Who Will Create the Jobs?

From the perspective of Brazilian macroeconomic statistics, the economy is doing very well. Since 2023, growth has been around 3 percent, inflation has fallen dramatically from 12.1 to 4.6 percent, and unemployment is at its lowest level on record. But from the perspective of many Brazilian people, the economy is not doing well, their paychecks barely lasting through the end of the month. What explains the difference? 

While the economic debate in this year’s presidential election has focused on high supermarket prices, the lies in the state of Brazilian wages and jobs. And more specifically, the type of jobs being created in Brazil. 

Labor market data show that nine out of every ten new jobs pay just one or two times the minimum wage. These are low-paid jobs with extremely high turnover. Moreover, the share of jobs that pay more than twice the minimum wage fell from 34.8 percent in 2019 to 30.3 percent in 2025—meaning fewer jobs providing working-class salaries. One result of this landscape is the increasing “Uberization” of the Brazilian working class: since 2022, the number of people working mainly through apps has grown by more than a third.

These figures paint a picture of a stagnant labor market, and stand in stark contrast to the significant changes to the character of the Brazilian workforce. Between 2012 and 2024, thanks to the massive expansion of federal universities during prior Workers’ Party (PT) and financial aid programs for low-income students, the number of workers with a university degree nearly doubled.

But because the jobs being created do not require the skills associated with university education, the share of Brazilians working in jobs below their education level rose from about 25 to 40 percent during that same period. The economy has not succeeded in generating the employment opportunities needed to absorb a growing pool of skilled workers—a problem shared by many rich countries in recent decades. 

False solutions

Faced with a yawning gap between educational attainment and employment opportunities, the far-right has stepped in with an entrepreneurial message, emphasizing hard work and small government as the recipe for prosperity. This program is on display in the proposal for a “Ministry of Prosperity” put forward by Flavío Bolsonaro, who promised to “provide the know-how people need to start their own businesses and formalize them. We will cut taxes, offer low-cost financing and bring prosperity to Brazil.” In response to structural problems in the economy, Bolsonaro’s solution is a nation of small business owners. 

In Latin America, this is a well-known refrain. Starting in the late 1980s, at the height of neoliberal market reforms in the region, the influential Peruvian economist Hernando de Soto argued that developing countries are full of entrepreneurial energy that only needs to be freed by securing property titles and cutting red tape. (Similar arguments found new footing in the subsequent growth of the microfinance industry, which held that access to the financial sector was the primary barrier to escaping poverty.) 

There are some issues with this perspective. The economist Antoinette Schoar distinguishes between “subsistence entrepreneurs,” who start a business because of a lack of employment alternatives, and those who build firms with the potential to grow and hire others. The reality is that very few small business owners in a country like Brazil ever move from the first group to the second—their so-called entrepreneurship being a replacement for otherwise earning a wage. In Brazil, around three quarters of own-account workers did not even have a business registration. But this is not, as de Soto would have it, an administrative problem: it is because entrepreneurship is often a replacement for otherwise earning a wage, and because the room for growth in these sectors is structurally limited given that they concentrate such a large share of the working population. 

For services like restaurants, hairdressers, or driving to provide good wages and secure employment, they would have to stop being jobs of last resort. For that to happen, other parts of the economy would need to be dynamic and capable of absorbing a larger share of the workforce. This will take more than individual will or elimination of red tape. 

Development economist Alice Amsden argued that, when it comes to good jobs, the demand for a skilled workforce matters even more than its supply. To address this structural weakness in the Brazilian economy, the state will be required to create the demand for new skills, and to do so through carefully crafted industrial policy with a long horizon. 

New industry 

Under the third Lula government, Brazil broke ground on such a strategy. Through its Nova Indústria Brasil program, the government made more than R$ 862 billion in financing available for 2023–2026, targeting sectors from biopharmaceuticals to critical minerals and artificial intelligence. But nurturing new productive firms that can create the demand for well-paid, skilled jobs requires more effort—and more time.

Innovation in industry cannot be achieved by simply cutting taxes, but rather requires incentives for researchers to commercialize their knowledge and scale it through new ventures. This includes institutions that facilitate the transfer of knowledge from universities to firms, incubators of both public and private strategic projects, and the financial infrastructure to support risk-taking and long-term, patient capital.

Brazil’s industrialization effort must be maintained and extended. That will require continuity in how it allocates its resources, better alignment among its institutions, stronger oversight from the Presidency over its ministries, continuous adjustments in policy plans towards a moving technological frontier, stronger institutions for technology transfer, and stronger incentives for economic actors to take risks and innovate. 

No matter the results of October’s elections, Brazil’s future will involve tackling these economic challenges. If the country follows the path of blind privatization, dismantling of the state bureaucracy, and relinquishing control of natural resources to foreign actors, Brazil will lose the potential to generate the quality jobs and opportunities that Brazilians deserve. Only a well-crafted development strategy can transform the economic prospects of the Brazilian working class, and turn its political tides.