Brazil's unemployment rate had increased unexpectedly in October to 7.9% and declined to 7.5% in November. The lack of considerable increase in unemployment during H2 2015 should not be understood at labor market resilience.

In reality, employment has fallen at a rapid rate in the last few months, apart from seasonal factors. Actually, a fall in the labor force has barred the jobless rate from increasing. In November, the seasonally adjusted unemployment rate was registered at 8.2%, as compared with the mid-2014's figure of 4.6% and 5.1% in late 2014.

"We further expect the seasonally adjusted rate to have inched up to 8.3% in December, although the official unemployment rate should have remained unchanged at 7.5%", says Societe Generale.

In 2015, the labor market declined sharply due to GDP contraction. There is a possibility that the average jobless rate in 2016 might be much higher than Societe Generale's projection of 6.9% because of recession in the economy.

"We forecast 9.7% in 2016, and still see some risk to this forecast. The rising unemployment rate should ultimately help cool wage growth to 2.0% this year, compared with 10.1% in 2014", says Societe Generale.