Employmentweb_low

policies and interventions
case study 99. Potential explanations for the recent positive trends in employment conditions in brazil. - vilma santana
informal work has grown in brazil between 1992 and 1999, when it became 56 per cent of the labor force. this was worse in the
countryside, where some municipalities had up to 70 per cent rates of informal jobs (instituto brasileiro de geografia e estatística [ibge],
2007). several hypotheses about the potential causes of this situation have been debated by academics and government officials, who
considered informality as a major drawback for productivity and economic growth. a number of economic reasons have been raised
(pochman, 2000; barros & Mendonça, 1996; Mckinsey & company, 2004) such as high taxes to hire and maintain a formally employed
worker, bureaucratic difficulties and high taxes to register small firms, which would encourage small entrepreneurs to keep their business
illegally unregistered and employees not legally hired. indeed, for each formally hired worker in brazil, taxes are 100 per cent of the
corresponding wage, one of the highest rates in the world. there are also complaints about the high burden of presumed workers'
privileges that are rights assured by the labor law enacted in the late 1940's. although there has been too much pressure to reduce
workers' protection such as job stability, indemnities for unjustified firing and labor-related taxes, there has also been organised resistance
by labour unions and social movements against these proposed changes. between 1999 and 2008, without any important change in labour
legislation, taxation policy or social insurance norms or coverage, there has been a minor but steady decrease in the country’s informal
employment rate (see Figure). during this time, there has been a historical strengthening of social policies focusing on the poor. thus,
among the social initiatives focusing mainly the extreme poor are educational incentive programmes and, for creating small firms, cash
transfer programmes such us the bolsa-escola, and a national programme against child labour. More recently, there was a reduction of
the interest rate and an expansion of credit, increasing internal consumption and demand, which boosted economic production. cash
transfer programmes apparently played an important role for the increase of internal consumption. along with the decrease of informal
jobs, there have been other positive changes regarding employment conditions and income distribution. Unemployment also fell from 12.1
per cent to 8.5 per cent between 1999 and 2008.
the brazilian economy has been growing and social inequalities have been falling steadily, as shown by a decrease in the gini index.
national population-based surveys have also shown that the proportion of the extreme poor and that of the working poor are falling, although
the latter is doing so on a smaller scale. no major changes in the labour law occurred during this time. this provides evidence that, without
the flexibility of workers' rights or tax reduction, it is possible to change a scenario of unjust employment conditions and improve economic
growth. in spite of the moderate improvement in employment conditions, the current poor indicators of occupational health and safety reveal
not only the need to establish stronger policies to keep improving employment conditions for both informal and formal workers, but also the
need of interventions to substantially improve working conditions and the effective application of existing norms and regulations.
Figure. proportion of informal jobs in Brazil (1992-2004).*
percentage
60
50
40
30
20
10
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
years
source: pesquisa nacional por amostra de domicilios (pnad, ibge).
*definition of informality: (workers without formal contracts + own account workers) / (protected workers + workers
without formal contracts + own account workers)
references
barros, r. p., & Mendonça, r. (1996). os determinantes da desigualdade no brasil. in A economia brasileira em perspectiva
(pp. 412-473). rio de Janeiro: instituto de pesquisa e economia aplicada.
instituto brasileiro de geografia e estatística. (2007). retrieved from http://www.ibge.gov.br/english/
Mckinsey & company. (2004). Eliminando as barreiras ao crescimento econômico e a economia formal no Brasil. retrieved
February 27, 2009, from http://www.mckinsey.com/ideas/pdf/diagnostico_da_informalidade-final.pdf
pochman, M. (2000). O trabalho sob fogo cruzado (2nd ed.). são paulo: editora contexto.
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