Source: Folha de São Paulo - Editorial, 10/03/2009

Folha de São Paulo - Editorial 1

The IBGE's LAST Monthly Employment Survey found that in the period immediately after the crisis, from October 2008 to last January, 88 people were pushed into underemployment in the six main metropolitan regions of the country.

As a result, the contingent of under-employed persons reached 709 thousand, an increase of 14,2% in relation to the total number of workers in this condition before the crisis. In January alone, underemployment increased 11% in relation to the same month in 2008 - a similar evolution to that of December (10,2%), measured under the same parameters.

Underemployed are people who want to work more hours and are available to take longer hours, but who, in the face of the crisis, only get part-time services. The increase in this contingent is yet another index of the deterioration of the labor market, which not only means loss of jobs, but also worsens in quality.

Official figures indicate that, at a minimum, the cycle in the expansion of formal employment has been interrupted. According to the General Register of Employed and Unemployed, a monthly survey by the Ministry of Labor, the formal job market has already lost 797,5 jobs since November - in a universe of 30 million Brazilian workers with a formal contract.

In addition, data from the IBGE show that the contingent of unemployed grew 20,6% from December to January; the unemployment rate jumped from 6,8% to 8,4%. The unemployed population went from 1,6 million to 1,9 million people in the six metropolitan areas surveyed.

The expansion of formal employment in recent years has been associated with economic growth. Inspection by the Ministry of Labor also helped, but what was lacking was legal incentives for formalization.

Data on job losses do not yet allow a definitive conclusion - everything will obviously depend on the severity and depth of the crisis in the country. But unemployment and informality are likely to be starting a new upward cycle.

It would be worse from an already bad picture. Approximately 50% of workers work in the informal sector today - against 60% in 2005, when the pace of precarious employment was reversed by economic growth. It is an intolerable contingent of workers excluded from basic social welfare guarantees. Tax and labor reforms, however, have been delayed by successive governments.

One sure way to increase the rate of regularization of workers is to relieve payrolls, which impose excessive costs on employers, in the form of taxation and social security contributions. If the crisis imposes limits on comprehensive tax reform at this time - because government revenues are falling - emergency measures to relieve labor charges, as long as they are directed at the economy as a whole, could alleviate the problem of unemployment and underemployment.

In addition, unemployment insurance coverage must be increased in all sectors.