Brazil sheds jobs as crisis takes hold

When Weliton Ribeiro started his temporary contract early last year with General Motors' Brazilian subsidiary as a panel painter, a booming economy, easy credit and exuberant car sales pointed to a rosy future.

Now, as the global crisis settles on Latin America's biggest economy, all that is gone -- along with Ribeiro's job, and those of 800 others at a GM plant in Sao Jose dos Campos, outside Sao Paulo, who were sacked early January.

The troubled US automaker is the first company to make mass lay-offs in Brazil, the fifth-biggest car market in the world.

Observers and unions fear thousands more workers will be axed in the weeks and months to come.

For Ribeiro, 29, the loss of his 1,300-real-a-month (560 dollars) pay packet hit hard.

A workplace accident required knee surgery and four months' leave, and it is difficult for him to walk. Expensive medical follow-ups are required.

He also has a 19-year-old wife who looks after their one-year-old daughter in their modest home, located in a rust-belt area likely to badly feel the manufacturing downturn.

Ribeiro is realistic about his chances of finding another job in what looks to be a protracted and deep recession.

"I know that it won't be easy, because there is a great number of unemployed people in the market. The market is low, it isn't strong ... It isn't going to be easy. But I'm going to fight, I'm going to keep going," he told AFP.

According to preliminary data gathered by the Federation of Industries of Sao Paulo (FIESP), the country's main economic hub, up to 120,000 people lost their jobs in December in the region, the Folha de Sao Paulo newspaper reported.

President Luiz Inacio Lula da Silva, a former trade unionist, on Monday met with union chiefs to evaluate the threat to employment.

Last Thursday, Lula admitted that 2008 would show a net loss of 600,000 jobs compared to 2007 -- a clear sign that the decade of strong growth he has overseen during his two mandates was at an end.

He also warned that the immediate future, up to the end of March, would be difficult, but called for companies to react calmly.

"The crisis is cause for worry," he said. "But it shouldn't prompt any precipitation, neither by the government nor by employers."

Unions and employer groups, though, have been meeting out of concern that widespread unemployment was just around the corner.

Ongoing talks between them have hinted of a deal involving reduced workweeks to save jobs, but so far nothing concrete has been agreed.

The president of the FIESP, Paulo Skaf, has repeatedly called on the government to order an interest rate cut as a way of helping struggling manufacturers.

"All the world is cutting interest rates. But not Brazil," he told a media conference last week.

"This doesn't have to do with the crisis from abroad, no. This is a Brazilian crisis. And this issue of interest rates is helping to worsen the situation."

Economists believe Brazil's reference interest rate, currently at 13.75 percent, will likely be cut this year, but only by a modest amount and in stages, given the country's constant fight to keep inflation under control.

The agricultural sector, a mainstay of Brazilian exports, has been especially affected by the crisis.

The Estado de S. Paulo newspaper cited data from the firm RC Consultadores that suggested farm revenues would fall 4.5 billion dollars this year.

The financial newspaper Valor predicted consumption would also plunge in 2009, pulling 86 billion dollars out of Brazil's economy.