The Brazilian labor market has historically lived with high levels of turnover and informality. Even among workers with formal contracts, stability is not guaranteed. Frequent dismissals, abrupt changes in occupation and difficulty in professional reintegration affect millions of people, compromising their life projects and the possibility of socioeconomic ascension. At the heart of this scenario, mass layoff events deserve special attention, both for the number of people affected and for the lasting consequences they cause.
IMDS produced the Technical Note "Post-Dismissal Trajectories and Challenges to Professional Relocation in the Brazilian Labor Market", which analyzes the effects of dismissals on the professional trajectory of more than 450 thousand Brazilian workers. Using data from RAIS (Annual Report of Social Information) from 2004 to 2019, the study investigates the long-term impacts of these shocks, revealing how the losses go far beyond immediate dismissal, affecting the employability and salaries of individuals for up to five years after dismissal. The study was the subject of a report by "Valor Econômico", which highlighted the persistence of difficulties faced by workers after leaving the formal market, including a greater risk of falling income and lasting obstacles to professional relocation.
Two years after the dismissal, the probability of being employed in the formal sector is still 23.8 percentage points lower among workers affected by a mass layoff, when compared to their peers in companies that did not experience this type of event. Even five years later, the difference remains high, at around 15.2 percentage points. These numbers show the slowness of the reintegration process and the structural difficulties that limit the resumption of a stable professional trajectory.
Among workers who manage to relocate, wage losses are also significant and persistent. In the first year after dismissal, earnings are, on average, 7.5% lower compared to the control group. This gap narrows over time, but it does not disappear even at the end of five years, as wages still remain 1.8% lower than those of workers who did not face the same type of interruption.
These impacts are not homogeneous. Workers who were employed in smaller companies face the greatest obstacles to re-establishing themselves in the labor market, both in terms of time and remuneration. On the other hand, those who came from companies with more than a thousand employees tended to have higher reemployment rates and more moderate wage losses. This pattern may reflect the presence of broader professional networks, greater reputation of companies in the market, and greater accumulation of formally recognized human capital.
Differences also appear between economic sectors. Sectors such as Processing Industry, Agriculture, Trade, and Electricity and Sanitation concentrate the greatest losses, both in relation to the probability of re-employment and income. Activities such as Information Technology, Financial Services and Communication show greater resilience, with faster recovery of jobs and less loss of income. These distinctions suggest that the effects of a mass layoff also depend on the dynamism and structure of the sectors, as well as the demand for specific skills.
