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English Report

According to the 2003 United Nations Develop Program (UNDP), Brazil finished the twentieth century with the sixth worst distribution of wealth in the world, behind only Namibia, Botswana, Sierra Leone, the Central African Republic and Swaziland. Unemployment in greater São Paulo is currently in the neighborhood of twenty percent. That is to say, of one out of every five workers is unemployed. This problem is still worse in Salvador, Bahia, where unemployment reached the thirty percent mark-of every three workers, one is unemployed.

Work in the first months of the Lula Government

Paulo César Pedrini*

One of the greatest challenges, if not the greatest, facing Brazilian society is the immense social injustice that exists in our country. This was confirmed recently in "Twentieth Century Statistics", published recently by the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística, IBGE). Economist Celso Furtado said the following at the release of this document,

"The problems are all exposed. No one doubts that it is necessary to distribute wealth, but no one does anything about it. The problem is much more the chronic immobility of a society that has no will to change itself. We accept the problem and the diagnosis, we show our respect, preach and give homage, but afterwards…."

The twentieth century was one in which Brazil increased its wealth but did not distribute it. In one hundred years the total wealth of the nation grew by almost a factor of twelve in relation to population. Nevertheless, the distribution of wealth became worse in the second half of the century. In 1960, the wealthiest ten percent earned thirty-four times that which was earned by the most impoverished ten percent; in 1991 the wealthiest made sixty times more, while in 2001 it diminished to 47 times more.

The concentration of wealth is the so large that, at the turn of the century, the wealthiest one percent of Brazilians earned virtually the same as the lowest fifty percent. Inequality is the Brazilian national trademark-inequality of wealth, race, class and region.

Between 1901 and 2000, the gross domestic product grew more than a hundred-fold, from 9.1 billion to one trillion Reais. In the same period, the population grew by nearly ten times, from 17.4 million to 169.8 million inhabitants.

According to the 2003 United Nations Develop Program (UNDP), Brazil finished the twentieth century with the sixth worst distribution of wealth in the world, behind only Namibia, Botswana, Sierra Leone, the Central African Republic and Swaziland.

In all of the 20th century, Brazil had the second-highest rate of economic growth in the world (on average, 4.5% per year), equal to South Korea and only surpassed by Taiwan, at 5% per year. However, this growth did not represent an improvement in the distribution of wealth.

The external debt crisis of the 1980's also reduced the income of the average Brazilian. From 1981 to 1999 the average income of a worker lost 7.5% of its value, falling from R$ 485.53 to R$ 449.00.

In the six principle metropolitan regions of the country, average income (corrected for inflation) fell 18.5% from May, 1983 to December, 2000. The minimum salary in Rio de Janeiro and Sao Paulo lost nearly 50% of its purchasing power between the time of its highest value (1958 to 1960) and the end of the century.

In order to understand the problems of work it is necessary to review some key problems inherited from the Fernando Henrique Cardoso government, for unemployment grew during this period and, in general, the situation of the worker was made much more precarious.

During the entire duration of the Plano Real, that is to say, eight and a half years, the inflation rate was165%. In this same period, administrative prices for public services grew by 291.6%, more than double the inflation of that which was regulated by the market-143.3%. This penalized, primarily, the lower classes.

Let us look at several examples of inflation in products the prices of which are controlled by the government: Natural gas, (513.1%), diesel oil (364.4%), gasoline (279.9%), combustible alcohol (198.4%), telephone (679.5%), mail (342.7%), train (247.6%), bus (239%) and subway (202.1%).

Some private services also had price hikes comparable to those of public services, such as insurance and medical coverage (572.2%), rent (420.5%), formal education (342.4%), which were much higher than the index of practical items offered by the market, such as beans (359.9%), fruit (300.3%), oil (290%), tomatoes (282%), latex paint (253.3%), cement (212.4%), french bread (205.3%) and soy oil (201.3%).

At the end of the previous government unemployment was up. The annual average rate was of 19% of the economically active population, while in 2001 this figure was 17.6%. The contingent of unemployed, just in the metropolitan region of Sao Paulo, was around 1,800,000 workers.

This high level of unemployment affected all segments of the population, people of 8-24 years (12.3%), men (10.1%), youth of 15-17 (9.6%) and heads of families (8.7%). It also affected all levels of education, those with full or partial secondary education (16.6%) and those who completed a university education (16.1%).

In addition, between 2001 and 2002, the time necessary to find a job increased from 48 to 51 weeks, and the group of those unemployed for more than a year increased from 22.3%, in 2001, to 24.1% in 2002.

Employment of unsalaried workers in Metropolitan Sao Paulo remained practically stable (0.4%), since there had been an improvement in that sector in the previous two years. Industry, meanwhile, generated 13 thousand new jobs, much less than the 107 thousand in the 2000/2001.

In business there were 3 thousand fewer positions and in services nearly 8 thousand. Both sectors maintained relative stability: self-employment grew 2.7% and the average working week went from 43 to 44 hours.

In 2002, as in other years, there was a decline of average income for unsalaried and salaried workers, 8.3% (R$889.00) and 7.5% (929.00) respectively.

One point about which many spoke, though with little depth, was the relation between interest rates and the life of the worker.

Interest is the value paid on top of contracted debt. It can be simple, when it is calculated on the quantity of capital, or compounded, when unpaid interest is added to the loaned capital, forming an amount on the basis of which the following amount of interest is calculated.

Interest, in simplified form, is always the financial compensation of a lender of the granted loan. The ANOTE-the electronic bulletin of the Inter-Union Department of Statistics and Socio-Economic Studies (Departamento Intersindical de Estatística e Estudos Sócio-Econômicos, DIESSE)-of July, 2003, contains a very useful explanation of the "Selic rate" and its effects, in language understandable by workers.

"The Selic interest rate is defined as the overnight rate of the Special System of Liquidation and Protection (Sistema Especial de Liquidação e Custódia, Selic). It is an average rate weighted by the volume of financial operations in one day, based on federal public titles in the form of committed operations that have been generated in the Selic system. It is fixed by the Central Bank of Brazil and is the basic rate used as a reference for monetary policy-the complex of measures adopted by the government with the aim of adjusting the resources of available payments (cash) available for the economic necessities of the country.

As the Selic rate is employed in the market for the inter-bank operations of one day and functions as a basic reference for interest rates, it affects the life of a worker, for the increase or decrease in basic interest naturally raises or lowers the rates charged by banks on the credit they extend to consumers or businesses.

The justification presented by the government for the maintenance of high interest rates is to control inflation, to attract external capital and to maintain the economy at levels considered reasonable.

The lowering of interest rates is a demand that unifies capital and workers alike, such that workers and businesspeople consider high interest rates an obstacle to economic growth and the job creation that follows from it. Beyond this, it is their view that there is no longer a motive to maintain high rates now that inflation is under control.

According to Central Bank facts, expenses in the public sector from the payment of interest grew 68.8% between January and August of this year, in relation to the same period last year. Up until August of this year, interest expenses came to R$ 102.417 billion (10.2% of the Gross Domestic Product), while this total in the same period last year, remained at R$ 60.689 billion (7.17% of GDP). This is reflected in the elevation of the Selic rate which makes up, approximately, half of the debt of the public sector.

Between January and August, 2003, the Selic rate remained at 16.17%. On average, these were the interest rates that effectively occurred over the greater part of the debt.

The government sought a better equilibrium through the primary surplus, which remained at R$ 49.293 billion (4.91% of GDP) as against R$ 37.363 billion (4.41% of GDP) for the same period of 2002. The primary surplus of August was R$ 4.964 billion, the equivalent of 3.68% of GDP (Financial Page, Folha de Sao Paulo, September 30, 2003).

Although these facts seem to be something remote from the person on the street, they directly affect the life of our people, because funds to make up the primary surplus are taken from the budget, principally from the social areas, resulting in a larger displacement to be accounted for.

According to the DIEESE, in 2002, only 54.7% of collective bargaining resulted in salary increases equivalent to or larger than the annual variation of the INPC-IBGE, which represents a significant loss in relation to 2001, when close to 64% of the researched categories attained salary increases equal to or higher than inflation.

Of the 149 salary negotiations registered by the DIEESE in the first six months of 2003, only 46% resulted in increases equivalent to or greater than the variation of the INPC-IBGE; the majority (54%), therefore, did not ensure the recuperation of the purchasing power of salaries.

This is the first time since the extinction of the salary policy that the majority of analyzed collective agreements have resulted in salary increases that are less than the integral variation of the INPC-IBGE. Even in the first half of 1999, considered the worst period for salary negotiations, 55% of the categories achieved increases equivalent to the official rate of inflation.

Various factors contributed to the difficulty of the recomposition of salaries researched in the first half of year. Inflation remained at very high levels (14-20%). Very low economic growth and high interest rates contributed to the hardening of the stance of management in collective bargaining.

This year 33% of the agreements have been analyzed so far. In 63% of the cases, workers have already been overburdened by the establishment of agreements insufficient for the replacement of accumulated inflation. In the remainder (37%), the agreements negotiated were equal to or slightly superior to the INPC-IBGE.

The real average income, in six metropolitan regions in the month of August, was at R$ 847.90 (close to 3.5 minimum salaries). Compared to the average general income estimated in August, 2002 as against August, 2003, we verify a loss of 13.8% of the total in these six regions-Recife: 19.2%, Salvador: 5.4%, Belo Horizonte: 12.5%, Rio de Jameiro: 18.1%, Sao Paulo: 12.2% and Porto Alegre: 8.5%.

At the same time as we are aware of the immense social injustice existing in our country, we see the indifference of public authorities with respect to the diminishment of inequality in basic sectors, such as education.

Research carried out by the National Confederation of Education Workers (Confederação Nacional dos Trabalhadores em Educação, CNTE) demonstrated that the average salary of basic education workers is in the range of R$ 500 to R$ 700, much less than is necessary to ensure dignified conditions of existence for any professional, especially because their work demands exclusive dedication, time for training, practice and the perfection of method-much less the conditions for the consumption of cultural goods.

Research of the United Nations Commission for Education and Culture (UNESCO) and the Organization for Cooperation and Economic Development (OCED) revealed that education workers have one of the worst salaries of 32 countries of equivalent economies, which demonstrates the failure to prioritize education in public policy.

Brazil is losing teachers. The scarcity of teachers in technical areas, mathematics, chemistry and physics, in the public system is visible and is increasing, as is also the case in other disciplines.

Analysis of the results of CNTE research shows that Brazilian education will rapidly veer toward collapse if public authorities do not implement policies that improve the working conditions such as to attract new professionals.

The most up-to-date research on unemployment to which we have access is with reference to August, 2003. This research points out that better education does not guarantee work. With respect to years of study, unemployment reaches 17% for those who went to school from 8 to 10 years, 12.7% for those without schooling or with less than eight years of regular study and 11.4% for those with 11 years or more of schooling.

Unemployment also affects more women than men. Among the unemployed women are the majority (54.4%).

The sector most penalized by the lack of work, however, is young people. Every year the number of people searching for work but who are not absorbed by the labour market increases. When they do get jobs they face the other problem-that they will likely be paid less. Employers can also simply substitute for older workers such that no new jobs are created and capital just extracts that much more profit.

The estimate of the number of economically active people in a comparison of July and August of 2003 shows an increase of 1.1%. In comparison with last August, the rate of growth was 5.1%, meaning that there was an increase of approximately 1.024 thousand people in the workforce.

According to DIEESE, the basic basket of goods in August would cost R$ 207.57, remembering that the minimum salary is R$ 240.00 and the minimum necessary salary would be R$ 1.396.00. With this we also have a loss in purchasing power in the order of 15% from August, 2002 to August, 2003.

What we thus see is a constant worsening in the quality of life of Brazilians-not only as a result of unemployment. The fact that salaries increase below the rate of inflation is important. Those who make less, eat less and eat food of lower quality. This decline of standards is also reflected in sectors like health and education. Unemployment insurance payments in relation to 2002 grew 10.5% in Brazil and 4.5% in the state of Sao Paulo.

It is worrisome that the Brazilian government constantly claims that economic growth will be the solution to unemployment and exclusion. There are basically only two ways to reduce poverty: the growth of the economy or the redistribution of wealth. The Brazilian model has always been to attempt to diminish the difference by growth, but this has not produced results.

During the military regime, the then Minister of Planning, Delfim Netto, said that it was necessary to make a cake in order to later divide it up. These were the times of the economic miracle. The great majority of the Brazilian population is waiting for its slice to this day.

Unemployment in Greater Sao Paulo is now in this neighborhood of 20%, or one of five workers. Unemployment is still worse in Salvador, Bahia, where unemployment reached the 30% point-one in three is unemployed.

The unemployment question is one of the greatest challenges facing the current government, and this is aggravated by labour insecurity and the growth of informal work. The working world in Brazil is in a state of unprecedented crisis.

We know that pressures from foreign capital are enormous (demands for reform, of the primary surplus, the establishment of the Free Trade Zone of the Americas, and payment of the external debt. The reform of welfare has already damaged the working class. It is necessary that workers mobilize themselves to defend their interests so as to press for labour and union reform, for the risk of the loss of rights grows even greater.

The Lula government was elected with the great hope of constructing a country in which social justice was the primary goal. However, up until this moment what we see is an aggravation of the situation inherited by the previous government. Nor do we see, to make matters worse, any change in the bearings of the economy. The primary surplus mentioned earlier is being raised in accord with the demands of the International Monetary Fund and we know that good intentions will not be enough.

This is the question: if the government continues taking money from social areas as it has been doing (including from Hunger-Zero) so far, in what way will they realize their priority?

* Paulo Cesar Pedrini is an historian and coordinator of the Workers' Pastorate of São Paulo.


-Bulletin-Electronic information of DIEESE of January to August, 2003.
-"Statistics of the the Twentieth Century", IBGE.
-Employment Research Manual of the IBGE (August, 2003).
-Research Report on the Situation of Primary Education Workers (CNTE).
-Folha de Sao Paulo, Financial page, September 25.
-Folha de Sao Paulo, special section on the Twentieth Century, September 30.