BRAZIL: Labour Deregulation Crosses the Border

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Jan 13 1998 (IPS) - Brazil is preparing to deregulate the labour market, imposing programmes already applied in Argentina and Spain with questionable results.

The Senate will vote on the temporary contracts for workers this week after the Constitution and Justice Commitee accepted the project by a sweeping 13 to four majority last week.

There is a sort of liturgy imposed by the economic globalisation of the developing countries, said former deputy Marcio Moreira Alves in comments to Brazilian daily O Globo.

“Firstly the opening of frontiers” to foreign trade and capital followed by “the increase of industrial production, then the privatisation of state companies and, finally, the reduction of the social cost of jobs,” he said.

The deregulation of the labour market means Brazil is now entering the “last stage,” with the last remaining State monopolised areas, like telecommunications and electricity undergoing privatisation.

The permanent delays in these apparently inevitable processes have led to Brazil being dubbed “the Argentina of tomorrow,” in a popular adaptation of an advertising slogan for a drink which leaves drinkers hangover free the next day.

Now the plan is to repeat in Brazil what the Argentine unions termed “rubbish contracts,” allowing companies to employ workers for up to two years, without paying any substantial welfare contributions.

The measure is arriving in Brazil at a moment when Spain is reevaluating temporary contracting, as rather than reducing unemployment, it simply led to “an absurd turnover” in jobs, said Marcio Pochmann, coordinator of the Union and Employment Studies Centre in the University of Campinas.

For while temporary employment accounted for a third of all jobs in 1994, Spain still had one of the highest unemployment rates in the world.

An agreement between the unions and the employer’s groups last April amounted to a U-turn on this type of deregulation in an attempt to recover some stability in the work market, said Pochmann.

In Argentina, various measures were imposed to make workers cheaper as unemployment soared to 18.4 percent in 1996. This index has since dropped some points, but at the cost of making employment far more unstable.

Meanwhile, a pitched battle has been fought over labour legislation in Brazil in recent years. The Single Workers Union (CUT), the biggest union organisation in the country, is fighting for a shorter working day, with no loss in salary, as a way of creating millions of new jobs.

Another union group, Fuerza Sindical, recently accepted an agreement with the vehicle parts industry in Sao Paulo, offering reduced working days with corresponding, but proportionally smaller, reductions in pay.

The battle is also being waged in statistics. While the last open unemployment index, measured by the governmental Brazilian Institute of Geography and Statistics estimated this at 5.35 percent, the Interunion Studies Department said it was closer to 16.6 percent.

And the difference is largely due to the methodology used. The first figure refers to all the metropolitan areas of Brazil and the amount of people seeking work in the last week, while the union figure refers only to Greater Sao Paulo, covering data for a month of jobseeking, including anyone over the age of ten years- old.

One argument used by the business sector and the government is that the cost of employment is very high in Brazil, despite the low salaries, because the welfare payments increase costs by 102 percent.

The unions reject this equation, as it includes weekends, public holidays, vacations and the thirteenth salary, which they do not accept as welfare contributions, but part of a normal pay arrangement.

Jose Pastore, professor at the University of Sao Paulo, and advisor to the National Industry Confederation, leads the academic attacks on Brazilian labour legislation, criticising it as being outdated – at more than 50 years-old – and overly rigid.

It is a legal system which encourages dischord and conflict and jams up the labour law system – there were 2.5 million court cases in 1996 compared to only 1,000 in Japan and 75,000 in the United States, said Pastore.

The Brazilian legislation was established during the presidencies of Getulio Vargas, 1930-45 and 1951-54. And the spirit of protecting the worker survived the last military dictatorship (1961-85).

President Fernando Henrique Cardoso announced the end of the “Vargas era” when he took power in 1995, alluding mainly to nationalism, state monopolies and the paternalistic manner of doing politics, but sweeping the social laws along with them.