The effects of the new coronavirus pandemic and restrictions on the operation of various economic activities could lead to a crisis resulting in losses of more than R$320 billion to the Brazilian economy.
This would cause 6.5 million workers to lose their jobs, according to a study commissioned by the National Confederation of Services (CNS).
According to the vice-president of the CNS, Luigi Nese, the impressive numbers should not be used to create alarm, although they should not be used to counter strategies recommended by health authorities to contain the spread of the disease.
President Jair Bolsonaro has clashed with governors and health experts, however, when he advocated that workers return to the streets so that the economy does not suffer such a major impact from the pandemic.
Crisis according to WHO
The World Health Organization (WHO), however, advocates isolation for everyone as the only way to prevent the spread of the disease. Even in a state of sustained transmission, that is, when the origin of the contamination is unknown
“The aim of the study is to show what a 60 to 90-day shutdown can do to the economy. We commissioned the data to prepare employers, workers, government and justice for a debate that will lead us to a post-crisis solution.
Regardless of a shorter or longer term in facing the Covid-19, we need to join forces so that the economy can recover after this process”, he says.
The services sector is likely to be the most penalized, with a loss of around R$117 billion in revenue. This is the case if the impacts of COVID-19 on the economy drag on for a period of 60 to 90 days.
The study, obtained exclusively by Estadão/Broadcast, also indicates that commerce will lose almost R$80 billion and the manufacturing industry will lose around R$66 billion in revenue. The new coronavirus pandemic would also bring losses to the construction industry (around R$20 billion) and agriculture (almost R$12 billion).
As a result, the outlook is for 2.2 million layoffs in the service sector, 2 million jobs closed in commerce, 1 million jobs lost in industry, and 637 thousand fewer jobs in construction.
The study also shows that, with less production and employment, Covid-19 could reduce federal revenue by almost R$125 billion this year.
Given the billion-dollar loss estimated in the study, Nese believes that the measures already announced by the government will be insufficient to prevent the closure of small and medium-sized companies and the elimination of jobs.
Provisional Measure 927
“The government announced measures to inject more resources into the market, but the amount of aid will probably have to be increased,” he predicted.
“The first thing to ensure employment during and after the crisis is to reduce payroll taxes – immediately, without discussion. We have this opportunity to implement this, even through a proposal on taxation of electronic transactions,” he adds, once again defending the re-creation of a tax along the lines of the old CPMF.
The executive also criticized the hasty way in which Provisional Measure 927, which suspended contracts and salaries for up to four months, was released earlier this week. Bolsonaro had to backtrack on this point of the MP hours after its publication.
"This provisional measure was a mess. What needs to be strengthened is the employment contract, emphasizing that what is agreed is worth more than what is legislated.
Changes to vacations and working hours have been made in collective agreements for many years. The suspension of salaries was a terrible idea, as it would further reduce demand during the crisis period,” he adds.
Immune
While the outlook is grim for almost all sectors of the economy, the study shows that the information technology, public and private healthcare and public services sectors, on the other hand, are expected to maintain or increase their income and jobs. Companies in the healthcare and social assistance sector alone are expected to see an increase of almost R$1.4T7 billion in revenue in 2020.
“Some sectors will grow at the expense of others. Because they are strategic services in this time of crisis, professionals in this area will, on average, be in greater demand with an increased workload. But they will also be impacted if the crisis lasts for a long time,” says Nese. “Information technology will improve processes, facilitate sales and remote activities, but if employees in these areas are unable to get to work, this sector will also come to a standstill,” he concludes.