COMMITMENT 3

To adopt the full-employment target as a priority of economicand social policies

The current concern with unemployment has acquired unprecedented dimensions, in previous periods of Brazilian history. In December 1994, within the euphoria that followed the successful implementation of the currency stabilisation plan, the rate of open unemployment dropped to 3.4%, the lowest in the decade. Shortly after, however, in the trail of the financial crises of Asia and Russia, the Brazilian economy practically stopped growing, and the unemployment rates started rapidly rising, in 1998 and 1999, having gone beyond the threshold of 8%, which had not happened since the deep recession of 1981.

Starting in 1995, in order to face the challenges and dilemmas of the Brazilian labour market, a comprehensive and politically articulated set of employment public policies began to take shape, as described below.

 The Fund of Support for Workers

The basic instrument for the implementation of employment public policies has been the Fund of Support for Workers - FAT, established by the 1988 Federal Constitution and funded by revenues collected from private enterprises and institutions. With assets of R$ 30 billion, FAT allows the conjugations of multiple possibilities of enforcement and therefore of management of policies geared to the labour market.

The Fund accounts for the financing of the unemployment-insurance programme, it finances investment projects, through the National Bank for Economic and Social Development - BNDES, and represents the main source of funds of the programmes aimed at professional qualification and at the generation of employment and income. The existence of FAT is a feature that differentiates Brazil from other countries, which traditionally funds such actions with resources coming from contributions on payrolls.

The strategy for the execution of employment public policies is based upon the construction of decentralised partnership networks. These networks involve federal official financial institutions, the state and municipality governments and society at large, by means of the Deliberative Council of the Fund of Support for Workers - CODEFAT and of the state and municipality employment committees. In addition to CODEFAT, which represents a successful experience of tripartite and parity based management of a public fund, there are currently in existence employment committees in all Brazilian states and circa 1.300 municipality committees - all of them equally tripartite and parity based - with representatives of government, of the employers and of workers.

The emphasis of the employment policies befalls active policies, geared to an increase in the number of people employed and of the quality of jobs generated. Within this group, it is worth highlighting the national programme for manpower training and development, a pioneer initiative that began in 1996, and the different programmes of support to the segment of urban and rural small-sized enterprises, with a special mention to the micro-credit programmes, geared to family agriculture.

Part of the programmes of support for small and micro enterprises already existed and was improved in terms of their format and operation conditions, in addition to having been financially reinforced. Other programmes represent new initiatives, at least in terms of the scope they have acquired. Such is the case of micro-credit programmes, that started being developed by federal state-owned banks, aimed at strengthening individual self-supporting ventures, by multiplying them and causing them to migrate into the formal sector of the economy.

Among the passive policies for the labour market, in addition to the unemployment insurance, one of the most important institutes is the Guarantee Fund for Tenure - FGTS, made up of mandatory contributions of employers on the payroll. The capitalisation of these portions, corresponding to 8% of the gross salary of workers, ensues an individual savings account workers can redeem in cases of dismissal or in specific situations. In 1999, dismissed workers were paid over R$ 12 billion out of FGTS funds.

The programmes meant to support smaller companies start from the elementary idea that the generation of occupation and income, in an economy assimilating labour-saving technologies, goes through the encouragement of activities, segments and companies in which the use of the labour factor is most intense. Along this line of thought, it is worth highlighting the establishment, in 1997, of a simplified taxation regime for small and medium-sized companies. Known as Simple, this simplified regime currently benefits circa 2.5 million of these companies, all over the country.

Another instrument that excels in this strategy is the Programme for Fiscal Recovery - REFIS, created in 1999. Refis is geared to regularising tax debits of companies, particularly small and medium-sized ones, the ones most affected by the effects of international financial crises on the Brazilian economy. Companies adhering to Refis regularise their situation vis-à-vis of the Federal Inland Revenue Service, by means of earmarking a fixed 2% percentile of their invoicing for the payment of tax-debt arrears. They thus recover the possibility of obtaining credit at the financial system and of participating of public bidding procedures.

Established in 1995, this programme represents the emergence of a governmental professional-qualification policy apt to attain national reach due to the volume of funds it can mobilise. The innovating character of this programme lays on the articulation it tries to promote among entrepreneurial, religious, trade-union and non-governmental institutions, which so far operated in a disperse manner in the field of professional education, failing - except for enterprises - to achieve an important presence in Brazil. The creation of this new institutional space for professional qualification has already accumulated a few success cases, such as those pertaining to the role performed by the state and municipality employment committees. It is an important progress, but it still is an ongoing process.

Implemented in a decentralised manner, PLANFOR operates in 4.300 Brazilian municipalities - 78% of the total - 500 of which amongst the poorest in the country. It gears its actions towards two targets: sectors having more potentiality in terms of job generation, such as tourism, construction, handicraft, fisheries, agriculture and animal husbandry, personal and cultural services, micro and small ventures; and critical groups, such as the unemployed, workers threatened with unemployment, small and micro entrepreneurs, women, young people, blacks and the disabled.

From 1996 to 1999, 5.7 million workers were trained, corresponding to circa 10% of the economically active population. There are no final assessments of the results obtained by PLANFOR yet. Nevertheless, the emphasis that has been placed on hiring independent assessments, carried out by universities, non-governmental organisations and research organisations, is a guarantee that, within this process, it will be possible to associate solid data on the programme’s performance, which will allow the relevant bodies to proceed to the necessary corrections of direction, if appropriate.

The major novelty that has emerged in Brazil in the last five years has been the mobilisation of significant public funds for financing several micro credit programmes. The Programme for the Generation of Employment and Income - PROGER has been put in place, a fund for the financing of credit operations for micro and small entrepreneurs of the formal and informal sectors of the economy, with funds from FAT. Divided between the urban and rural modalities, this programme started operating through Banco do Brasil and Banco do Nordeste. In the period from 1995 to 1999, financing schemes for urban ventures involved R$ 1.9 billion, and R$ 3 billion for activities in the rural milieu.

In 1996, BNDES launched the Popular Productive Credit Programme, which operates with non-governmental organisations, established in municipalities that are ready to adhere to the initiative. These micro-credit institutions, sorts of banks of the people, may count on the participation of local governments. In two years - 1998 and 1999 - the programme transferred R$ 120.6 million, which have funded circa one hundred thousand micro-credit operations, in 197 municipalities.

 The national Programme for Strengthening Family Agriculture - PRONAF

Established in 1995, also with funds from FAT and from institutional funds, PRONAF grants credits with subsidised interests to small family farmers and to co-operative organisations and production associations, provided that they are made up of small farmers. The loans may be used for funding the harvests and animal-husbandry activities, or for investments, such as the purchase of machines, agricultural equipment, production goods and other infrastructure items indispensable for the venture. The maximal amounts of financing schemes vary from R$ 5 thousand, for running expenses, to R$ 15 thousand, for investments.

With PRONAF, for the first time in Brazilian history, family farmers have had a specific programme for access to bank credits, that has been extended, starting in 1999, to families settled by the agrarian reform. In six years - from 1995 to 2000 - circa R$ 10 billion will have been made available for small producers, thus benefiting circa 1.5 million families, in three thousand municipalities.

One of the main initiatives of the government in the domain of rural development, having a high social reach, PRONAF is creating new perspectives for circa 2.5 million small rural properties, by generating employment and income and by consolidating citizenship in the countryside. It also favours the de-concentration of economic development, which brings about benefits, not only for the rural milieu, but also for small and medium-sized cities in the hinterlands of the country.

In addition to the unheard volume of expropriations and settlements of rural landless rural workers, classical instruments of agrarian reform, the current government has been adopting complementary actions aimed at integrating the farmer settlements to the local development plans. The goal is to create and consolidate new initiatives of land restructuring based upon the tenets of decentralisation, participation, integrated efforts, the emancipation of settlers and the diversification of instruments and models for the democratisation of access to land.

Programmes that have been established in the last two years represent alternatives to classical agrarian reform, thus contributing for the indispensable economic fitting of the new owners, who need, as any entrepreneur, to attain efficiency, to learn modern techniques, to use technology, in sum, to become competitive. Otherwise, the agrarian reform would only crystallise poverty in the rural milieu.

The Land Bank (Banco da Terra) - In its implementation stage, Banco da Terra is a fund meant to finance the acquisition of land, managed by BNDES, under the guidance of a council also made up of representatives of rural workers. The co-operative letter of credit, an innovation that complements traditional intervention, is integrated to market and separated from the State, in all stages of the process, from the selection of the land to be purchased to the implementation of the agricultural project. Therefore, it truly represents a new model of land-related policy.

Within this new model, the direct intervention of the state is replaced by the community itself, which goes to the marketplace, chooses the land, applies for land-related credit and draws its development projects. The economic and social outcomes will certainly surpass those of the conventional model, since the producer and his or her association undertake, from the beginning, the management of the activity. In 1999, the first year of its effective operations, Banco da Terra financed ten thousand families, having released circa R$ 115 million.

The Cocoon Project (Projeto Casulo) - This is another innovating experience of local development, which has as its main goal the putting in place of a decentralised and participatory model of land-related action. Local and state governments register landless farmers and identify state and municipality public areas available or apt to be purchased. The federal government grants the credits and shares, with the other partners, the financing scheme for the social infrastructure. There are currently 32 projects in place, particularly in Regions North and Northeast, serving a total of 1.304 families.

Publications

Summary

Commitment 4