Labor Markets in Brazil, Poland and Singapore Melissa Epstein Gus Giacoman Ricardo Saias Vilas Abraham The Global Economy Group Project #4 – Labor and Trade March 2,

Characteristics of Successful Labor Markets Ease of Hiring / Firing Unemployment Trends Government Regulation of Wages Class Notes, Labor Markets 2

World Bank’s Doing Business In (DBI) Reports Objective: provide basis for understanding how friendly a labor market is to a business Provides quantitative measure of: ▫Regulations for starting a business ▫Employing workers ▫Getting credit ▫Protecting Investors ▫Paying Taxes ▫Trading Across Borders World Bank’s Doing Business In Report,

DBI World Reports to Measure Hiring / Firing Restrictions Brazil faces strongest restrictions and regulations Of three countries analyzed, most difficult to hire Brazilian employees and most expensive to fire them World Bank’s Doing Business In Report,

Hiring / Firing Trends- Brazil Difficulty of employing workers in Brazil is due to fixed long term contracts and strong government minimum wage regulations Brazilian minimum wage requirements price people who are willing to work at a lower cost out of the market While it is easy to fire employees, few do because fired workers receive 46 weeks of severance pay World Bank’s Doing Business In Report, 2010, pp

Hiring / Firing Trends- Poland In 1990s, labor market reform eliminated government control over wages and employment High share of jobs are provided by the public sector Low labor costs due to low wages Rise of less unionized private sector brought more flexibility to labor market acro_economics_employment_basic_information.htm 6

Hiring / Firing Trends- Singapore Very easy to hire, employ and fire workers However, demand for high quality managerial talent is driving up salaries 70% of manufacturing companies have pay increases between 6-20% to attract managerial staff _Q12006.pdf % Companies with Pay Increase 7

Unemployment Trends Poland is highly dependent on global economic situation and has been strongly impacted by the 2009 Financial Crisis Brazil’s unemployment rate declined dramatically in the later part 2009, primarily due to seasonal employment. 8

Minimum Wage Requirements Brazil: plays a strong role because it is used as an anti-inflationary policy, is tied to social security benefits and other government programs Poland: only one minimum wage that is continually revised upwards, and applies to all labor. Traditionally higher than US Singapore: no minimum wage requirement. Employees negotiate salaries with employees. Businesses have flexibility to make spontaneous wage adjustments as economy fluctuates 9

Key Findings: A series of social, economic and political factors should be analyzed when determining labor market operations within and comparing across countries Brazil is not an attractive labor market due to high regulations and restrictions on employment Singapore is aggressively hiring, though has high acquisition costs for top talent Brazil’s Year End 2009 unemployment rate may be deceiving due to seasonal trends. Real unemployment should be reflected in Q statistics Poland’s labor market is highly correlated with global economic trends and is more volatile than other economies considered 10