I. THE LABOR MARKET DURING THE 1990s
Statistics from the Brazilian Geographical and Statistical Institute (Fundação Instituto Brasileiro de Geografia e Estatística — IBGE) reveal that, in 1990, 56.7% of the population above 10 years old (corresponding to 64.5 millions of Brazilians) were participating in the labor market either by having an occupation or by looking for jobs. In 1995, this percentage rose to 61.3%, representing a contingent of 74.1 million people. The working force grew 14.9% during that period, which meant an average increase of 1.9 million people per year.
The number of occupied people increased, between 1990 and 1995, in 9.954 million (16.7%). More recently, the data from the Monthly Employment Survey (Pesquisa Mensal de Emprego — PME/IBGE) indicate that the level of occupation in the metropolitan areas grew 1.8% in the January-December 1996 term.
Two questions arise: What type of jobs are the Brazilians finding in the labor market? And how many haven't found jobs?
The increasing participation of the employees with working papers in the total of occupied people was broken, in the past decade, by a significant modification that has been occurring since 1990 in the form of entering the labor market. In the metropolitan areas, the participation of the self-employed and of the employees without working papers in the total of the occupied people increased, according to data from IBGE, from 39.3%, in December 1990, to 48.0% in December 1996 (Graph 2). This means that, in spite of the rights guaranteed by the Brazilian Labor Code (CLT), a sharp decline in the degree of protection of the Brazilian workers by means of a working contract is occurring. These changes occur in the opposite direction from what would be expected from a classic standard of employment generated by a modern and capitalist labor market.
GRÁFICO 2 LEVEL OF INFORMALITY OF OCCUPIED
PEOPLE EVOLUTION
Note: The level of informality corresponds to the ratio of the self-employed and employees without working papers to the total of occupied people. Source: PME/IBGE |
The adverse conditions of the country's economy, present in the beginning of the decade, allied to a rigid labor law, led the workers to accept low quality jobs, or to seek a living as self-employed or as workers without working papers.
In addition, the greatest employment generation was displaced from the industrial activities, in the 1970s, to the service sector, in the 1980s and 1990s.
Growth of the Service Sector
In 1995, the tertiary sector already comprised 73.4% of the non-agricultural occupations and more than half (52%) of the country's occupied population. The rhythm of the growth of the tertiary sector was remarkable, breaking a historical equilibrium between the industrial and service sectors, that had been occurring in the earlier decades, relative to the absorption of the labor force.
During the the 1980s, the service sector generated 12.9 million new jobs, absorbing 76.8% of the increase in the population occupied in non-agricultural activities. The industrial sector, that used to absorb the greatest number of non-agricultural workers during the 1970s, was responsible, in its turn, for the growth of only 16.4% of the non-agricultural jobs in the 1980s. And, in 1995, the industrial sector comprised only 19.6% of the total of occupied people.
The service sector was also the option chosen by the labor force that could not find occupation under the high-pressure competition of the industrial sector. This pressure is a consequence of the adjustment practices and of the growth of the tertiary sector promoted by Brazilian enterprises, which provoked the transfer of jobs from the secondary to the tertiary sector. It occurs that it is specially in the tertiary activities that a good deal of the informality observed in the occupied population is concentrated.
According to data from the Ministry of Labor, in the formal sector of the labor market, where the workers are protected by working contracts and by public by-laws, around 2.4 million jobs were eliminated between January 1990 and December 1996. Because of its depth and length in time, this reduction of jobs originates from the process of commercial opening that replaced the old model of protected industrialization, characteristic of Brazilian development until the end of the 1980s. Graph 3 shows that the job growth in the formal sector has a downward tendency, from 1990 on. Not all people who lost their jobs, however, remained unemployed. Part of this contingent found occupation in the tertiary sector — formal or informal.
GRÁFICO 3 JOB EVOLUTION IN THE FORMAL SECTOR -
BRAZIL
Source: CAGED - Mtb |
Briefly, in a context of great transformations, the Brazilian economy has generated jobs for the large majority of the people that enter the labor market. These jobs, however, are increasingly informal and tertiary. Consequently, the quality of these jobs deviates from the desirable standards of social protection that all workers desire and deserve.
Increase in Turn Over
Another evidence of downfall in the quality of jobs manifests itself through the increase in labor force turn over. Between 1992 and the first half of 1996, turn over grew 24.0%. The constant substitution of workers, which determines the reduction of the average time of perman-ence in the job, causes the enterprises not to invest in training of their personnel. Furthermore, there is evidence that the pressure of costs arising from the high payroll taxes, in an environment of increasing competitivity, allied to a rigid labor law, are contributing not only for the increase in the labor force's turn over, but also for the relative increase in the number of those that are occupied without working papers.
The adjustment of the Brazilian labor market, in the present economic circumstances, is processing more through informality than through unemployment.
Graph 4 reveals that the unemployment rate in Brazil was located, in 1996, in a relatively low level (5.42%) in comparison to other countries, specially Spain (22.7%), Argentina (16.0%) and Poland (14.9%), among others. The Brazilian rate is higher than those of the United States (5.3%), Japan (3.2%), and Korea (1.8%).
GRÁFICO 4 UNEMPLOYMENT RATE IN SELECTED COUNTRIES
Source: International Labor Organisation, 1996 |
Graph 5 presents the average of the unemployment rates for six metropolitan areas, covered by PME/IBGE during the period of 1982-96. The unemployment rises with the recession of 1990-92 and starts to decline with the recovery initiated in 1993, consolidating its downfall after the implementation of the Real Plan, in 1994.
In 1996, however, the unemployment rate rises again (5.42%) in relation to the 1995 average (4.64%).
From May 1995 on, however, the unemployment rate interrupted its downward tendency verified right after the Real Plan, elevating itself from 4.35% in April of that year, to 5.56% in August 1996 (Graph 6). The growth of the Brazilian economy, registered in the first quarter of 1995, indicated an expansion of the GNP that was incompatible with the stability of prices and with external equilibrium. The Government promoted, then, an economic adjustment, that contributed to the conjunct-ural growth of open unemployment. In August 1995, the Government began to gradually loosen the monetary tightness, decreasing the interest rate and releasing the compulsory deposits. In December 1996, the unemployment rate fell to 3.82%.
GRÁFICO 5 OPEN UNEMPLOYMENT RATE GROWTH
Source: PME/IBGE |
Beyond those conjunctural matters, a structural phenomenon related to unemployment is also being observed in the Brazilian economy. Part of the recent increase in unemployment is due to the technological restructuring and to the adoption of new forms of labor or managerial organization, that the Brazilian enterprises have been practicing with the objective of lowering costs and increasing competition within a more open and globalized economy.
This phenomenon, of structural nature, is having significant effects on the Brazilian labor market and must be separated from the short-term effects arising from the adjustment that the Government had to make in order to assure the success of the Real Plan. The dismissals in the car part, textile, apparel and shoe sectors seem to be part of this structural context. The productivity increases registered in the Brazilian economy, specially in the manufacturing industry, confirm this point of view.
GRÁFICO 6 OPEN UNEMPLOYMENT RATE GROWTH
Source: PME/IBGE |
The productivity gains, so important for increasing the eco-nomy's competitiveness and, in that way, for obtaining advantages from globalization, diminish, however, the effects of the industrial product's growth on the employment level. Graph 7 shows that the productivity measured both by worker and by hour paid, had an increase within the range from 43% to 45% between 1991 and 1996. This increase in productivity has important consequences for the quantity and quality of the job that is being generated by the economy. Among others, it imposes an enormous challenge for the educational system and for the country's vocational training system, besides allowing improvement in labor relations.
The exploration of the opportunities enlarged by globalization requires that the enterprises adjust themselves to new standards of technology and social organization of labor.
The new standards diminish the requisites of work per unit of output and of capital and increasingly demand qualified work. Therefore, they constitute important structural changes in the underlying economic conditions of employment generation.
GRÁFICO 7 PRODUCTIVITY GROWTH IN THE
MANUFACTURING INDUSTRY
Source: PME/IBGE |
These standards, technological and organizational, are characterized:
a) by the reduction in production, innovation and business cycles;
b) by the changes in division of labor within and between enterprises;
c) by the consolidation of computer and information technologies, as hegemonic instruments of a new economic era;
d) by multivalence and the worker's knowledge as essential requisites to the new productive processes; and
e) by new forms of management.
The strongest impact of competitive globalization, within this new concept, is the increase of work productivity. The biggest challenge is to achieve a progressive trajectory of employment generation and still assure that the workers have access to the productivity gains created in the core of this process.
For the workers to increase their share in the national income, it is necessary that they have access to productivity gains. For such, it is important that real income grow more than productivity.
In an economic environment that is inflationary and that is protected by high trade barriers, the entrepreneurs repassed the wage increases to the prices without feeling threatened by external competitors. In this way, they replaced their profit margins and avoided any redistributive effect of the real income gains. With the commercial opening, the success of the stabilization plan and the end of the indexation of wages, the mechanisms that provoked the wage-price spiral were eliminated.
The slow recovering of the work's real income observed since 1992 was accelerated, from July 1994 on, with the implementation of the Real Plan. Graph 8 emphasizes the evolution of the work's real income (annual average) in the six metropolitan areas covered by PME/IBGE.
According to the Graph, one can verify that the smallest increase in real income occurred exactly for the formal sector of workers, protected by contracts signed on working papers. This segment had an increase of 23.04% in its real income, between July 1994 and July 1996. Meanwhile, in the same period, the self-employed had an increase of 56.24%, and the employed without working papers, one of 36.47% in their real income.
GRÁFICO 8 WORKERS' REAL INCOME GROWTH
Note: The level of informality corresponds to the ratio of the self-employed and employees without working papers to the total of occupied people. Source: PME/IBGE |
The real income, therefore, increased in inverse proportion to the average income of each occupational position (employees with working papers, without working papers and self-employed), which means that the greater the average income, the smaller the increase in wages.
The Real Plan and the Reduction in Income Inequalityand in Poverty
Data from Ipea show that the part of the income appropriated by the poorest 50% (of the population with income) increased 1.2 percentage point, while the share of the richest 20% reduced its participation in 2.3 percentage points. This indicates that the lowest wages grew more than the highest wages, reducing the inequality. On the other hand, around 5 million people crossed the poverty line in the six major metropolitan areas of the country.
The elimination of the mechanisms that maintained the wage-price spiral, in the context of a greater growth in real income than in productivity, also points to a redistribution of national income for the benefit of workers, although a measurement of the degree of this redistribution does not exist.
Data from Labor Market: Conjuncture and Analysis (Mercado de Trabalho: Conjuntura e Análise), year 1, March 1996, published jointly by the Ministry of Labor and Ipea, indicate that, in 1995, the increase in productivity of industrial work (3.9%) was much inferior to the growth in the real average income (14.1%), in the metropolitan areas covered by the PME/IBGE.
The Brazilian economy, in brief, is revealing itself capable of generating many jobs, but the majority of them is of low quality and subject to high turn over. On one hand, there is increasing informality of the work force, conjugated to a process by which the majority of Brazilian workers is already occupied in the service sector. On the other hand, the growth of productivity in the modern sector is substantial, neutralizing the effects of the economic expansion on the formal employment.
The adjustment of the Brazilian Labor Market to the economic reality of the 1990s is manifesting itself more through informality than through unemployment.
With the success of the Real Plan, the workers are obtaining real income gains. This has attenuated the income inequality, which is an auspicious fact for a country that has in the income disequilibrium one of its biggest challenges.
