shows that support for President Dilma Rousseff is declining. Apart from losing unemployment benefits, other reasons for discontent include corruption scandal at Petrobras, a state oil company.
Stats don’t lie…
Economists predict that the recession will continue throughout the year and this will increase the unemployment rate from 9% to 10%. According to a report from the Labor Ministry, it is predicted that between February and June 492,000 benefits will be running out every month. About one third of unemployed Brazilians have been jobless for more than six months. This was never the case for the last 10 years.
Fabio Lorusso, a 30 year old public relations professional lost his job due to recession in July last year. He was even cut off his unemployment benefits since December. Now he lives with his parents. This is a common scenario that is found in most houses of Brazil. Many people, like Fabio, blame the Petrobras scandal for this situation.
Still far away…
Brazil has now 200 million population of which 9 million are unemployed. About 2.5 million people who are currently living on unemployment benefits will soon be unemployed. Economists predict that it will take years for the current jobless situation to reverse. The economy of Brazil will be stable no earlier than in 2019.
The downturn of Brazilian employment situation started in early 2014. Since then 1.5 million people had lost jobs and companies still continue to dismiss 100,000 workers every month. The situation is alarming.The Labor minister Miguel Rossetto has assured that soon the recovery phase of this unemployment situation will begin. The fiscal deficit is already more than 10% of GDP last year.
That’s why the government is unable to extend the benefits. The unemployment benefit was cut in order to lower government spending. Economists are concerned that if the current situation is not revived within this year then people will start to use up their savings and so move towards poverty.