Informality advances in Brazil; low wages are now the norm in the country

High informality and low wages were the labor market scenario in Brazil in 2019. A survey by Pnad (National Household Sample Survey) indicated that unemployment fell, but with increasing informality and falling average incomes.

According to the Underground Economy Index, calculated by the Brazilian Institute of Economics of FGV (Fundação Getúlio Vargas), informality is still responsible for a significant portion of the Brazilian economy, having moved R$ 1.2 trillion in the 12 months between June 2018 and June 2019, equivalent to 17.3% of Brazilian GDP. This is the highest value in the last eight years. The growth in informality also increases the production of goods and services that are not declared to the government and the tax evasion of the country. In the 12 months between June 2018 to June 2019, the index advanced 0.1%.

This scenario is strengthened by the emergence of new forms of work, with applications that stimulate informality and expand the outsourcing of employment in Brazil.

According to the Institute of Applied Economic Research (Ipea), informal job vacancies are responsible for much of the small generation of jobs in recent years in Brazil. Currently, the country has over 11 million unemployed. Still, according to Ipea, these new informal jobs are behind the drop in productivity and the slow recovery of the Brazilian economy after the recession from 2014 to 2016.

Another problem produced by the high informality in Brazil is the reduction in the level of social security contributions, which worsens the country's fiscal issue. In addition, informality puts people in a situation where there is no fixed income, which limits their access to credit. In informal work, the worker also loses access to any kind of legal protection, does not receive vacation, meal vouchers or transportation allowance, benefits that formal work provides.

Currently, according to IBGE data, Brazil has 38.8 million informal workers. This total is 41% of the total employed persons in Brazil (93.8 million), that is, they represent 4 out of 10 Brazilian workers.

Brazil: poverty grows and inequality increases

According to the IBGE (Brazilian Institute of Geography and Statistics), Brazil's GDP grew by 1.3% in 2018. The latest Focus Bulletin, published last Monday by the Brazilian Central Bank, pointed out that Brazil's GDP growth in 2019 should be around 1.1%. Therefore, if all goes as expected by the experts from the top 100 financial institutions in the Brazilian market, which make up the Focus Bulletin, 2019 will have a lower GDP growth than 2018.

This scenario allows us to say that the Brazilian economy continues at a very slow recovery pace. As the Brazilian GDP advances with very little vigor, it seems that the country's economy should recover pre-crisis level only in 2022.

According to the technical director of Dieese (Inter-Union Department of Statistics and Socioeconomic Studies), Clemente Ganz Lúcio, if the Brazilian economy continues at this pace, it will take a decade for the country to recover the level of employment that existed before the crisis that began in 2013.

Currently, Brazil has 12.4 million jobless people, a rate of 11.6%.

According to Rafael Guerreiro Osório, a researcher at the Institute for Applied Economic Research (Ipea), the country's performance in the areas of income distribution and education pushed performance down. For Osorio, "we are not doing well in education. And this year, we have not seen a proposition of educational policy that promises extraordinary results, if any. In life expectancy, there is no way to change much from one year to another. So the hope would be for income, but our situation today will keep us close to the middle of the ranking." Brazil occupies the 79th position among 189 evaluated nations.

To make matters worse, Brazil has won the terrible title of runner-up in the world this year, second only to Qatar.

According to the newspaper O Estado de Minas, "Brazil is the second most unequal country in the world among those who provide estimates based on tax data, second only to Qatar"

In Brazil, 1% of the richest population (about 1.5 million people) concentrates 23.2% of the share of total income declared by individuals to income tax (in Qatar the richest 1% concentrates about 27% of total declared income).

According to The State of Minas, "the income concentration of this small group of rich people in Brazil is 164% higher than in Sweden, where the one hundredth richest share accounts for 8.8% of the total income. Sweden, from the 1930s until recently, saw the income share of the richest hundredth shrink from 12.3% to 8.8%, in Brazil, over the last nine decades, the distribution pattern has shown a steady and persistent concentration: 1% richer answered between 20% and 25% of the total income".

However, part of the Brazilian financial market, media, and government analysts insist that the Brazilian economy is growing again. For the thousands of Brazilian unemployed and underemployed, this kind of analysis is a kind of derision. For the thousands of Brazilian unemployed and underemployed, this kind of analysis is a kind of derision. While most face a day-to-day world record in homicide, hate crime, incarceration, state violence, unemployment and lack of prospects, part of the country's richest 1% insists that everything is getting better.

Cost of living in Brazil: Petrobras (PETR4) announces a reduction in gas price, but the measure does not reach consumers; Vale (VALE3) and Petrobras (PETR3) pull Brazilian GDP down

The National Union of Liquefied Petroleum Gas Distribution Companies (Sindigás) reported that Petrobras will reduce the price of gas by up to 12% for residential consumption and up to 17% for corporate consumption. Brazilian refineries will practice the reduction in prices from today, August 5.

In Brazil, cooking gas (LPG) is usually sold in 13 kg canisters for residential use and in packages over 13 kg for business use. However, it is still unclear how the measure can cheapen cooking gas. The fall in the price for the end consumer depends on a number of factors, such as an infrastructure that allows the effective reduction of the gas price and that does not exist in Brazil.

According to the Institute of Applied Economic Research (Ipea), Vale and Petrobras' performance in the first half of 2019 helped push Brazilian GDP down.

According to Ipea, the poor performance of the Brazilian extractive industry in the first half will decrease by 0.2 percentage point the Gross Domestic Product (GDP) expansion of 2019, despite the expected improvement until the end of the year.

Unemployment insurance in Brazil is one of the smallest in the developed world

According to a study of Applied Economic Research (Ipea), the Brazilian unemployment insurance program is one of the smallest in the world developed in aspects such as values, rules of operation and comprehensiveness. The research carried out by Ipea analyzed the systems of 97 countries where there is some kind of benefit. In addition to being among the lowest in the group, the effective coverage rate has been falling in recent years, due to the growth of unemployment. Between 2015 and 2018, the percentage of Brazilian unemployed who received the benefit fell from 7.8% to 4.8%.

The economist Newton Marques says unemployment is one of the worst problems in the Brazilian economy today. He believes that only if "the government makes an economic policy that can resume the economic activity of the country as a whole" this situation will tend to be minimized. However, so far, there is no government measure directly geared towards job creation.

Long-term unemployment grows in Brazil

According to data released by the Institute of Applied Economic Research (Ipea), the number of Brazilians seeking employment for more than two years rose 42.4% between the first quarter of 2015 and the same period in 2019. Since then, the number of people in these conditions has reached 3.3 million. The situation affects women and the North and Northeast regions more intensely. According to Ipea's assessment, unemployment should only begin to subside as of next year.

According to the Valor newspaper, the percentage of long-term unemployed in the country increased from 17.4% in the first quarter of 2015 to 24.8% in the same period this year, reaching a level of 3.3 million people.

According to the G1 website, the study concludes that the Brazilian labor market, therefore, remains quite deteriorated, with large numbers of unemployed, discouraged and underemployed.

Cost of living in Brazil: health insurance prices rise 382% in 18 years

The price of individual health plans rose 382% in 18 years in Brazil. According to a survey by the Institute of Applied Economic Research (Ipea), between 2000 and 2018, the price of individual health insurance in Brazil grew more than double the rate of health sector inflation in the period, which was 180%. The Ipea evaluates that the National Health Agency (ANS) completely failed in the attempt to regulate the service. Ipea also proposes a new calculation methodology that considers the National Broad Consumer Price Index (IPCA) as a reference for the adjustment.

In an official statement, the National Agency for Supplementary Health (ANS) said that "it considers technically inadequate the comparisons made [by IPEA] between the index of readjustment of individual health plans and consumer price indexes, whether general, such as the IPCA, or specific".

Currently, according to ValorInveste website, Brazil has about 47 million beneficiaries of private health insurance. Over the past three years, more than three million people have stopped having health care plans because of rising unemployment and falling incomes.

Brazil murder rate is one of the biggest in the world in absolute terms

Brazil had 65,600 murders in 2017, reveals Atlas of Violence by Ipea and the Brazilian Forum of Public Security. The survey considers records of the Mortality Information System, produced by the Ministry of Health.

The report warns of violence against youth, blacks, women and the LGBTI + population.

75% of homicide victims in Brazil in 2017 were black, according to the Atlas of Violence. Within a decade (from 2007 to 2017), the rate of blacks murdered rose by 33.1%. The murder was also the cause of half of the deaths of young people in Brazil in 2017.

This was the first time the Atlas of Violence included statistics on violence against the lesbian, gay, bisexual, transgender, transvestite and intersex population.

Another report produced by the Indian Missionary Council (CIMI) analyzed in 2018 data for the year 2017. The CIMI report also showed an increase in violence against indigenous peoples in Brazil. In cases of indigenous murder, the year 2017 registered 110 cases.

Brazil is also a country where there is a lot of violence against journalists. In 2018, the index increased by 36%, according to a report by the National Federation of Journalists (Fenaj). According to a survey, 227 journalists were verbally or physically attacked. 64 journalists were killed in their practice in Brazil between 1995 and 2018, according to a report by the Public Prosecutor's Office.

According to the magazine Superinteressante, Brazil has had more homicides than all of these countries in 2015: USA, Canada, Morocco, Algeria, Tunisia, Libya, Egypt, China, Mongolia, Malaysia, Indonesia, Australia, New Zealand, South Korea, Belgium, Netherlands, Luxembourg, Germany, Italy, Switzerland, Denmark, Norway, Sweden, Finland, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Austria, Hungary, Belarus, Ukraine, Romania, Moldova, Bulgaria, Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, Albania, Greece and Macedonia.