Unemployment Rate in Brazil Jumps to 5.3% in January

02/27/2015 - 09h00

The low unemployment rate was, so far, the exception to the country's economic downturn. Data released by the Brazilian Institute of Geography & Statistics (IBGE) on Thursday (26) indicate it may change.

The unemployment increased considerably: from 4.3% in December to 5.3% in January. In January 2014, the rate was 4.8%.

This period's increase is natural because it reflects the end of the Christmas season. However, the rate published by IBGE is the highest for this time of the year since 2008-2009, at the height of the global financial crisis.

Despite being above the expectations of the market, the figure is not a surprise to economists and businessmen who had anticipated it for months.

Poor job creation in the formal labour market in 2014 indicated the trend.

Even with the weak economic growth in recent years, the rate of unemployed Brazilians remained historically low.

The economy's strong expansion in the middle of the last decade allowed the labour market to absorb high skilled workers and the least educated.

The economic prosperity brought higher wages, but the increase was bigger than the expansion of economic efficiency and, therefore, it elevated companies' spending.

As the firing and hiring costs are very high in Brazil, businessmen preferred to keep their employees, even with the downturn of recent years. It seemed they expected the slowdown to be brief.

The problem is the recovery did not come and the prospects have worsened even more. Recession is expected in 2015.

Translated by JULIANA CALDERARI

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