July 17, 2020
1. Unemployment rate increases by 26% in seven weeks, according to IBGE
After a small drop – which interrupted four consecutive weeks of increase – the unemployment rate increased once again due to the coronavirus pandemic, reaching the highest such percentage over the past two months. The information was published on Friday by the Brazilian Institute of Geography and Statistics (IBGE).
According to IBGE, nearly 12 million people were unemployed in the first week of June, an increase of 675,000 people in comparison to the previous week. Compared to the first week of May, the number of people who were unemployed increased by 2.6 million people, a 26% increase over a seven-week period. The unemployment rate stands at 13.1%, the highest it has been since the beginning of May, when the figure was at 10.5%.
The number of employed dropped by 1.5 million in just one week to 82.5 million. The employment rate in Brazil is at 48.5%, registering a decrease in comparison to the previous week (49.3%) and to the first week of May (49.4%). According to IBGE, out of the total number of employed workers, 8.6 million are working from home, representing 12.4% of workers who are still employed during the pandemic. “This group has remained stable since the first week of May,” says IBGE.
Estado de São Paulo: Após 7 semanas, País volta a perder vagas de trabalho e 2,6 milhões ficam sem emprego desde maio
Folha de S.Paulo: Desemprego acelera e 1,5 milhão de vagas são fechadas na última semana de junho
O Globo: Com flexibilização do isolamento, brasileiros voltam a buscar vaga e desemprego sobe a 13,1%
2. President sanctions new legal framework for basic sanitation
On Wednesday, President Jair Bolsonaro sanctioned a new legal framework for basic sanitation. Bolsonaro vetoed 11 sections of the bill that had been approved by Congress. The new law aims to increase the participation of the private sector in basic sanitation. At the moment, sanitation services are primarily provided by local state companies. The new legal framework aims to increase competition in the sector.
The bill approved by Congress also aims to universalize access to sanitation, stipulating sewage treatment to 90% of people and clean water to 99% of people by the end of 2033. “The intention to make things universal is more effective. What was only a promise is now concrete,” says Minister of Regional Development Rogério Marinho, one of the members of government who gave a speech during the ceremony.
According to Economy Minister Paulo Guedes, the new law could generate up to R$ 700 billion (USD $130.08 billion) in investments in the sector. “We hope there will be R$ 600 – R$ 700 billion in investments in this sector over the next few years. 100 million Brazilians could not wash their hands. In fact, 100 million people with no sewage systems and 35 million without clean water. This is important and opens a door, as this is the first wave of investments,” said Guedes in his speech.
Bolsonaro participated in the ceremony via videoconference. He was diagnosed with COVID-19 and he has been working from the presidential residence Palácio da Alvorada. He did not give a speech. The legal framework was approved by the Chamber of Deputies in December and by the Senate in June. It has been under debate in Congress since 2018.
3. Paulo Guedes says he will deliver the tax reform
Economy Minister Paulo Guedes said that he will send the first part of the tax reform will be presented to Senate President Davi Alcolumbre’s (DEM-AP) house in person on Tuesday. The statement was made during the panel “The Brazilian Economic Moment” in an event for foreign investors.
According to Guedes, the first part of the reform combines bills that have already been sent to the Chamber of Deputies and to the Senate. It includes the creation of a dual Value-Added Tax (VAT), resulting from the unification of federal and state taxes. “We will start with the dual VAT and end PIS/Cofins. This is already with the Chief of Staff,” he said.
However, the minister said he cannot guarantee that the reform will include a tax on transactions. “If we start with something that separates us, the reform will end before it begins.” But Guedes also argued his point of view on the need for change and the need to implement a tax on transactions. “What do I think about Brazilian taxes? They are awful, poorly planned. Crazy,” he said. Guedes also discussed the importance of a broader base taxation. “Online commerce is a broad base, as are online payments,” he said. However, Guedes added that it is not a tax like the Provisional Contribution on Financial Transactions (CPMF). “It is not the same tax with a different name.”
The minister also mentioned that there will be a proposal to reform taxes on dividends, following the reduction in companies’ income tax. “Will there be a tax on transactions? We are considering increasing the base. Will there be a tax on dividends? Yes. The income tax of companies will drop,” he said while mentioning that it is not possible to tax companies in Brazil at 34% while in other countries taxes are at 20%.
4. New Education Minister takes office and promises dialogue with educators
On Thursday (16th), the new Education Minister Milton Ribeiro took office. He was nominated to the position in the previous week. President Jair Bolsonaro, who is recovering from COVID-19, participated in the ceremony via videoconference from his home and signed the document confirming the new minister.
During his first speech as minister, Ribeiro talked about creating an open national dialogue on education and promised to prioritize technical schools. “We want to open the dialogue to hear researchers and educators who, like myself, are saddened to see what has been happening with education in our country, as seen in our position in rankings like the Program for International Student Assessment. Still, by incentivizing professional courses, we hope that young people will have access to the job market, a way to reach their potential to contribute to our country,” he said.
The new minister said that educational policies and philosophies that he thinks are wrong “have deconstructed the authority of the teacher in class” and that he will support initiatives to recover this authority.
“Often, what happens is what we see on TV: teachers being assaulted, disrespected and whatever I can do, as Minister of Education, to support initiatives, I’ll do to restore the respect for teachers.”
During a brief speech, Jair Bolsonaro also discussed the need to restore respect for teachers in class. “Teachers are basically our second parents. They are people to whom we owe respect and recognition for what they teach us and what will remain in our lives forever. The lives of teachers at the moment are not easy,” he said.
The president thanked Milton Ribeiro for having accepted the invitation and listed some of the challenges he will face: “It is a large Ministry, complex and with autonomous sectors, which often need advice to make decisions. It is not easy to be a Minister as the future of the nation depends on you.”
5. Ministry of Defence warns of armed conflict risk in South America
On Thursday (16th), the Ministry of Defence published a periodic study of geopolitics in Latin America, warning of the possibility of an armed conflict in the region. The document discusses the chances of a civil war in Venezuela specifically, as a result of the social and economic hardships the country is facing. Due to this concern, the Ministry of Defence says the Brazilian Armed Forces need to constantly monitor the region in case of war, especially considering that there could be an influx of refugees in Brazil. Another issue discussed in the study was the growing influence of China in the region, as the country is increasingly becoming the main trade partner of some of South America’s most important economies.