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Unformatted text preview: ecent Labor Market Policies The rapid increase in unemployment at the beginning of the 2009 and the lower real due to the 2008 inflation made the Government take two actions related to labor markets: • • First, to address the sharp increase in unemployment the Government extended the unemployment compensation period (Seguro Desemprego, SD) for two additional months for the “most affected sectors and states.” Originally the SD covered from three to five months and it was extended to three to seven installments. Every month, around 600 thousand people receive the benefit, and in 2008, the total cost was R$13.8 billion. The additional payment is expected to cost R$2.2 billion and only those laid off after December 2008 are eligible. Funding for these benefits come from the FAT (Fundo de Amparo ao Trabalhador) which might use up to 10 percent of its technical reserves. Second, the Government increased in February the minimum salary from R$415 to R$465 (about 6.4 percent) following its periodic adjustment pattern. The minimum salary not only applied to working individual but it also defines the benefit amount for several social security and social assistance transfers. This increase is expected to represent R$24.3 billion in additional salaries. The R$50 increase will impact the Federal Government’s in R$8.5 billion (about 0.3 percent of GDP), mostly affecting the social security accounts with additional R$7.8 billion. Other benefits also linked to the minimum wage, like salary bonus (abono salarial) and unemployment compensation will also be readjusted. Overall, the labor markets policy response in Brazil is addressing the vulnerable population affected by the decline in external demand and facing unemployment. Other interventions like housing construction and increase social assistance transfers (Bolsa Familia) are part of the measures of the Government. CHILE Labor market facts Unemployment rates have been increasing, quarter‐to‐quarter, since the first quarter of 2008, changing the downward trend that these rates showed during the previous two years (see Figure 6). During the quarter ending in April 2009, unemployment rate was at 9.8 percent, higher than in the same period of 2008 (7.6 percent) and of 2007 (6.8 percent). On the other hand, the activity rate, has stayed at the same level than in April last year (i.e., around 56.2 percent of the working age population) (Figure 5) Employment creation came to a halt in February 2009. After three years of annual growth of employment between 1 and 4 percent every month, the quarter ending in February 2009 showed an employment growth rate of 0.1 percent. Since March 2009 there has been net job destruction of around 30 thousand jobs per month. Salaried jobs have declined steeply going from an annual creation of around 200 thousand up until November 2008 to only 41 thousand in February 2009 and net job losses of nearly 40 thousand in the quarter ending in April 2009.. The number of non‐salaried workers has had an annual decline of around...
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