Federal Spending on Labor Market Programs in Brazil
The objective of labor programs is to improve the efficiency of the labor market inmatching labor demand with labor supply. One way of doing this is by reducing the costborn by workers during the transition between jobs with unemployment insurance...
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| Format: | Policy Note |
| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/841291614373144982/Federal-Spending-on-Labor-Market-Programs-in-Brazil-Background-Chapter-of-the-2018-Expenditure-Review-A-Fair-Adjustment-Efficiency-and-Equity-of-Public-Spending-in-Brazil http://hdl.handle.net/10986/35230 |
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okr-10986-352302021-04-23T14:02:19Z Federal Spending on Labor Market Programs in Brazil World Bank LABOR MARKET LABOR MARKET PROGRAM INCOME SUPPORT TECHNICAL AND VOCATIONAL EDUCATION EMPLOYMENT PUBLIC EXPENDITURE REVIEW PUBLIC SPENDING JOB CREATION PROGRAM The objective of labor programs is to improve the efficiency of the labor market inmatching labor demand with labor supply. One way of doing this is by reducing the costborn by workers during the transition between jobs with unemployment insurance andjob-search support. In Brazil some labor programs have the additional, explicit objectiveof supplementing the income of low-wage workers. The provision of labor programs inBrazil is carried out across different ministries and agencies. The bulk of expendituresare made in the form of unemployment cash benefits. Wage supplements and otheractive labor market programs are administered by the Ministry of Labor. Trainingprograms for the unemployed are financed by the Ministry of Education, while somesmaller social programs with a labor support objective are managed by the Ministry ofSocial and Agrarian Development. This chapter of the expenditure review analyzes the volume, trends and efficiency in labor program expenditures in Brazil. It also benchmarks labor program expenditure against comparable spending indicators from other countries, in terms of their function, magnitude and resource allocation. As part of a public expenditure review, the laborprograms covered in this chapter are those that are financed directly from the FederalGovernment’s budget and tracked in budget execution reports from the BrazilianTreasury. So, for example, the chapter covers programs like the Seguro Desemprego,Abono Salarial and PRONATEC. Government mandated programs that are financed byemployers without going through the state budget, such as the Fundo de Garantia por Tempo de Serviço (FGTS), Salário Família and other programs are not analyzed in terms of expenditure trends. The chapter shows that there is significant scope to improve the efficiency and effectiveness of spending on labor market programs. Brazil’s budget expenditure on labor market programs is lower than in OECD countries, but higher than that of comparable economies in Latin America. Spending is significantly higher when offbudget programs mandated by the federal government are taken into account. Budget allocations are tilted towards 'passive' income support programs, although the share of spending on ‘active’ programs has been rising rapidly in recent years. The lack of emphasis on active labor market support—particularly job search assistance and intermediation—is a weakness that limits the government's ability to respond effectively to rising levels of unemployment and to contain spending on passive labor market support. Furthermore, there is an incoherent overlapping of programs with similar functions which adds to perverse incentive effects and fiscal pressures. Indeed, the adjustment formula and extensive use of the statutory minimum wage as a policy parameter has a ratchet effect on fiscal obligations from across the social protection ‘system’ (including pensions and social assistance). The chapter shows that significant efficiency gains and expenditure savings could be obtained from rationalizing programs with similar functions. The document is a Background Chapter for the report Background Chapter for A fair adjustment : efficiency and equity of public spending in Brazil : Volume 1 – Overview (report no. 121480). 2021-03-10T16:23:37Z 2021-03-10T16:23:37Z 2018-12-01 Policy Note http://documents.worldbank.org/curated/en/841291614373144982/Federal-Spending-on-Labor-Market-Programs-in-Brazil-Background-Chapter-of-the-2018-Expenditure-Review-A-Fair-Adjustment-Efficiency-and-Equity-of-Public-Spending-in-Brazil http://hdl.handle.net/10986/35230 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work Economic & Sector Work :: Policy Note Latin America & Caribbean Brazil |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
LABOR MARKET LABOR MARKET PROGRAM INCOME SUPPORT TECHNICAL AND VOCATIONAL EDUCATION EMPLOYMENT PUBLIC EXPENDITURE REVIEW PUBLIC SPENDING JOB CREATION PROGRAM |
| spellingShingle |
LABOR MARKET LABOR MARKET PROGRAM INCOME SUPPORT TECHNICAL AND VOCATIONAL EDUCATION EMPLOYMENT PUBLIC EXPENDITURE REVIEW PUBLIC SPENDING JOB CREATION PROGRAM World Bank Federal Spending on Labor Market Programs in Brazil |
| geographic_facet |
Latin America & Caribbean Brazil |
| description |
The objective of labor programs is to
improve the efficiency of the labor market inmatching labor
demand with labor supply. One way of doing this is by
reducing the costborn by workers during the transition
between jobs with unemployment insurance andjob-search
support. In Brazil some labor programs have the additional,
explicit objectiveof supplementing the income of low-wage
workers. The provision of labor programs inBrazil is carried
out across different ministries and agencies. The bulk of
expendituresare made in the form of unemployment cash
benefits. Wage supplements and otheractive labor market
programs are administered by the Ministry of Labor.
Trainingprograms for the unemployed are financed by the
Ministry of Education, while somesmaller social programs
with a labor support objective are managed by the Ministry
ofSocial and Agrarian Development. This chapter of the
expenditure review analyzes the volume, trends and
efficiency in labor program expenditures in Brazil. It also
benchmarks labor program expenditure against comparable
spending indicators from other countries, in terms of their
function, magnitude and resource allocation. As part of a
public expenditure review, the laborprograms covered in this
chapter are those that are financed directly from the
FederalGovernment’s budget and tracked in budget execution
reports from the BrazilianTreasury. So, for example, the
chapter covers programs like the Seguro Desemprego,Abono
Salarial and PRONATEC. Government mandated programs that are
financed byemployers without going through the state budget,
such as the Fundo de Garantia por Tempo de Serviço (FGTS),
Salário Família and other programs are not analyzed in terms
of expenditure trends. The chapter shows that there is
significant scope to improve the efficiency and
effectiveness of spending on labor market programs. Brazil’s
budget expenditure on labor market programs is lower than in
OECD countries, but higher than that of comparable economies
in Latin America. Spending is significantly higher when
offbudget programs mandated by the federal government are
taken into account. Budget allocations are tilted towards
'passive' income support programs, although the
share of spending on ‘active’ programs has been rising
rapidly in recent years. The lack of emphasis on active
labor market support—particularly job search assistance and
intermediation—is a weakness that limits the
government's ability to respond effectively to rising
levels of unemployment and to contain spending on passive
labor market support. Furthermore, there is an incoherent
overlapping of programs with similar functions which adds to
perverse incentive effects and fiscal pressures. Indeed, the
adjustment formula and extensive use of the statutory
minimum wage as a policy parameter has a ratchet effect on
fiscal obligations from across the social protection
‘system’ (including pensions and social assistance). The
chapter shows that significant efficiency gains and
expenditure savings could be obtained from rationalizing
programs with similar functions. The document is a
Background Chapter for the report Background Chapter for A
fair adjustment : efficiency and equity of public spending
in Brazil : Volume 1 – Overview (report no. 121480). |
| format |
Policy Note |
| author |
World Bank |
| author_facet |
World Bank |
| author_sort |
World Bank |
| title |
Federal Spending on Labor Market Programs in Brazil |
| title_short |
Federal Spending on Labor Market Programs in Brazil |
| title_full |
Federal Spending on Labor Market Programs in Brazil |
| title_fullStr |
Federal Spending on Labor Market Programs in Brazil |
| title_full_unstemmed |
Federal Spending on Labor Market Programs in Brazil |
| title_sort |
federal spending on labor market programs in brazil |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/en/841291614373144982/Federal-Spending-on-Labor-Market-Programs-in-Brazil-Background-Chapter-of-the-2018-Expenditure-Review-A-Fair-Adjustment-Efficiency-and-Equity-of-Public-Spending-in-Brazil http://hdl.handle.net/10986/35230 |
| _version_ |
1764482599360659456 |