FIVE YEARS OF THE REAL PLAN

The urban unemployment rate in Brazil continues to be relatively low, when compared to the rates of OECD countries.

Compared to Mexico and the largest countries in South America, Brazil has the second lowest unemployment rate for 1999.

YEAR	RATE
1992	5.86
1993	5.30
1994	5.06
1995	4.64
1996	5.42
1997	5.66
1998	7.60
1999*	7.61

The Real Plan brought changes to the labor market. In order to make the market more flexible and stimulate the creation of jobs, the Government has been developing two sets of policies.

The first set comprises shorter-term policies. Aside from minimizing the costs of new recruitment, they aim to safeguard employment and to promote the creation of job positions, benefiting not only the unemployed, but also the young who are trying to join the job market.

Among those measures, it is worth highlighting: the establishment of job contracts for a fixed period of time; the legalization of the "Hour Bank", which allows the job to be adapted to seasonal and cyclical variations in production; the regulation of part-time work; and the temporary suspension of the job contract, providing for the training of workers during a fixed period following his or her dismissal.

The second set of policies will take effect over the longer term. They aim to modify labor legislation, modernizing and differentiating it from the one established under the Consolidation of Labor Laws (CLT). The changes include, among others, the goals of democratizing labor relationships and giving value to collective representation, thus contributing to the preservation of jobs.

The measures already adopted have begun to take effect, therefore contributing to the stabilization of the unemployment rate. In May 1999, the unemployment rate was 7.7%, which thus was below the rate during the same period of the preceding year (8.2%). The recent net creation of job positions, particularly among workers with registered jobs and in industry in general, seems to suggest that the sharpest effects of the international crisis may be behind us.

Manufacture	-10.4%
Construction	-3.2%
Trade	6.5%
Services	16.4%
Others	-0.3%
Overal Averagel	6.9%

Metropolitan Regions: São Paulo, Rio de Janeiro, Belo Horizonte,
Porto Alegre, Salvador and Recife
Souce: IBGE/PME

From 1994 to 1999, the percentage of the population employed in the six major metropolitan areas increased 6.9%.

The reduction in employment, a more sensitive issue in the manufacturing sector, was more than compensated for by the creation of work positions in the service and trade sectors, in accordance with a worldwide trend.

From 1991 to 1998, the number of positions increased in the most skilled job categories. Simultaneously, a reduction of 3.8% occurred in the number of positions occupied by workers with up to four years of schooling.

This is one of the reasons why the Government has made extraordinary efforts to increase the skill level of the labor force. From 1995 to 1998, more than 5 million workers were eligible for the National Worker Skills Plan – (PLANFOR), utilizing funds of about R$ 1 billion.

Because of these changes, workers with less education—who in 1991 accounted for 39.0% of the working population, had their share decreased to 27.4% in 1998. On the other hand, the share of the total working population accounted for by those with 9 to 11 years of schooling rose from 21.2% to 28%. Furthermore, the percentage of positions occupied by professionals with 12 or more years of education rose from 14.3% to 17.4%.