Perhaps the low unemployment rates in Brazil can now be explained.

Bloomberg has recently reported the case of a Brazilian metal worker who didn’t lose his job in a Mercedes-Benz (DAI) bus and truck plant when demand slackened earlier this year. Instead, he and 1,500 colleagues got a five-month furlough, the equivalent of full pay and benefits — and are still counted as employed.

According to the article, such labor deals have helped keep Brazil’s jobless rate at record monthly lows even as the economy slows. One reason joblessness remains stable is that companies expecting an economic recovery are hesitant to fire skilled workers to avoid costly severance packages. “Employers are looking to the future and betting there will be an improvement in the second half and in 2013,” said a labor expert.

“If the economy does not rebound, unemployment could balloon,” said FGV economist Rodrigo Leandro de Moura.

“The third and fourth quarters are critical,” said a manufacturing executive. “If we don’t see growth, we can’t maintain employment.”

Source: Bloomberg

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