Recession in Brazil Pushes Middle Class to Self-Employment

09/28/2015 - 09h03

With the increase in layoffs (almost 1 million positions have been lost in the last 12 months) and the difficulties in finding new employment with a formal contract, Brazilians are increasingly resorting to self-employment.

In August, 19.8 percent of the employed population classified themselves as such, the largest grouping since December 2006, the equivalent of 4.5 million employees.

One year prior, participation was at 19 percent, and, in August of 2013, 17.9 percent, according to data from the IBGE for the six major metropolitan areas.

In previous years, the job market experienced a boom in format contract work, accompanied by employment income advances, which supported the growth period of the Brazilian economy through household consumer spending.

This situation, with the recession, came to an end. "Significant changes are taking place in the job market. The type of integration is changing" said Cimar Azeredo, employment and income coordinator for the IBGE.

These changes are reflected in the footwear industry worker who was laid off and began to repair shoes at home as well as in the engineer who also lost his job and became a consultant.

A large number are between the ages of 25 and 49, support the family and can't sit at home waiting for a new opportunity in formal contract work.

In other words, during this moment of the crisis, pay is more important than benefits such as the "13º salário" (the term for the extra month of pay in Brazil) and vacation time.

Many opt for activities related to commerce, such as the retail cosmetics or food industries, explains Azeredo, from the IBGE.

INCOME

Another facet of this new model of integration in the job market is visible in the income.

On average, the group that is self-employed has experienced a smaller drop in actual income than employees in the private sector who have access to workers' rights.

In August, the first group experienced a 1.7 percent drop, half of what was felt among employees with formal contracts.

The explanation, however, is not exactly positive. One of the possible reasons is adoption by people with the highest qualifications, such as lawyers and engineers, who raise the average pay -even though those professionals could be earning less than what they earned when they were employees.

Naercio Menezes Filho, from Insper, insists that "it is still too early to confirm a radical transformation in the job market". Better conclusions regarding current unemployment behaviors should become more clear starting next year, he says.

Translated by SUGHEY RAMIREZ

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	Letícia Moreira/Folhapress
	The recession in Brazil pushes the middle class to self-employment