In November 2019, the Brazilian government introduced, as part of an employment stimulus package, the Contrato Verde Amarelo (CVA), a wage subsidy program for young first-time employees entering in contracts of up to 1.5 minimum wages. Despite CVA did not pass the final senate vote and, consequently, lost its validity, the relevance of this measure remains in light of Brazil's high labor costs and unemployment, and the dramatic impact that COVID-19 epidemic will leave in its labor market. This note analyzes the design, relevance and potential impacts of the CVA, as it was introduced in 2019, and recommendations for improvements based on international experience. In particular, as government will consider a revised version to speed up recovery of the labor market following COVID-19 epidemic, these recommendations will be useful in the drafting of an improved proposal.
The objective of the policy note is to inform reforms of the unemployment protection system of Brazil,through a comparison of its salient features with international benchmarks, and by taking stock of employment dynamics since the 2014 crisis. Recommendations include varying degrees of ambition (and political complexity), from parametric reforms of the unemployment insurance Seguro Desemprego (SD) to more systemic reorganization of programs, and the extension of coverage to growing shares of nondependent workers. The note builds on prior analysis of Brazil's labor market programs undertaken as part of the World Bank's expenditure review for Brazil (published World Bank 2018). The main novelties include a broader and deeper international benchmarking, as well as analysis of the unemployment dynamics since 2015, which are important to inform the optimal redesign of unemployment programs. The note was developed before the COVID-19 pandemic, and, while it takes stock of recent trends, it is not meant to be an assessment of Brazil's emergency response or do justice to the emerging literature and data on the matter. As Brazil prepares for its economic recovery, the note aims to provide valuable information for a national policy debate around the much-needed modernization of the unemployment protection system. The note is organized as follows. The first part of the note takes stock of some of the key characteristics of Brazil's labor market and unemployment dynamics since the 2014 economic crisis using the National Household Sample Survey Pesquisa Nacional por Amostra de Domicílios Contínua (PNADc) survey data. The centerpiece of the analysis is the comparison of the design features of SD to a range of international programs of reference countries, through a benchmarking exercise of its regulation, generosity, activation measures, and effective coverage rate. The final part of this note summarizes the key findings and provides recommendations.
The arrival of AI-powered chatbots has made many people think once again about the skills needed for the "digital future of work." Any efforts to improve digital skills are addressing a moving target, which implies that teaching the appropriate skills is not a trivial matter. What is certain, though, is that there is a very considerable digital skills gap between richer and poorer countries. The demand for digital skills is very heterogeneous, ranging from basic digital literacy that enables individuals to effectively use simple digital tools to the advanced digital skills necessary to participate in the "global division of digital labour." The limited data available suggest that levels of digital literacy are relatively low in countries of the Global South. Low-income countries exhibit extremely low levels of digital literacy, while the gaps between middle-income and high-income countries are also very considerable. The evidence on the use of digital technologies in schools suggests that most middle-income countries lag far behind high-income countries, particularly in schools with students with low socio-economic status. This may cause digital skills gaps to persist or even grow. Digital skills training programmes are proliferating, without having proven their effectiveness in terms of enhancing digital skills. Some evidence indicates that job referrals or training in the use of professional online platforms may be as important as digital training in improving employment prospects. Our assessment of digital skills in the Global South calls for policy action to address the yawning digital skills gap between high-income countries and low- and middle-income countries. This is a precondition for equitably harnessing the potential gains of digitalisation. Such policies will need to rest on a considerably expanded knowledge base regarding "digital skills," how to acquire them, and their labour market relevance.
