Report Briefing (social) on labor markets

Brazil has high levels of social inequality, especially homelessness, poverty, and segregation. The pandemic has only made this problem worse and will keep informal workers informal and cause more people to be pushed into the informal market rather than the formal market. In Brazil, 40 percent of workers operate in the informal sector and therefore do not have paid sick leave or redundancy that would protect them from being impacted by COVID-19. Welfare programs like Bolsa Familia are insufficient to keep many of these disadvantaged families and people working in the informal labor market above the poverty line and most of these workers do not have savings to fall back on. Approximately 85 percent of Brazil’s population lives in urban areas. In these metropolitan areas, there are an estimated 25,000 homeless people and around 33 percent of this population is drug dependent. The homeless population relies on the everyday flow of workers, residents, and visitors who provide donations or pay for informal labor such as washing windscreens but this form of labor is difficult to maintain during the pandemic. Additionally, many millions of residents who populate Brazil’s low-income peripheries and favelas are likely to be poor, informally employed, and lacking savings. President Bolsonaro telling people to get back to work briefly helps people informally employed but increases their risk of getting sick which they cannot afford. It is clear that people who work in the informal sector are suffering as a result of the pandemic as a lot of informal labor is simply not feasible when trying to enforce social distancing. However, even when these people have to work, as most employed in the informal labor market do not have savings, they are at risk of getting sick and not being able to make an income as a result.

Welfare programs attempt to minimize the pandemic’s impact on disadvantaged people in Brazil, however, these programs actually create a short term incentive for people to work informally rather than formally because, in this way, beneficiaries of welfare systems can ensure a steady income from the welfare system while still working in the informal labor market. On top of the people who were already vulnerable to the negative impacts of the pandemic, there is a “new vulnerable” group of people. This “new vulnerable” consists of formal workers who, under normal conditions, would not be at risk but were hit hard by economic downturn and wage reduction agreements. Unemployment increased and many people who worked in the formal market were laid off. As a result, the formal market shrunk in size. There is another group of people who constantly transition between formality and informality, going in and out of poverty. Both the “new vulnerable” group and the group that constantly switches between the informal and formal market are left out of the Emergency Basic Income Program. Mounting job losses push more Brazilians into the informal economy. People who lost full-time jobs take on informal jobs as they try to make ends meet. As people lose their formal jobs and the formal labor market shrinks due to the pandemic, they must look to the informal market to find employment wherever possible to make a living.