Crisis could cut 600 jobs
Marcio Pochmann assesses the risk of freezing job creation

TATIANA FÁVARO

The slowdown in economic activities due to the energy crisis will initially imply a drop in Brazilian GDP growth from the estimated 4,5% to between 2% and 3%, from an optimistic perspective. According to the professor at Unicamp's Institute of Economics (IE) and researcher at the Center for Studies on Union and Labor Economics, Marcio Pochmann, this means that the social drama could be worsened by cutting 600 jobs, due to energy rationing.

Two other impacts on the job market are expected, according to Pochmann, who is currently heading the Social Projects Coordination of São Paulo City Hall and joins the chorus with other economists. The first is the possibility of postponing or canceling investments planned for this year, especially in the second half of the year. “There will be no energy to support the expansion of installed capacity in Brazil. Statements from large businesspeople demonstrate that, if the energy issue in Brazil is not quickly made viable, the resources could be injected into other countries,” he states.
The professor warns of the repercussions that postponing or lacking investments can have on jobs: each year, approximately 1,5 million people enter the market; Without new investments and without expanding the number of jobs, the country's job creation policy could be frozen for an indefinite period.

The Central Bank is already working on the hypothesis of the second effect expected by experts on the Brazilian economy: the rise in inflation this year, due to the shock resulting from the increase in the amount paid for electricity. Once again, it is the population who will bear the consequences. “Electricity is a matrix of various costs and, therefore, this impact on prices will be passed on to inflation. Certainly, the losers are the workers, as there is no legislation that guarantees the automatic transfer of inflation to salaries. If unions are unable to pressure wages to keep up with inflation, workers will have less purchasing power and this will affect the food and clothing sectors. This is synonymous with a negative impact on employment”, warns Pochmann.

The misconceptions – The most serious aspect of the energy crisis, according to the researcher, is the lack of investment in recent years. “Until the end of the 70s, the growth rate was 7% per year. In the last two decades, in the 80s and 90s, the energy issue remained in the background, despite the rationing problems that were foreseen”, recalls Pochmann.
Several mistakes were made. One of the main ones, in the economist's opinion, is that the government opted to privatize existing assets and not investments. “Brazil could have privatized new hydroelectric plants and not distribution”, accuses the researcher. Numerous experts also drew the government's attention to the low rates of investment in the area of ​​infrastructure. These are facts: the government, handcuffed by the International Monetary Fund (IMF), did not invest. And the only reason the country didn't go out sooner was because the economic expansion was poor. Suffice it to say that, from 1981 to 2000, Brazil grew an average of 2,1% per year. “It’s very small growth,” says Pochmann.

According to the Unicamp professor, Brazil's brake was triggered, basically, by the format of the agreement with the IMF. “This agreement aims to generate a primary surplus, that is, to guarantee that the public authorities’ operational expenses are lower than their revenues. The immediate repercussion meant holding back the level of investment. And, cyclically, the water scarcity ended up leading to what we are experiencing today, which is, in my opinion, a structural problem, for which there is no immediate solution”, he concludes.

2nd revolution – The expectation is that the government will spend at least a year tracking down investors. To win them over, it will be necessary, above all, to create a favorable scenario. Difficult, given the worldly contradiction embittered by the country and providentially remembered by Marcio Pochmann: “While the world is experiencing the third technological revolution – in the face of computers, microelectronics –, Brazil has a problem that falls within the second revolution, when it was discovered electrical energy more than a century ago.” For the economist, it is pure demonstration that the government has lost the ability to plan the most different areas of economic activity. If he ever had it.