Labour reform will not reduce unemployment in Brazil

Significance

Deteriorating labour market conditions are having negative economic and social effects. The unemployment rate reached 13.6% in the three months ending in April, with 14 million people jobless. The two-year recession and political instability have delayed any sustained recovery in the labour market. Labour relations will also be affected by the controversial labour reform bill, already approved by the Lower House and currently under debate in the Senate.

Impacts

• High unemployment and low prospects of near-term economic improvements will fuel the government’s unpopularity.
• Labour informality will increase if the domestic market continues showing signs of deceleration.
• Labour reform may reduce, for better or worse, the reaction time of the labour market to changes in the goods market.