The Impact of COVID-19 in Brazil: Labour Market and Social Protection Responses
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The Impact of COVID‑19 in Brazil: Labour Market and Social Protection Responses Ian Prates1,2 · Rogério J. Barbosa3
© Indian Society of Labour Economics 2020
1 Introduction The social and economic crisis triggered by the COVID-19 pandemic pushed 83.5% of the labour market in Brazil into a state of vulnerability (Barbosa et al. 2020a; Prates and Barbosa 2020). And even with emergency policies, we estimate that at least 26 million workers (over a quarter of the economically active population) will not have access to any compensation: whether unemployment insurance, EBI (Emergency Basic Income), or right to a significant withdrawal from their workers’ fund (Length-of-Service Guarantee Fund). All that is left for them is bankruptcy, layoffs, or the emergency assistance programme for formally registered workers. Like many other developing countries, however, Brazil was already suffering from a state of emergency prior to the COVID-19 pandemic. But in the Brazilian case, a poor recovery from the 2015–16 economic crisis alongside the new coronavirus epidemic combined to create the perfect storm. At the beginning of 2020, Brazil had 12.6% unemployment, 5% hidden unemployment due to discouragement, 40% informality, and rapidly rising inequality. For the bottom half of the social pyramid, the 2015 crisis never ended. Since then, the poorest population has experienced income losses every year. Targeted transfer programmes have had no countercyclical effect (Barbosa et al. 2020b). Systematic budget cuts in the Bolsa Família Programme have resulted in a drop in the number of beneficiaries as well as in the average amount transferred. This has led to an increase in the queue for entry to the programme (people who meet the eligibility criteria but are not incorporated). To a large extent, the persistence of poverty results from the dismantling of social policies after 2015. Poverty and informality, ever-increasing since then, bear witness.
* Ian Prates [email protected] 1
Brazilian Center for Analysis and Planning (CEBRAP), São Paulo, Brazil
2
Social Accountability International (SAI), New York, USA
3
Center for Metropolitan Studies, University of São Paulo (USP – Brazil), São Paulo, Brazil
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Vol.:(0123456789) ISLE
The Indian Journal of Labour Economics
1.1 COVID‑19 and the impacts on social protection and the labour market The pandemic arrived with devastating effects. Data from the Ministry of Economy show a negative balance of more than 1 million formal jobs between March and April. In total, there was an increase of 4.9 million in the numbers of unemployed persons. Furthermore, until May 26, working hours and wages were reduced for 8.1 million workers under a special programme for the formal labour market.1 More than half of these labour agreements were for the complete suspension of employment contracts. The official unemployment rate in May was 10.1%, slightly smaller than in January and February. However, if we also take into account the contingent of people who couldn’t search for a job specific
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