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By Silvio Cascione
BRASILIA, April 29 (Reuters) - Brazil's unemployment rate rose sharply in the first quarter, government data showed on Friday, with 11.1 million workers unsuccessfully looking for a job as a severe recession entered its second year.
Brazil's national unemployment rate rose to 10.9 percent in the first quarter, up from 9 percent at end-2015 and 6.5 percent at end-2014, statistics agency IBGE said.
Wages discounted for inflation dropped 3.2 percent from a year earlier to an average of 1,966 reais ($563).
"We expect the labor market to deteriorate further," Goldman Sachs economist Alberto Ramos said in a note. "Policy tightening, weak consumer and business confidence and tighter financial conditions are expected to lead to a higher unemployment rate in 2016 and negative real wage growth."
Brazil's economy is expected to contract nearly 4 percent for a second straight year in 2016 as a ballooning budget deficit and a corruption scandal put the government of President Dilma Rousseff on the brink of impeachment.
The unemployment rate is set to continue rising and is unlikely to drop before 2018, according to most economists surveyed in a recent Reuters poll.
Unemployment benefits were set to expire for more than 2 million people in the first half of this year, according to data obtained by Reuters, in a threat to years of progress against poverty in one of world's most unequal countries.
The national unemployment rate replaced a narrower monthly calculation discontinued last month by IBGE that covered only Brazil's six largest metropolitan areas.
In February, the monthly jobless rate stood at 8.2 percent, the highest in nearly seven years.
$1 = 3.4872 Brazilian reais Reporting by Silvio Cascione; Editing by Bill Trott