HOW TO ELIMINATE UNEMPLOYMENT IN BRAZIL

Fernando Alcoforado*

This article aims to present the strategies that would allow solving one of the greatest scourges experienced by the Brazilian population in the history of Brazil, which is mass unemployment. In Brazil, while the economy has deteriorated since 2014, unemployment reached 12 million unemployed workers and 4.8 million discouraged in 2021.

Figure 1 presents the evolution of the unemployment rate from 2012 to 2018 and Figure 2 presents the unemployment rate from 1995 to 2020.

Figure 1- Unemployment rate – Brazil (%)

Source: Blog do IBRE- Fundação Getúlio Vargas

Figure 2- Evolution of the unemployment rate (%)

 Source: Valor Econômico

The analysis of Figures 1 and 2 allows verify that the unemployment situation worsened from 2014 onwards, when there was a vertiginous growth in the unemployment rate. The main reason for the mass unemployment registered in Brazil is the fact that the country was economically stagnant from 2011 to 2020. The economic stagnation in Brazil is explained by the drop in investment in the Brazilian economy from 1990 onwards, as shown in Figure 3 below:

Figure 3- Investment rate as a percentage of Brazil’s GDP

Source: https://blogdoibre.fgv.br/posts/taxa-de-investimentos-no-brasil-menor-nivel-dos-ultimos-50-anos

Figure 3 shows the investment rate in the Brazilian economy has been increasing from 1930 to 1989. From 1990 to 2019, the investment rate in Brazil has been declining. The main responsibility for the drop in investment in the Brazilian economy is of the governments of Brazil who have adopted the neoliberal economic model since 1990, which has produced disastrous results for the Brazilian economy by presenting low growth and investment rates and high unemployment. Figure 4 unequivocally demonstrates that, in the period of the neoliberal economic model (from 1991 to 2020), the ten-year growth rates were very low and with stagnation occurring in the decade 2011 to 2020.

Figure 4- Decennial growth rate of the Brazilian economy

Source: Poder 360

Figure 4 shows that the Brazilian economy showed the highest economic growth from 1931 to 1980, driven by the actions of the Getúlio Vargas, Juscelino Kubitschek governments and the military dictatorship that adopted national developmental economic policies with the Brazilian government acting as a mentor and inducer of national development over contrary to the neoliberal model in which the market becomes the main economic agent and the government becomes a supporting role. The practice has demonstrated the unfeasibility of the neoliberal economic model in Brazil, inaugurated by President Fernando Collor in 1990 and maintained by Presidents Itamar Franco, Fernando Henrique Cardoso, Lula da Silva, Dilma Roussef, Michel Temer and Jair Bolsonaro. Brazil’s economic stagnation will only be overcome with the abandonment of the neoliberal model and its replacement by the national developmentalist model of selective opening of the Brazilian economy.

The solution of Brazil’s economic and social problems requires the adoption of the national developmentalist economic model of selective opening of the Brazilian economy that would allow Brazil to assume the control of its destiny, contrary to the neoliberal economic model that makes the future of Country is dictated by market forces, all of them committed to international capital. The adoption of the national developmentalist economic model of selective opening of the Brazilian economy would require the Brazilian State to exercise effective command of the economy of Brazil, whose governments abdicated this role since 1990 in favor of market forces. The economic history of Brazil shows that, whenever the country achieved significant socioeconomic development, the Brazilian national state was the great protagonist, as occurred with the national developmentalism of the Vargas Era (1931/1945 and 1950/1954) and during the Juscelino Kubitschek administrations (1955/1961) and post-1964 military governments (Figure 4). In this period, Brazilian governments planned the economy according to the Keynesian model, which advocates that the State act as an active agent in promoting economic development against recession and high unemployment, which is the opposite of the neoliberal economic model existing in Brazil.

With the adoption of the national developmentalist economic model, it will be possible to eliminate existing unemployment in Brazil with the implementation of the following governmental strategies: 1) Reactivation of the Brazilian economy; 2) Incentive to the social and solidarity economy; 3) Incentive to the creative economy; and, 4) Restructuring of the education system.

Strategies for reactivating the Brazilian economy

1) Immediate execution of 7,000 stopped public works whose investments total R$ 9.3 billion and the construction of a large number of new public works, with emphasis on economic infrastructure (energy, transport and communications) and social (education, health , housing and basic sanitation) with investments of R$ 2 trillion to raise the population’s employment and income levels.

2) Adoption of the import substitution policy, producing the following products internally: a) Chemical fertilizers or organic fertilizers; B)fuel oils from oil or from bituminous minerals; c) Platforms, vessels and other floating structures; d) Telecommunications equipment, including parts and accessories; e) Products of iron or steel and other products of base metal; f) Manufactured products; g) Medicines for human and veterinary medicine; h) Parts and pieces for motor vehicles and tractors; i) Integrated circuits and electronic micro assemblies; j) Insecticides, pesticides, herbicides and similar products; l) Heterocyclic compounds, their salts and sulfonamides; m) Naphthas; and, n) Passenger cars.

3) Reduction of interest payments and amortization of public debt to be renegotiated with public debt creditors so that the government has resources for investment in economic and social infrastructure and in the import substitution policy.

4) Taxation of large fortunes with assets above 1 billion reais, which could yield approximately 100 billion reais per year for the government to have resources for investment in economic and social infrastructure and in the policy of import substitution.

5) Increase in the tax on the financial system for the government to have resources for investment in economic and social infrastructure and in the policy of import substitution.

6) Decrease in government spending by drastically reducing the number of unnecessary ministries and public bodies and superfluous expenditures at all levels of government for the government to have resources for investment in economic and social infrastructure and in import substitution policy .

7) Drastic reduction of the economy’s basic interest rate (Selic) to reduce the size of public debt and encourage private investment.

8) Promote a program to expand productive activity in the primary, secondary and tertiary sectors of the economy, using idle capacity to reduce inflation rates.

9) Promote a broad export program, especially in agribusiness and the mineral sector.

10) Stimulate agribusiness and industrial production by granting tax incentives.

11) Grant loans at attractive interest to companies.

12) Drastically reduce bank interest rates to encourage household consumption and business investment.

13) Implement the fixed exchange rate to replace the floating exchange rate to encourage exports.

14) Reduce Brazil’s external vulnerability with capital controls that would be carried out with taxation on the inflow of foreign capital by requiring that a certain percentage of foreign investment be held in reserve for a certain number of days with the Central Bank to limit the volatility of capital flows.

Strategies to encourage the social and solidarity economy

In addition to reactivating the economy to eliminate unemployment, the Brazilian government should encourage the development of the Social and Solidarity Economy, which is one of the solutions capable of alleviating the problem of unemployment and opening the way to invent other ways of producing and consuming in the future, contributing to greater social cohesion. The Social and Solidarity Economy is a new model of economic, social, political and environmental development that has a different way of generating work and income, in different sectors, whether in community banks, credit cooperatives, family farming cooperatives, fair trade issue, in exchange clubs, etc. The Social and Solidarity Economy constitutes a new way of organizing work and economic activities in general, emerging as an important alternative for the inclusion of workers in the labor market, giving them a new opportunity through self-management.  

Based on the Social and Solidarity Economy, there is the possibility of recovering bankrupt companies, and giving them continuity, with a new mode of production, in which the maximization of profit is no longer the main objective, giving way to the maximization of quantity and the quality of work. It can be said that the adoption of the Social and Solidarity Economy is, without a doubt, the solution that would allow, within the framework of capitalism, to face the mass unemployment that tends to grow vertiginously in the future with the replacement of qualified workers and not qualified workers by robots in the labor market. It is an important alternative for the inclusion of workers in the labor market, giving them a new opportunity to work with a new mode of production in which profit is no longer the main thing goal.

Géraldine Lacroix and Romain Slitine state in their work “L’économie sociale et solidaire” (Paris: Presses Universitaires de France, 2016) that, from fair trade to solidarity savings, through social innovations in the field of environmental protection, the fight against exclusion social or equal opportunities, the Social and Solidarity Economy offers answers to numerous questions in contemporary society. This work contains information that the social and solidarity economy corresponds to 10% of GDP and is responsible for 12.7% of employment in France. In Brazil, the social and solidarity economy represents only 1% of the GDP (REDE BRASIL ATUAL. Com autogestão, economia solidária já representa 1% do PIB no Brasil. Disponível no website <http://www.redebrasilatual.com.br/economia/2015/08/economia-solidaria-ja-representa-1-do-pib-no-brasil-3696.html, 2015>).

Strategies to encourage the creative economy

The Creative Economy is one of the most effective ways to generate new jobs, based on the opinion of George Windsor, director of research at Nesta, a non-profit organization that aims to stimulate the 12 sectors of the creative economy in the UK (GIL, Marisa Adán. Economia criativa é saída para o desemprego, diz especialista. Disponível no website <http://revistapegn.globo.com/Empreendedorismo/noticia/2015/12/economia-criativa-e-saida-para-o-desemprego-diz-especialista.html>, 2015). In Windsor’s view, creating jobs linked to creativity has enormous potential to move the economy, that is, “the creative industry adds value to products in a way that no other sector can”. According to Windsor, there are several ways to generate jobs linked to the knowledge economy: stimulating the games industry; develop local creative centers that work based on the cultural traditions of each region; facilitate credit for creative sectors of the economy; invest in education focused on design and technology. If the British government embraces these measures, it believes it will be possible to create 1 million jobs in the UK by 2030. According to Windsor, the Creative Economy is currently one of the fastest growing sectors in the world economy. It is also one of the most profitable areas in terms of generating profits, jobs and exporting goods and services.

The article “A economia criativa no mundo moderno” (The creative economy in the modern world) reports that the term “Creative Economy” refers to activities with socioeconomic potential that deal with creativity, knowledge and information. To understand it, it is necessary to keep in mind that companies in this segment combine the creation, production and commercialization of creative goods of a cultural and innovation nature, such as Fashion, Art, Digital Media, Advertising, Journalism, Photography and Architecture. In common, companies in the area depend on talent and creativity to effectively exist. They are distributed in 13 different areas: 1) architecture; 2) advertising; 3) design; 4) arts and antiques; 5) crafts; 6) fashion; 7) cinema and video; 8) television; 9) publishing and publications; 10) performing arts; 11) radio; 12) leisure software; and, 13) music. It is important to say that, by focusing on creativity, imagination and innovation as its main characteristic, the creative economy is not restricted to products, services or technologies. It also encompasses processes, business models, management models, among others (DESCOLA. A economia criativa no mundo moderno. Disponível no website <https://descola.org/drops/a-economia-criativa-no-mundo-moderno/>, 2016).

Strategies for restructuring the education system in Brazil

Education plays a key role in preparing and updating workers at all levels for the job market. The more prepared and up-to-date the worker is, the greater the chances of him getting and staying in the job. Brazil has a very outdated education system in terms of the requirements to prepare the workers of the future. Workers in Brazil are still being prepared for a world of work that is coming to an end. It is urgent to restructure the education system in Brazil to face the new challenges.

In order to restructure the education system in Brazil, it is necessary to initially overcome the existing weaknesses in primary, secondary and higher education. The weaknesses of primary and secondary education in Brazil are evidenced by the poor results obtained by Brazilian students in the PISA International Student Assessment Program, which seeks to measure the knowledge and ability in reading, mathematics and science of students aged from both industrialized OECD member countries and partner countries. To change this reality, it is necessary to make a revolution in basic education and not just carry out specific reforms in education.

In turn, the weaknesses of higher education in Brazil are demonstrated by the ranking of universities around the world carried out by THE (Times Higher Education) which evaluates the performance of university students and academic production in the areas of engineering and technology, arts and humanities, life sciences, health, physics and social sciences and also considers research, knowledge transfer and international perspective, in addition to the teaching environment. Brazilian universities have ranked far from the best universities in the world. To overcome the existing weaknesses in elementary, secondary and higher education in Brazil, it is necessary to make a revolution in Brazilian education at all levels.

The education system in Brazil must be restructured in order to prepare and continually update people for the current and future job market and to deal with the complexity of the world in which we already live and will live in the future with the ongoing advances in artificial intelligence, in the 4th Industrial Revolution and in the 5G Internet in the field of communications, among other technologies, which revolutionize society in all technological fields. It is necessary to prepare and update people for the job market that is changing as a result of these technological revolutions in which everyone will have to deal with a highly complex environment with super-intelligent machines. It is necessary to restructure the education system in Brazil from kindergarten to higher education, inspired by the successful educational policies practiced in the education systems of Finland, South Korea, Japan and Switzerland, which are the most advanced countries in education in the world and also the United States, which is the most advanced country in higher education. In addition, it is necessary to prepare people to exercise full citizenship.

For all that has just been exposed, it can be concluded that Brazilian education will only overcome its current weaknesses and carry out a true revolution in education in Brazil if there is an increase in investments in the country’s education, which requires, as a preliminary, changes in directions of the Brazilian economy with the abandonment of the neoliberal model, responsible for the current economic disaster, and the adoption of a developmentalist economic policy, similar to the one that was responsible for the greatest economic and social development in Brazil achieved in its history from 1930 to 1980, adjusted to the new times with the Brazilian national state taking the reins of the Brazilian economy. This is the precondition for education to become a national priority and for there to be an increase in spending on education, a fact that has not occurred, especially since 2014 in Brazil. Without increased investment in education, it will not be possible to solve Brazil’s immense problems and make the economy grow and develop in the future. Brazil’s future will be compromised if it does not consider education as a national priority.

These are the strategies needed to eliminate unemployment in Brazil. In order to eliminate unemployment, it is therefore necessary to reactivate the Brazilian economy with the abandonment of the disastrous neoliberal economic model and its replacement by the national developmentalist model, with the government becoming an active agent in the development process, promoting the reactivation of the Brazilian economy, encouraging development of the social and solidarity economy and of the creative economy to generate jobs and increasing investments in education to restructure the education system in Brazil with a view to continuously preparing and updating people for the current and future job market, to deal with the complexity of the world in which we already live and will live in the future and become citizens aware of their responsibilities for the development of the country. These strategies should serve as a reference for the Brazilian people to choose their candidates for the various elective positions in the next elections. It is recommended to elect candidates who assume the commitment to defend the adoption of the strategies proposed here to eliminate unemployment in Brazil.

* Fernando Alcoforado, 82, awarded the medal of Engineering Merit of the CONFEA / CREA System, member of the Bahia Academy of Education, the SBPC- Brazilian Society for the Progress of Science and IPB – Polytechnic Institute of Bahia, engineer and doctor in Territorial Planning and Regional Development from the University of Barcelona, university professor and consultant in the areas of strategic planning, business planning, regional planning, urban planning and energy systems, was Advisor to the Vice President of Engineering and Technology at LIGHT S.A. Electric power distribution company from Rio de Janeiro, Strategic Planning Coordinator of CEPED- Bahia Research and Development Center, Undersecretary of Energy of the State of Bahia, Secretary of Planning of Salvador, is author of the books Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona,http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development- The Case of the State of Bahia (VDM Verlag Dr. Müller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011), Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV, Curitiba, 2015), As Grandes Revoluções Científicas, Econômicas e Sociais que Mudaram o Mundo (Editora CRV, Curitiba, 2016), A Invenção de um novo Brasil (Editora CRV, Curitiba, 2017), Esquerda x Direita e a sua convergência (Associação Baiana de Imprensa, Salvador, 2018), Como inventar o futuro para mudar o mundo (Editora CRV, Curitiba, 2019) and A humanidade ameaçada e as estratégias para sua sobrevivência (Editora Dialética, São Paulo, 2021) .