Brazil's recession is pushing unemployment up

The labor market in Brazil has been a puzzle for the three years, when growth was markedly weak yet the unemployment rate continued to decrease. The explanation for this is the fact that the non-active labor force increased in the past three years, as income transfer programs and subsidized credit lines for higher education incentivized people to not seek work. 

However, the need for the government to provide fiscal consolidation, and thereafter changes in social and labor benefits, again increased the active labor force. In a recessionary environment, people are not finding jobs, so the unemployment rate has started to move up. 

"We forecast the unemployment to reach 7.3% by the end of this year and 7.8% by the end of 2016",said Barclays in a report on Friday.