LABOUR-BRAZIL: Unions Fear Energy Crisis Will Result in Lay-offs

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, May 25 2001 (IPS) - Brazil’s central trade unions have begun to mobilise to prevent the lay-offs they expect from an energy rationing plan, to go fully into effect on Jun 4.

“The dismissals have already begun, even before the measures have come into force – and where they were least expected, in a lamp factory,” Paulo Pereira da Silva, the president of Forca Sindical, the country’s second-largest central trade union, told IPS.

One firm, Osram, anticipated the effects of the rationing by sacking 54 of the 600 employees working in its Sao Paulo incandescent lamp factory, because clients have begun to buy fluorescent fixtures, which consume less energy, the trade unionist pointed out.

The Central Unica de Travalhadores (CUT), the country’s biggest labour confederation, announced several protests, including one by the local metal-working union in Sao Bernardo do Campo, the capital of Brazil’s car-making industry, on Friday.

The 30,000 employees of the country’s state-owned power companies also resolved to hold a “warning” strike on Jun 1, to demand a seven percent raise, guarantees against lay-offs, and better working conditions.

The unions have suggested that the government of Fernando Henrique Cardoso reduce the work-week from 44 to 40 hours, in order to curb unemployment.

Labour activists also argue that in order to compensate for the losses resulting from the rationing measures, authorities should approve tax breaks that would enable companies to lower their costs without cutting wages.

The energy rationing plan will likely drive up unemployment, which stood at 6.5 percent of the economically active population in this country of 170 million in April, the Brazilian Institute of Geography and Statistics (IBGE) said Thursday.

The magnitude of the increase in joblessness will depend on the reaction of the companies, which will have to choose between firing workers or reducing the work day and reaching other agreements with their employees, since “dismissals are expensive,” said Shyrlene Ramos de Souza, with the IBGE.

Preliminary rationing measures went into effect last Friday, including a 35 percent cut in public lighting and the cancellation of night-time sporting events.

But the bulk of the national rationing plan aimed at cutting consumption – from the average registered last May, June and July – by 20 percent, will begin to be implemented in early June. Households and businesses will have to reduce their electricity usage by 20 percent, or pay heavy surcharges for failing to do so.

Consumers who fail to reach the target in July will be subject to three-day power cuts, and repeat offenders will suffer six-day cuts.

Energy consumption between 200 and 500 kilowatt-hours a month will pay 50 percent more than the current rate, while consumption over 500 kilowatt-hours will cost three times the normal rate.

Companies and homes that use less than 200 kilowatt-hours will be encouraged to save even more than 20 percent with additional discounts.

The government plan is aimed at preventing widespread power outages in southeastern, northeastern and central-western Brazil, the regions affected by drought and facing future energy shortages. However, the possibility of scheduled blackouts has not been ruled out.

A special agency created to tackle the energy crisis by designing and implementing rationing measures will make a monthly report on society’s response to the savings plan. If the 20 percent reduction is not achieved, power cuts will be imposed, said the agency’s coordinator, Pedro Parente.

Economists at several local thinktanks predict that the rationing plan will lead to a one or two percent drop in gross domestic product (GDP) growth this year, which was initially projected at around four percent.

In consequence, the promised 400,000 new jobs this year will not be created, according to CUT president Joao Felicio.

But the dip in GDP growth has been underestimated, said Pereira da Silva, who forecasts a much larger drop.

The president of Forca Sindical said more than 100,000 jobs would be lost in the construction sector alone, because work on construction sites will have to come to a halt in order to reduce power consumption.

Finance Minister Pedro Malán is mainly to blame for the crisis, because he stood in the way of the investment needed for boosting the generation of electricity, despite numerous studies that have been warning for years that a power deficit was on the horizon, said Pereira da Silva.

The trade unions are demanding that the special agency created to deal with the energy crisis hear their proposals and discuss possible alternatives with them, in order to keep the workers from having to “pay for the government’s errors.”

Labour also questions the legality of the government’s measures. CUT has joined legal proceedings brought by the bar association, which argues that the surcharges to be applied to the biggest energy consumers and the power cuts to be used as punishment are unconstitutional.