The World Bank report “Sustaining Employment and Wage Gains in Brazil” analyses the future of labor market policies
BRASÍLIA, October 16th, 2015 - In the past 15 years, employment and earnings have grown significantly in Brazil, and the labor market was the key driver for the sharp decreases in poverty and inequality. To maintain social and economic development, and sustain the accomplishments of the last decade, two goals should be at the center of labor market policy: raising labor productivity and connecting the poor to more and better jobs, says the World Bank report Sustaining Employment and Wage Gains in Brazil, launched yesterday, in Brasília, and today in São Paulo.
“The pace of job creation in Brazil has been faster than in most countries over the past decade, and inequality reduction was remarkable,” said Martin Raiser, World Bank director for Brazil. “To sustain these gains in the face of less accommodating economic conditions, Brazil will need to make its labor force more productive, and to make sure the poor also benefit they will need to be better connected with productive jobs.”
With the deceleration of China and the fall in commodity prices, the external environment for Brazil has changed fundamentally from that prevailing during the last decade. Slower growth is likely to exert downward pressure on employment and wages. To succeed in these adverse circumstances, labor market policies need to focus on investing in those skills demanded by employers and on improving the match between labor demand and supply.
Brazil has successes on which to build. The report shows, for instance, that employment and training policies in Brazil strengthened the qualifications, employability and productivity of beneficiaries. Moreover, Brazil’s focus on promoting employability and income-earning opportunities for the poorest segments of the population delivers important insights into ways to address the multidimensional employability challenges of the disadvantaged.
“Brazil’s successes to date suggest incremental reforms may yield significant further benefits,” explained Senior Economist Joana Silva, one of the report’s lead authors. “For example, strengthening information systems and tracking final labor market outcomes could help improve the effectiveness of active labor market policies. The adoption of a placement-focused management approach in SINE- Brazil’s National Employment System; redesigning the “Apprentice Law” to incentivize firms to offer better opportunities for youth; and the adaptation of training and employment programs to the varying profiles of targeted groups are some of the policies that can contribute to raise labor productivity and connect the poor to better jobs.”
The report commends Brazil for the dramatic expansion of access to government funded training programs, particularly for the poor and less skilled. In this area, too, additional steps could pay important dividends. Enhancing the collaboration with the private sector in the design of job relevant curricula, supporting more opportunities for learning in the workplace and improvements in monitoring and information systems to guide learning institutions, students and prospective employers are among the measures suggested by the report.
“Brazil has made a tremendous progress in the expansion of technical education and in increasing the access of the poor to training opportunities,” said Senior Economist Rita Almeida, co-lead author of the report. “The measures we propose aim to ensure that Brazil’s poor can continue to transform their newly acquired skills into productive employment opportunities and remain connected to the labor market.”
While highlighting Brazil’s successes and emphasizing the incremental nature of the proposed reforms, the report cautions that labor market policies and investment in skills alone will not suffice to address the recent rise in unemployment. Improvements in the business climate and the restoration of investor and consumer confidence are equally critical to ensure a return to growth and job creation.
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