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Labor Markets in Brazil, Poland and Singapore

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, 2010. Characteristics of Successful Labor Markets. Ease of Hiring / Firing Unemployment Trends

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Labor Markets in Brazil, Poland and Singapore

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  1. 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, 2010

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

  3. 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, 2010

  4. 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, 2010

  5. 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 22-26.

  6. 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 http://www.balticdata.info/poland/macro_economics/poland_macro_economics_employment_basic_information.htm

  7. 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 % Companies with Pay Increase http://sg.hudson.com/documents/emp_sg_Hudson_Report_Q12006.pdf

  8. 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. www.bizpoland.pl

  9. 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

  10. 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 Q1 2010 statistics • Poland’s labor market is highly correlated with global economic trends and is more volatile than other economies considered

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