Employment Growth in Brazil: Expectations and Future Challenges

On August 25, Labour Minister Luiz Marinho made an important statement about the General Register of Employed and Unemployed Workers (Caged). He said the data to be released soon will show that formal employment in Brazil continues to grow, but at a pace that is not as fast as in previous months. This situation indeed raises concerns and reflections about the future of the Brazilian labour market.

The Current Employment Scenario

In an interview with the programme “Bom Dia, Ministro”, Marinho stressed that the slowdown in labour market growth is worrying. He attributes this decline to high interest rates, currently set at 15% by the Central Bank. According to him, keeping this rate at such a high level is, at the very least, “irresponsible”. This view is not isolated; many economists have pointed out that the high Selic rate may be stifling economic recovery and the creation of new jobs.

“Caged for August is growing again, but below the pace it had been growing before. Last month it already grew below the pace, it slowed down. It continues to slow down”, Marinho said. This statement is a clear sign that, despite signs of growth, the economy still faces significant challenges.

The Influence of the Interest Rate

High interest rates have a domino effect on the economy. They not only make it harder for companies to access credit, but also discourage investment and hiring. Marinho emphasised that for a more vigorous quarter, the Central Bank needs to begin a significant reduction in interest rates. He believes that monetary easing could encourage economic activity and, consequently, job creation.

He also projected that, for 2025, the balance of formal jobs could reach around 1.5 million, but this growth depends on rapid action by the monetary authority. “This year I think it is already set, and we will perhaps have a balance of around 1.5 million formal jobs in Brazil”, Marinho said. For him, signalling an interest rate cut now could have a positive impact in the following year, 2026.

Recent Caged Data

In July, Caged recorded the opening of 129,775 formal vacancies, a balance that represents the lowest figure since March. This raises a warning sign, considering that, up to July, the positive balance of formal jobs stood at 1.3 million. The drop in hiring is evidence that the labour market is facing difficulties.

Future Expectations

The minutes of the last Copom meeting, where the Selic rate was kept at 15% a year, indicated that monetary policy is at a new stage. The aim is to keep this rate unchanged for an extended period to control inflation. However, this strategy may have negative consequences for employment. According to the Focus survey, conducted by the Central Bank with various economists, the expectation is that the Selic will remain at 15% until the end of this year. However, specialists have begun adjusting their forecasts for the 2026 interest rate, lowering it to 12.25%. This may be a sign that there is hope for a less restrictive future.

Final Considerations

The outlook for Brazil's labour market is a topic that deserves attention. Forecasts for formal employment growth are tied to complex economic factors, such as the interest rate. With the statements of Minister Luiz Marinho, it is clear that rapid action by the Central Bank is crucial. GDP growth appears assured, but we need a more favourable environment so that we can truly see robust employment growth. It is essential that everyone pays attention to these changes and prepares for what is coming, as the future of work in Brazil depends on it.