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Weekly Report - 18 June 2020 (WR-20-24)

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TRACKING TRENDS

BRAZIL | Pandemic reshapes labour market. On 16 June, Brazil’s national statistics institute (Ibge) published the first coronavirus (Covid-19) edition of its monthly survey of Brazilian households (PNAD Contínua). The PNAD Covid-19, based on phone interviews and undertaken with the support of the federal health ministry, seeks to identify the pandemic’s impact on the labour market as well as quantify the number of people in Brazil who have suffered from flu-like symptoms over the month of May – during which a number of states began to ease isolation measures, despite surging infections.

The Ibge found that, in the last week of May, 10.9m people were unemployed – up from 9.8m in the first week of May, or a 10.8% increase in the number of unemployed. This change is likely due to an expansion of the available workforce rather than a lower number of available jobs, as the employed population remained largely stable throughout the month of May, totalling 84.4m in the final week.

As of the end of May, 13.2% of the employed population (8.8m people) was working remotely, a figure largely unchanged from the beginning of the month. The number of furloughed workers had fallen from 16.6m in the first week of May (19.8% of the employed population) to 14.6m (17.2%). Meanwhile, 17.7m people, categorised as outside of the workforce, said they were not looking for employment because of the pandemic and lack of available opportunities. 

Also on 16 June, the federal senate approved a presidential decree which establishes measures to guarantee employment, notably by allowing employers to suspend contracts or reduce working hours (and salaries accordingly), with the government topping up lost income. The version of the decree approved by congress allows for these measures to be extended until the end of the year.

On 17 June, the federal chamber of deputies voted on a separate presidential decree aimed at easing pressure on employers and employees, by relaxing rules around remote working and taking holiday, amongst other measures. Presidential decrees come into effect from the moment they are issued, but must be approved by congress to maintain their validity. 

BRAZIL | Mansueto out. Mansueto Almeida, a key member of Economy Minister Paulo Guedes’ team, announced on 14 June that he would soon be leaving his post as national treasury secretary. Almeida said he was too tired to work beyond the end of this year on the post-pandemic agenda, but there has been speculation that he was dissatisfied with the fiscal measures taken to tackle the pandemic.

Almeida is a strong defender of the spending cap, which prevents the government from increasing expenses from one year to the next, but which new legislation now essentially allows it to bypass where spending on the coronavirus emergency is concerned. Bruno Funchal, an economist currently working in the finance secretariat, will replace Almeida on 31 July.