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With almost 25 years of stagnation in income per capita, solidifying the worst distribution of income and wealth, the irresponsible link to short term international capital, and the permanence of neoliberal style political economy during the 1990s could not result in a scenario other than the predominance of poverty and the advance of social disintegration.

Social Exclusion in Brazil and the World

 Marcio Pochmann[1]

 Social exclusion has generally been treated in Brazil with an initial focus related to the restriction of income.  Poverty lines are defined and from there programs of transferring income are structured, often neglecting the broader reality of the labor market.[2]

 Little priority has been given to the new processes of generating social exclusion, nor to the relation between social exclusion and concentration of wealth.  This text seeks to start from these focuses, in addition to pointing toward a new methodology of calculating social exclusion that might be able to serve as a parameter for international comparisons. 

 In the Brazilian case, social exclusion is configured as an unquestionable mark of Brazilian capitalist development.  Slavery, predominant during more than three centuries in the country, presents itself as the regime of social exclusion par excellence.

 Only after the Revolution of 1930 did the country move to spread political rights. On the other hand, the presence of social rights, strengthened by the Getúlio Vargas government, was confined to, and only to, formal wage earners who were employed in the cities.

 The majority of the population, which was located in the countryside, remained legally excluded from access to social and labor rights until the 1960s.  With the Rural Worker Statute, in 1963, and the installation of Funrural, in 1967, the rural population moved to having gradual access to social and labor rights.  These were equalized among the rural and urban populations only in 1988, after the ratification of the new Federal Constitution.

 In fact, the Constitution of 1988 outlawed the concept of regulated citizenship that permitted the access to health and social welfare only for employees with a formal labor contract.  The advent of the Single Health System (SUS) and the innovation of social security expanded access to social rights since the practice of universalization of rights was practically nonexistent.  Only in 1974, for example, was there constituted, for the first time, the offering of non-contributory social benefits (Program of Social Integration and continued value benefit).

 Despite that, social exclusion in Brazil remained as a serious problem.  On one hand, the old exclusion continued being the mark of less developed geographic regions confronting the permanence of poor education, absolute poverty and income inequality.  On the other hand, the new social exclusion also shows its face in Brazil today, expanding rapidly through long-term unemployment, youth alienation, poverty in single-parent families, and absence of educational opportunities.

 In spite of a significant economic advance, with an average annual rate of the Gross Domestic Product of almost 7.5 percent, it is noted that during the period between 1960 and1980 the majority of the population ended up not having satisfactory access to the results of this progress.

 On the other hand, for the period between 1980 and 2000, the evolution of social exclusion suffered a profound modification.  Contrary to what occurred earlier, there was a combination of the low expansion of economic activity with the advance of the democratic political regime (1985-2000).

 The return of Brazilian democracy, with reorganization of political party life, and with strengthening of unionism and of social organizations, was accompanied by the absence of sustained economic growth. 

 Between 1980 and 2000, the national per capita income grew only 0.36 percent as an annual average, well below that which was verified in the earlier period (1960-1980) when the per capita income increased on average 4.58 percent annually.  In addition to certain stagnation in the evolution of national per capita income, economic constraint was linked to the predominance of a strong oscillation in economic activity, accompanied by the manifestation of a long hyperinflationary regime (1979-1994).

 In the face of the weak economic behavior, the performance of the labor market was negative. The country also registered a significant elevation in unstable occupations (work without registration, self-employment, and working without pay) as well as unemployment.  The latter grew to an annual average rate of more than 13 percent during the 1990s, while the informal occupations increased, on average, 2.4 percent annually.  The brutal loss of participation of wageworkers in the national income – a drop from 45 percent to 36 percent throughout the 1990s – also reveals a process of de-structuring the national labor market.

 In the same way, tax reform that would establish fiscal justice continues to be postponed.  While rich people practically do not pay taxes, poor people contribute to the majority of the fiscal burden. The absence of social reform to guarantee a fair distribution of income ends up imposing not only greater inequality of wealth, but also an additional pressure inside the labor market.  In the face of insufficient income, the country has more youths prematurely leaving the school system, at the same time that retired and pensioned people are not quitting their working positions.

 This is not to say that the country has remained socially stagnant in the last forty years.  The re-democratization and the ratification of the Constitution of 1988, contributed for an improvement in the educational and health indices.  But, simultaneously, in the last twenty years, social exclusion was reinforced by new processes.

 In this sense, the old social exclusion did not disappear.  The problem of the low levels of income and education remain, but now under a new form.  Unemployment and informal labor contribute to breaking social ties in a society that is each day more competitive, where there exists a thirst for more sophisticated patterns of consumption and in which violence unfolds as the fullest symptom of social breakdown.

 In societies profoundly unequal and with low economic dynamism, as is the Brazilian case, the expansion of social exclusion only ought to be understood as the other face of a sterile process of concentration of income and wealth. 

 During the period between 1980 and 2000, there was an increase of the percentage of rich families, from 1.8 to 2.4 percent.  Secondly, the average income of rich families went from ten to fourteen times the average income of all Brazilian families.  The city of São Paulo, which had 23.4 percent of the country’s rich families in 1980, jumped to a participation in the country’s total “richness” of forty percent.  Finally, in 2000, it is verified that the ten cities with the greatest number of rich families concentrated sixty percent of the income of the country’s well-off families.[3]

 This means that the expansion wealth is no longer associated with a long cycle that involves investment and the building of productive chains.  To the contrary, it conforms to a restricted cycle of expanding the wealthy, who instead of generating jobs, destroys the system of production and labor.

 Thus, there is a need for creating new parameters for measuring social exclusion. 

An attempt to surpass this limitation was the creation of an indicator of Social Exclusion (IES), to verify new social and economic indices, especially in Latin American countries.[4]

 The IES data indicates that Brazil has one of the worst distribution of income on the planet, together with Sierra Leone and Guatemala, and has rates of homicide higher than countries in a situation of civil war.  Thus, Brazil is the fifteenth world economy, with the 31st highest income per capita.

 With almost twenty-five years of stagnation of per capita income, with solidification of the horrible distribution of income and wealth, the irresponsible linking to short term international capital, and the retention of neoliberal style political economy in the 1990s could not result in any other scenario than that of the predominance of poverty and the advance of social disintegration.

[1] Adjunct professor at the Institute of Economy and researcher at the Center for Union Studies and Labor Economics at the State University of Campinas.  Municipality of São Paulo Secretary of Development, Labor, and Solidarity.

[2] For an alternative focus, aligned to access to universal policies, and that articulates income transfer programs to emancipating programs, see the experience of the São Paulo Prefecture, Outra Cidade É Possível: Alternativas de Inclusão Social em São Paulo (São Paulo: Cortrez, 2003).

[3] See this information in Atlas da Exclusão Social: Os Ricos no Brasil, volume 3, São Paulo: Cortez, 2004.

[4] Atlas da Exclusão Social: A Exclusão no Mundo, volume 4, São Paulo: Cortez, 2004.