ipea Current Issues in Brazilian Labor Market Ipea Carlos Henrique Corseuil and Lauro Ramos Presentation prepared for the visit to OECD on March, Instituto de Pesquisa Econômica Aplicada Institute for Applied Economic Research

ipea Instituto de Pesquisa Econômica Aplicada The 2006 IPEA Yearbook I.Editor: Paulo Tafner II.Chapters and coordinators: 1.The monetary effort and stability 2.Demography: recent demographic performance and perspectives 3.Education and formation of Brazilian labor force 4.Institutions, labor market and reform 5.Labor market performance Labor Market, Technology and Innovation 7.Public Policies for Employment and Income 8.Brazilian Social Security System

Labor Market Performance Quantity and Quality of Labor Force Product Market Environment Outcomes Labor Market Institutions and Regulations

Labor Market Outcomes Unemployment Quality of jobs –Share of informal job positions –Employment composition by schooling level –Share of manufacturing job positions –Earnings

Metropolitan Brazil Non Metropolitan

Brazil Metropolitan

Positive highlights of Brazilian public education:  Huge expansion of basic education. Access to this level of education is now almost universal ;  Growth in high school;  Significant rise in acess to college education  Increase in graduate education. Nevertheless, there is still a lot to do. Priorities:  Relentless investment in quality, specially in elementary and middle education, and  High school enlargement. Quality of the labor force

 The payroll taxes and contribuitions over total income ratio in the industrial sector increased from 43% in 1986 to 57% in With higher costs to firms, there was a reduction in hiring.  The average import tariff dropped from 22,5% to 12,7% from 1989 to Labor institutions and product market environment.

 The labor market performance reflects the inconsistency between the labor legislation related to the 1988 Constitution on the one side, and the opening of the economy, the monetary stabilization, the rise in the tax burden and the event of external shocks, on the other.  Two effects of this inconsistency are the rise in informality and a higher unemployment rate.  There is a need for institutional adjustments that allow companies to compete in international markets with equal conditions, while also ensuring that workers have adequate protection. Interpretation and Recommendations

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