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Higher productivity could boost Brazil growth to 4.4%, World Bank says

  • 07/03/2018 17h08publicação
  • Brasílialocalização
Mariana Tokarnia reports from Agência Brasil
Brasília - O Ministro da Casa Civil da Presidencia da Republica Eliseu Padilha e o Diretor do Banco Mundial para o Brasil Martin Raiser Durante Lançamento do Relatório Emprego e Crescimento (Antônio Cruz/Agência Brasil)

Eliseu Padilha and the director for Brazil of the World Bank, Martin Raiser.Antonio Cruz/Agência Brasil

Brazil must improve its productivity in order to resume growth, reports released Wednesday (Mar. 7) by the World Bank argue. Should the country's yearly productivity rate remain the same, Brazil is estimated to grow a mere 1.8% per year. A boost in productivity, on the other hand, could drive the country’s expansion to 4.4% a year, the studies add.

In Brazil, work productivity has increased 0.7% a year since the mid-90s. The rate is an indicator for technical efficiency, which shows how companies or the country turn supplies into goods and services.

On Wednesday, the institute published the reports Emprego e crescimento: a agenda da produtividade and Competências e empregos: uma agenda para a juventude ("Employment and Growth: the Productivity Agenda," and "Skills and Jobs: an Agenda for Young People," in a literal English translation). According to the World Bank, an average Brazilian worker is only 17% more productive than they were 20 years ago. For the average worker in high-income countries, the increase in the period was 34%.

The international agency further highlights that job generation is crucial for Brazil to maintain the achievements made up to 2010, as two thirds of poverty reduction in Brazil from 2000–2010 were made possible by the creation of employment.

From 1966 to 2015, when the country’s average GDP increase stood at 2.6% a year, some two thirds of this expansion corresponded to the boost in labor force and education, and one third to the surge in physical capital.

High minimum wage

The World Bank regards Brazil’s minimum wage as high compared to international standards. The minimum wage in the Organization for Economic Co-operation and Development (OECD) has remained steady at 45% and 50% of the average pay. In Brazil, this percentage reaches 70%. The minimum wage in Brazil is $295.19 a month.

The increase in the minimum wage could make an impact on the admission of young people. Studies mentioned in the publication show that hikes in the minimum wage lower the probability of employment for adolescents by 3%.

The OECD is a group made up mostly of developed countries. The minimum wage of member countries surpasses that of Brazil. OECD figures for 2015 indicate that, whereas Brazil had a minimum wage of $1.12 an hour, countries like Australia had $9.54, US $6.26, and Japan $5.52.

Brazil in search of improvements

In the ceremony held to launch the reports, Brazil's Chief of Staff Eliseu Padilha said the government has adopted measures to bring balance to accounts and encourage growth, mentioning as an example the reform in the country's high-school curriculum, which is to offer students the option of vocational education.

Padilha also talked about the cap on public spending, which limits the increase in spending in a given year to the inflation reported in the year prior. For this year, the limit has been set at 3%.

Translated by Fabrício Ferreira

Edited by: Nádia Franco / Mariana Branco