In the country of scams, jobs and wages still resist – 01/19/2023 – Vinicius Torres Freire

Life is so full of blows that people have forgotten about elementary matters of existence. For example, the progress of the economy and, most essential of all, work. There is a coup in Brasilia, a coup on the sidewalks and in tweets from the barracks, a billionaire coup in the public square, a coup of intrigue at Fiesp, a coup at the graduation of doctors from USP.

The subject is more boring, certainly, but the IBGE employment statistics for November have just come out. There are mixed signs that the economy is indeed cooling down. But numbers from the world of work so far suggest only a slight slowdown — or not at all.

That is, the number of people employed, income from work (“wages”) and the mass of income are still growing or even accelerating. The average wage for the quarter ended in November was 7.2% higher than a year earlier (in real terms: already discounting inflation in these 12 months). In October, it had grown by 4.7%.

The growth in the number of employed people has slowed down since May (when it increased to an unsustainable 10.6% per year), but still grew by 5% in November (compared to November 2021).

The sum of all earnings from work, therefore, the “salary mass”, still accelerates, growing at 13% in November. This is water in a glass half full. But it is very drinkable water and it has political implications.

In the haziest air of the half-empty glass, there are bad prospects and a still incomplete recovery from work, trampled by the epidemic. The average real salary in November is still lower than in pre-pandemic November 2019, for example.

As for prospects, it’s hard to imagine that skyrocketing interest rates won’t do damage. Uncertainty about the future of economic policy, which helps to keep interest rates high, will create another difficulty. That cloud of Lula 3’s macroeconomic policy, overshadowed by absurd or unnecessary statements by the president, will remain there at least until April.

Even so, the unemployment rate in November is the lowest since 2014. There are economists who say, however, that in the current conditions of the Brazilian economy, this is low enough unemployment to keep inflation under pressure.

In informed guesses from economists, the number of jobs should stay the same in this 2023 (compared to 2022), with a slight increase in the unemployment rate. The growth in the number of employed persons would continue until the middle of this year.

Given the turnaround in economic moods, government deficit estimates and interest rates (thanks to the mismanagement of the November-December transition economy), it is very likely that we have missed the chance to shorten the period of near stagnation that will come. With high interest rates, high family debt and less growing credit, things are complicated.

GDP growth should actually drop from close to 3% in 2022 to close to 1% in 2023. But it is still possible to recover part of the lost time, depending on the government’s cleverness, both in political communication and in the elaboration of a tax plan.

The deceleration, it should be noted, is still smooth (but it will get worse). There were still no news of blackouts in economic sectors; economic confidence has dropped since the middle of the year, but there have been no collapses; the world of work at most so far just slows down.

In political terms, it might be a small reprieve for the government, perhaps extra time, though in the age of social media, presidential prestige can evaporate within weeks. In order to take advantage of this extra period of grace, let’s say, and undo the bad damage of November-December, it would be convenient for Lula 3 to give some good economic news, make friends, influence people and encourage business.

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