Brazil’s lack of good-paying jobs

Good morning! Today: Brazil’s lack of good-paying jobs. Jair Bolsonaro’s approval rating stable. 

Brazil’s lack of good-paying jobs

Over 43,000 formal jobs

disappeared in March—more than half of them in the Northeast. Since January, however, the balance is positive, with net creation of 180,000 jobs. After 4 years of registering more layoffs than hires, Brazil bucked the negative trend in 2018. However, the country is failing to create good-paying jobs.

Of every 200 workers hired in 2018, only one was set to earn more than BRL 10,000 (USD 2,500) per month. And 171 of them were positions paying up to BRL 2,000. This means that the number of high-paying jobs created in 2018 was half of what the country saw in 2011. Store vendors were the category with the most hires (by far) in 2018, taking on a total of 1.8m people. Meanwhile, only 2 criminal investigation professionals (a well-paid position) were hired in all of last year.

It has never been so hard for Brazilians to recover revenue after a recession. The country’s GDP per capita has stagnated at BRL 32,000—about 9% below pre-recession levels (Q1 2014). If revenue was equally shared, each Brazilian would have BRL 2,500 per month to live with. And we know that income equality is not a Brazilian trademark.

Jair Bolsonaro’s approval rating stable

A new opinion poll measuring President Jair Bolsonaro’s popularity shows that fewer people are on the fence about this administration. While 35% believe he is doing a “good or great” job (up 1 percentage point from March), 27% deem the government as either “bad or terrible” (up by 3 points).

CNI polling director Renato da Fonseca said many Brazilians voted for Bolsonaro to prevent the left-leaning Workers’ Party from returning to power, but that he has not yet been able to convince them his government was heading in the right direction.

Meanwhile, the president is losing the faith of investors. Despite the advance of the pension reform in Congress, there is a perception that the government spent too much energy in what was supposed to be the easiest part of the legislative process. Now that the real debates begin, there is fear of the reform being severely diluted.

Foreign investors withdrew BRL 199m from the São Paulo stock market yesterday. The Brazilian Real had one of its worst days of the year, falling to 3.99 on the U.S. dollar—bringing the BRL 4 barrier within touching distance.

Indigenous leaders engage in shareholder activism

Members of the Guarani indigenous group have pulled a strategy as of yet unseen in Brazil: they have purchased stocks of a major railway project in order to denounce Rumo Logística (Brazil’s largest railway operator, administrating over 12,000km) for disobeying environmental laws and indigenous rights during a shareholders’ meeting. To earn their seats, each indigenous leader bought six BRL 17.00 shares.

Rumo Logística administers São Paulo’s railways and has doubled the tracks on the Itirapina-Cubatão line in order to improve transportation between the coast and inland. However, the company must compensate 5,000 Guarani people impacted by the project, by building houses, a bridge, sites of prayer, creating community farms, and purchasing tractors. According to a letter read yesterday by the indigenous activists at the shareholders’ meeting, 72 of these 101 actions are stalled.

Reports from Brazil’s indigenous affairs agency confirm that the logistics company is not in compliance with the terms it had itself established back in 2013. On April 19, the Federal Prosecution Office recommended a BRL 10m fine and the suspension of the company’s operating permits.

Brazil enters the era of open banking

The Central Bank has published the country’s guidelines for open banking. Financial institutions will now have to share customer data with other companies—as long as customers themselves authorize it. For the Central Bank, clients (and not financial institutions) own their data and can allow it to be used by companies—which would allow customers to centralize their bank information into one app and make financial operations without accessing their bank’s webspace.

Right now, startups looking to access banking data (such as transaction history or direct debits) ask customers for their banking password and username, and then use relatively unsophisticated “data scraping” techniques. With open banking rules, they would no longer need to negotiate with banks.

The Central Bank expects open banking to be a reality by 2020. Initially, banks and institutions working in more complex segments, such as foreign exchange operations, will be forced to comply. Fintechs, credit cooperatives, and small companies are under a less strict regulatory framework—but could also be forced in the future.

What else you need to know today

• Environment. A bill drafted by the Rural Caucus in the House is set to remove many of the environmental licenses required for agricultural producers and infrastructure projects. Congressman Kim Kataguiri, a young leader of Brazil’s new conservative movement, was chosen as rapporteur and is expected to request the matter to be considered as “urgent” by the House—which would fast-track its processing.

• Rio. The impeachment process against Rio de Janeiro Mayor Marcelo Crivella is moving fast. The case’s rapporteur was set to present his recommendation on whether the City Council should continue the proceedings on Monday, but should do so tomorrow—and he is expected to go against Mr. Crivella. Meanwhile, the mayor’s office is engaged in all sorts of horse-trading moves to try and preserve his office.

• Turkey. The Turkish government has asked for the extradition of Ali Sipahi, accused of terrorism and being a member of Hizmet, an organization led by Muslim clergyman Fethullah Gülen—an enemy of President Recep Tayyip Erdogan. Mr. Sipahi has lived in Brazil since 2007 and owns a restaurant in São Paulo. He has been under preventive arrest since April 6, following Turkey’s request. The Supreme Court is analyzing the extradition request.

• Intrigue. Although President Bolsonaro has publicly asked for more unity and less squabbling within his team, he has himself voiced criticism against VP Hamilton Mourão. To senators and congressmen, Mr. Bolsonaro said Mr. Mourão acts like a sort of “parallel president.” Carlos Bolsonaro, one of the president’s sons, has been vocal about his mistrust towards Mr. Mourão—who he suggested wants to grab the presidency for himself.

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