Here’s Why Consumption in Latin America’s Biggest Economy Is Taking a Hit

When Brazil’s Dilma Rousseff was sworn in for her second presidential term in January, she proclaimed that maintaining jobs and raising salaries were her “greatest priority.” Months later, real wages are falling and — even with people leaving the workforce — unemployment has spiked to its highest in more than six years. How does all this look on the ground?

Firing the young

Companies’ least experienced employees are often the first to get the ax. The jobless rate for people ages 18-24 climbed to 19.5 percent in October, from 11.8 percent in the same month last year, according to government data that tracks employment in six Brazilian metropolitan areas.

More part-timers

Adapting to the slowdown and cutting costs translate into hiring more part-time or short-term employees, who generally don’t receive the same perks as full-timers, according to Prolancer, a company that connects firms with freelancers. In the first nine months of the year, employers using the service contracted with nearly double the number of people versus the same period of 2014.

Talent migration

Amid the recession, Brazilians have become more disposed toward seeking work abroad, according to Catho, a job placement service. Even without the prospect of a raise, promotion or any other benefit, 11.5 percent of people would take the leap, almost triple the level in 2013, according to the most recent survey of 23,011 people in June and July.

“People have gotten used to a certain level of consumption in Brazil, and it’s only now dawning on them that that may not be sustainable,” said Thomas Trebat, director of Columbia University’s Global Center in Rio de Janeiro, said by phone. “They had jobs that paid two times the minimum wage, and now they’re struggling to get one that earns one minimum wage, so sacrifices have to be made.” Read More…