Loss of Workers’ Rights and Precarious Nature of the Labor Market - 06/17/22
By Paula Marcelino
Brazil has a historically restricted and exclusionary labor market. Many people work without any type of contract. At only one moment over the last century, during Dilma Rousseff's first term as president (2011-14), has more than 50% of the working population been employed with a formal contract. Today, in 11 of the 27 Brazilian states, there are more informal than formal workers, that is, people who do not have a labor contract or receive the minimum wage. The result is that a large percentage of the population that works remains below the poverty line, surviving on less than US$1.90 a day. In most Brazilian cities (2,892 out of 5,570) there are more people receiving federal government assistance for families that are demonstrably in poverty (Auxílio Brasil, a successor to Bolsa Família, which grants approximately US$85.00 a month), than people with formal employment contracts.
In Brazil, a country with a dependent economy, with late and deficient industrialization and a history of high unemployment rates, the process of formalizing the employment contract has always been a means of poverty reduction. This formalization was regulated at the federal level, roughly speaking, with a set of laws formulated in the 1940s and expanded with the 1988 Constitution. A formal contract guarantees, for example, that a worker receives an indemnity allowance if dismissed without just cause, paid vacations, paid health and maternity leave, and regulation of working hours, among other benefits and protections. Working under a contract with labor law protection had been increasing in Brazil, but has regressed since the impeachment of President Dilma Rousseff in 2016. Over the last six years, many measures have been implemented and laws have been changed that made the job market in Brazil even more precarious and exclusionary. I will address the four most important measures.
1) As soon as Michel Temer took office in 2016 after the impeachment of President Rousseff, he adopted a policy of radical austerity, instituting, through a constitutional amendment (EC 95/2016), a spending ceiling that limits for twenty years the growth of federal government expenditures. Never in the country's history, not even during the twenty-one years of military dictatorship, has there been such a radical austerity measure. The spending ceiling imposes a sharp cut in federal expenditures in health, education, and infrastructure, signaling the abandonment of the neo-developmentalist policy of the Workers' Party governments. This new policy under Temer was associated with the consequences of the Lava Jato Operation, which was a judicial operation theoretically directed against corruption. It was quite irregular and, in many ways, corrupted, leading to the near paralysis of civil construction, a sector of the economy that hired the greatest number of workers. Since then, overall, unemployment rates have gone up.
2) Also under the Temer government Congress approved Law No. 13,429/2017, which allows unlimited, unrestricted outsourcing in all activities of private companies or the public sector. What's more, the law also allows for so-called cascade outsourcing, that is, a company already outsourced, subcontracts other companies, in an infinite chain. Studies show that over the last years outsourcing in Brazil has been the biggest factor in the reduction of wages, the precariousness of working conditions, and the externalization of conflicts of a union nature. There are simply no known cases that refute these first two factors.
3) Temer's interim government rushed to implement reforms to make the workforce cheaper. Thus, in November 2017, a labor reform was approved. It relaxed more than 100 articles of labor protection legislation and union regulation, as well as reduced the chances of access to and the power of the Labor Court system, traditionally the branch of the judiciary most favorable to workers. This affected working hours, the regulation of overtime, conditions for dismissal, and types of contracts. Virtually nothing escaped the flexibilization that overwhelmingly favored employers to the detriment of pay and working conditions. Five years later, there is no data that proves that the promise of the labor reform, namely, the creation of jobs, has been fulfilled.
4) In November 2019, under the Bolsonaro government, a pension reform came into force (Constitutional Amendment 103/2019). It established a minimum retirement age (65 for men and 62 for women), which especially affects workers who enter the labor market earlier, who will be obliged to contribute for a longer period of time until they reach the minimum age. In addition, due to the increase in informal labor relations and the precarious nature of work contracts, expanded by the labor reform, most workers do not contribute to the social security system, so they cannot accumulate the necessary contribution time to be able to retire with a pension.
While the Bolsonaro government has offered no indication that it plans to modify the current precarious nature of employment in Brazil for a large segment of the population, presidential candidate Luiz Inácio Lula da Silva, who is currently ahead in the polls, has promised to revisit and revise if not overturn many of the provisions in the new labor legislation that are considered by most experts to be harmful to the interests of Brazilian workers.
Paula Marcelino is a professor at the Department of Sociology at the University of São Paulo (USP), Brazil. She has published books and articles on outsourcing, precariousness of work and unionism in Brazil. For the English-speaking reader, the following readings are indicated: The Brazilian Union Movement in the Twenty-first Century: The PT Governments, the Coup, and the Counterreforms. Latin American Perspectives, v. 47, 2020.
