Informal Sector Employment Becomes Obstacle for Brazil's GDP in 2018

03/26/2018 - 11h12

The rise in informal sector jobs in Brazil's labor market has become an obstacle when it comes to getting the economy back on track. The trend may lead to lower-than-expected economic growth in 2018.

Last year, all 1.8 million jobs created belonged to the informal sector. The average income of workers without work permits, sometimes referred to as workers who are "on their own", is half the income of formal sector workers.

Analysts have revised Brazil's growth from 3% to 2.5% for 2018, a change that was justified by the formal labor market's lack of strength and the fact that household consumption corresponds to 65% of the country's GDP.

Consumption in the country reached its peak between 2011 and 2014, when the percentage of formal sector jobs was at its highest: 45%. The percentage has since declined to 42%.

Marcelo Gazzano, an analyst at consulting firm AC Pastore, pointed out that the lifting of restrictions concerning R$ 44 billion (US$ 13.3 billion) in inactive FGTS accounts (Employment Time Guarantee Fund) may very well have helped fuel the economy. "It's not that there won't be a recovery. There will, it just won't be as robust as the recovery we had anticipated".

Translated by THOMAS MATHEWSON

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