Worker President Raises Workers' Hopes in Brazil

September 25, 2007

On October 27, 2002, Luiz Inácio Lula da Silva—lathe operator, metalworker, undisputed leader of the independent labor movement that emerged in the late 1970’s to challenge the military regime, founder of the Brazilian Workers’ Party (PT) and a former congressman representing the state of São Paulo—was elected president of the largest and most strategic power in Latin America, the world’s fifth-largest nation in population, and one of the ten largest economies on the globe. Lula’s mandate was unprecedented in contemporary Brazilian history: 52 million votes, representing over 61 percent of the total.

The Lula “Era,” as it is being called in Brazil, has raised the hopes of trade unionists and of the left worldwide. Lula’s platform calling for the restoration of sustainable growth and the reduction of poverty and inequality in Brazil offers one of the most substantial and credible alternatives to the current model of globalization dominated by the interests of speculative international capital. Lula has voiced his opposition to any Free Trade Area of the Americas (FTAA) that will mean the “economic annexation” of the South to the North. Such a position signals a substantial delay to a total NAFTA-expansion in the hemisphere, as there can be no real FTAA without Brazil.

And with the presidency of the country now occupied by a labor leader who directly confronted a military regime that relied on state control of the labor movement to repress collective worker action, Brazil’s more progressive and reform-minded unionists say that it is also high time to end Brazilian labor’s dependence on the state for support of official union structures.[1] These union militants see an opportunity to implement a labor law reform that will threaten the survival of more conservative trade union centrals and leaders.

Other constituencies that supported Lula during his campaign, such as the landless movement, will be expecting real progress on the systematic expropriation and distribution of unproductive land to family farmers, small and medium producers, and rural workers. [see “New Chance”, this issue] Another labor-related demand facing the Lula Government, and one that is already a source of debate and contention, is the reform and consolidation of Brazil’s broken and beleaguered social security system.

In sum, President Lula and his new Labor Minister Jaques Wagner—former PT federal deputy for the state of Bahia and former petrochemical workers union leader—must come to terms with all of the daunting challenges confronting a workforce of approximately 90 million Brazilians. These include:

—Unemployment—Brazil has suffered a severe rise in unemployment thanks to the economic policies of deregulation, privatization and high interest rates pursued by the administration of former President Fernando Henrique Cardoso. By the end of the 1990’s, the official unemployment rate—which does not reflect Brazil’s chronic underemployment and the high number of workers who have become permanently discouraged from seeking jobs—exceeded 7 percent. In São Paulo, Brazil’s largest metropolis and the third largest city in the world, nearly 20 percent of the working population is unemployed, making for about two million people without jobs in that city alone.

—Low wages—About one of every three Brazilians earns the minimum wage or less. In 2002, the minimum monthly salary was raised to 200 reais, which is now equivalent to about $65. DIEESE, the highly respected and credible Inter-Union Department of Statistics and Socio-Economic Studies, has concluded that the minimum wage is only one-sixth of the amount necessary to satisfy the most basic needs of a family of four in metropolitan São Paulo. And last year, the official Brazilian Institute of Geography and Statistics (IBGE), found that the average monthly wage for six of Brazil’s largest cities was a meager 770 reais, now only a little over $250.

—Growing informal economy—The number of workers in the informal sector—those who are not registered with the government in order to receive basic labor protections and benefits—rose from 42 to 58 percent of the total labor force in the last ten years.

—Income maldistribution—According to the IBGE, the wealthiest 50 percent of Brazilian society earns nearly 90 percent of total income, while the bottom half receives only a little more than 10 percent. And DIEESE has found that in the major metropolitan centers of Brazil, the wealthiest 25 percent earns between 60 and 70 percent of the total income, while the poorest quarter of the population receives between 2 and 4 percent. As recognized in Lula’s own platform, this extreme income maldistribution contributes to Brazil’s devastating problems of social conflict and instability, crime, an underdeveloped internal market and arrested economic growth.

—Racial discrimination—Notwithstanding the persistent myth that Brazil suffers only from class as opposed to racial discrimination, the Lula administration will have to face the shocking reality that the average white Brazilian earns more than twice the income of Brazilian non-whites.

—Forced labor—Much of this blight is concentrated in the Amazon basin. Labor contractors lure workers to remote areas in order to clear forests, extract charcoal for metal production, raise livestock, and plant and harvest crops. Once the laborers arrive at their work sites, they soon find themselves in the thrall of a well-developed system of debt-bondage. Armed guards, threats of physical harm or death, and the sheer remoteness of the region keep them from escaping.

—Child labor—In spite of Brazil’s recent progress in reducing child labor through an effective combination of public education campaigns and special stipends to families to keep their children in school and out of the labor force, there are still well over 2.5 million Brazilian children under the legal age of 16 who continue to work. They are employed primarily in drug trafficking, prostitution, trashpicking, charcoal production, mining, the harvesting of sugarcane, sisal, cotton, coffee, oranges, and other crops, fishing and domestic services. The International Labor Organization (ILO) classifies some of these activities among the “worst forms” of child labor.

Although these labor conditions present staggering challenges, Labor Minister Wagner began responding to many of them in his first 30 days in office. For example, he is promoting a program entitled Primeiro Emprego (“First-Time Employment”) that will offer jobs to young people between the ages of 16 and 24 who, because of their social and economic situation, are particularly susceptible to being driven into criminal activity. Five million has been budgeted for pilot projects that will produce at least 15,000 jobs for these at-risk youth by the end of 2003. The Brazilian government will guarantee their salaries for the first six months; private employers agreeing to employ the young people will pay for the remainder of the year. If the pilot projects are successful, Wagner intends to expand the program.

The Labor Ministry is also giving serious consideration to reducing the standard workweek from 44 to 40 hours in order to increase employment. Wagner has spoken of targeted tax incentives and subsidies to those employers who actually contract more workers by reducing hours without diminishing existing wage and benefit levels.

The inclusion of renowned economist and democratic socialist Paul Singer in the Labor Ministry as Secretary of Economia Solidaria (“Solidarity Economy”) is a clear effort to promote alternative sources of employment. Singer is proposing the massive creation of service, family farm, labor and microcredit cooperatives as a means of putting hundreds of thousands of Brazilians back to work. He is asking not only the Bank of Social and Economic Development (BNDES) to underwrite the effort, but is urging other major state banks, such as the Caixa Economica Federal and the Banco do Brasil, to finance this new source of job creation. However, Singer also knows that business often sets up cooperatives as a way of evading unions and labor rights obligations, and is demanding that the laws be tightened in order to avoid employer subterfuge.

As for the 55 million Brazilians in the informal economy, Wagner proposes a national mobilization and education campaign to secure formal labor registration for many of them. He concludes that most of these workers are self-employed, temporary or day laborers who avoid registration in the formal economy because they fear that the legal obligations are too costly. He argues that such workers should be paying some contribution to social security, as the system is running an unsustainable deficit, but believes they should be given other tax breaks as an incentive to register.

Wagner has not minced any words about his intentions to better oversee the federally (and worker) financed Workers’ Support Fund (FAT), which underwrites already existing programs of unemployment insurance, job training and education, and employment placement services. The FAT has a current operating budget of $ 1 billion. The administrative board responsible for the disbursement of funds includes representatives from both business and the national trade union centrals who have used the FAT’s proceeds to finance programs for the benefit of their direct constituencies, and, in some egregious cases, for themselves. Labor Executive Secretary Sandra Starling suggests that one way of minimizing corruption and waste would be to create a system of civil servants with proven records of honesty and integrity to disburse the funds. A citizens’ board, including representatives of business and labor, would monitor the distributions.

Minister Wagner and the entire administration are also pressing for more effective enforcement of and compliance with the ILO’s anti-discrimination convention, which Brazil ratified in 1965, as a means of combatting racism and sexism in employment, pay and working conditions. The Labor Ministry and Secretary of Human Rights Nilmario Miranda will also be partly responsible for implementing the provisions of Lula’s platform calling for material incentives to private businesses that implement affirmative action programs, the enforcement of non-discrimination in the provision of credit to small business, and the development of job education programs for socially excluded groups.

As for eradicating the unconscionable practices of forced and child labor, the Lula Era is showing some signs of hope. Within the first 22 days of the new government, the Labor Ministry’s Special Mobile Enforcement Group liberated 263 agricultural workers from forced labor conditions on plantations in the northern state of Pará. The administration is pledging even more support to this unit and the Ministry’s overall enforcement capacity. Moreover, the Labor Ministry is considering, in conjunction with the Ministry of Agrarian Development, a policy of prioritizing agrarian reform for those lands where there has been a history of forced labor. Finally, the new government intends to expand the family stipend programs as a way of keeping children in school.

Although President Lula has committed himself to implementing a livable minimum wage policy, his administration has not yet presented final and definitive figures for a legislative proposal. However, his campaign platform, incorporating many of the ideas of Eduardo Suplicy, federal senator from the state of São Paulo, advocates a guaranteed minimum income plan for Brazilian families that would also include higher education scholarships for the sons and daughters of indigent families, as well as special education and employment training programs for heads of households who have lost their jobs.

All of these programs are costly, and a key question remains: Will Lula, facing a staggering international debt burden, have the budgetary means to implement his socially progressive labor and employment policy?

The IMF’s draconian pressures on Brazil to generate substantial budget surpluses as a requirement for maintaining debt relief, as well as Wall Street demands for fiscal austerity as a condition for satisfactory bond ratings and positive reports to foreign investors, are sobering challenges to the new labor and social agenda. However, there are a few factors working in Lula’s favor: World Bank President James Wolfensohn has openly praised the new government, and has committed substantial funding to Wagner’s Primeiro Emprego and to Lula’s Fome Zero (“Zero Hunger”) program. At the same time, Brazil’s intention to increase domestic credit sources, including the massive generation of credit cooperatives, could begin to reduce dependence on foreign investment. And the Argentine tragedy should have taught the world’s financial markets and institutions the serious lesson that if Lula is not permitted to bring a minimal amount of growth and social stability to one of the world’s largest economies, then prospects for security in the hemispheric and international economy are bleak.

Lula’s platform specifically calls for the creation of a National Forum on Labor, with labor, business, and governmental representation, to debate, develop and recommend policies and programs which address all of the problems mentioned. Wagner announced in early January that the Forum would begin operating within 90 days, and he has already begun to solicit the participation of major business organizations and national trade union centrals. Wagner has announced that he will urge the Forum to finalize a proposal for delivery to the Congress by the end of 2003.

However, one topic that will surely provoke extended debate within the Forum is the reform of labor relations and current state support for trade union structures. A formidable question facing the Lula administration is whether it can develop a labor law reform that will diminish state interference in union governance and collective worker action, strengthen more independent collective bargaining systems, and end state support for otiose and unrepresentative union structures, without falling into the neoliberal trap of labor market flexibilization and the dismantling of trade union representation for millions of Brazilian workers.

And there are other unanswered questions concerning the government’s relationship with the national union movement. Given the strong personal, though unofficial, ties between the PT and trade unionists in the Unified Workers Central (CUT), Brazil’s largest national trade union central representing over 22 million workers, will the new Brazilian government and much of the labor movement be able to maintain both independence and constructive relations at the same time? Alternatively, will substantial sectors of the Brazilian labor movement attempt to form an opposition bloc to the new government if their demands are not satisfied quickly?

Thus far, both the new administration and the Brazilian labor movement are demonstrating patience and moderation. Jaques Wagner has said that he will seek reforms based on the principles of freedom of association and trade union autonomy, including a gradual termination of the labor movement’s dependence on government funding, as well as limiting government intervention in collective bargaining and strike action. However, the Lula administration has not slipped into the trap of “flexibilizing” labor standards. At his inauguration, Wagner announced that the Brazilian executive branch would remove a Cardoso administration proposal, pending in the Senate, that legally permits collective agreements with single employers to provide for less than the minimum benefits and working conditions guaranteed by the federal labor code. In addition, President Lula refused to renew an executive order issued by the former administration that established a system of short-term individual contracts with fewer mandatory benefits for temporary employees.

Moreover, the PT has a rich and well-developed history of governing at the municipal, state and congressional levels over the last 20 years. This experience has offered an invaluable education for both elected PT public servants and trade unionists with strong PT affiliations on how to maintain both constructive and independent relationships. For well-known labor leader and PT militant Luiz Marinho, President of the São Bernardo Metalworkers Union and a strong candidate for the CUT presidency, the role is clear and unambiguous: “It is evident that trade unionists have the fundamental responsibility of representing their members, and that means maintaining our independence. And with our companheiros in the new government, including in the Labor Ministry, we simply have an even more direct channel for implementing our trade union agenda.”

For unionists with more serious reservations about the PT and the Lula Government, including those in national union centrals such as the Força Sindical (Union Force), representing 12 million workers, and the General Confederation of Workers (CGT), representing around six million, the question remains as to whether they will assume a position of critical but constructive engagement or outright opposition. From the beginning, the CGT and the Força Sindical have criticized the CUT for being organically linked with the PT and for espousing an overly politicized unionism. They have not attempted to fundamentally challenge the official system of union governance and official union structures.

Nonetheless, the new administration has invited the entire Brazilian labor movement to be a direct partner in negotiations over labor and social reform, something which Lula’s predecessors were both unwilling and unable to do. Such a democratic and inclusive approach means that the government’s critics in organized labor also find themselves in the proverbial glass house. CGT officials Hugo Pires and Waldir Vicente told me in late January that they had reminded Força Sindical leader Paulinho da Silva that he needs to responsibly negotiate with the new government, as opposed to simply making threats and blustering to the press.

Finally, international unionism, especially the U.S. labor movement, can play a critical role in supporting Lula’s social and labor agenda. For example, workers’ pension funds invest literally trillions of dollars in financial markets, and can exert influence when it comes to Wall Street’s relationship with Brazil. In addition, the labor-friendly social development projects of the Lula administration suggest interesting potential partnerships with pension funds in the United States and throughout the world.

More direct contacts between U.S. and Brazilian unionists, as well as exchanges involving city and state governments, small agricultural producers and family farmers, popular educators, musicians, artists and progressive legislators, can only enhance North American support for Brazil’s new democratic opportunity, as well as help counter any revanchism on the part of the Bush administration. In addition, the AFL-CIO and its affiliates can count on the full cooperation of the Lula Government in our efforts to guarantee labor and organizational rights to the over one million Brazilians living and working in the United States.

With Lula as President of Brazil, U.S. labor and the AFL-CIO have a very direct and promising opportunity to implement our vision of global justice and workers’ rights. Lula is an ally and friend for a number of historical, personal and ideological reasons. His position on globalization, the FTAA and world trade corresponds with our concerns, and his proposal for balanced growth, increased employment, decent jobs and more social and economic equality is a program that we support.

President Lula is also well aware of the importance of international labor solidarity to his success. He made the following remarks to several hundred friends and admirers in the lobby of the AFL-CIO building on December 10, an audience that included President John Sweeney and other members of the Federation’s Executive Council: “If I succeed, all of you will succeed; and if I fail, all of you will fail. But I can’t fail, and do you know why? It might take a hundred years for another trade union leader to be elected the president of Brazil, so we can’t afford to squander this opportunity.”

Stanley Gacek is a labor attorney and the AFL-CIO's Assistant Director for International Affairs, responsible for the Federation's relations with Latin America and the Caribbean. He has spoken and written extensively on Brazilian labor and politics, and has been a friend and adviser to Lula and the PT for 22 years.

1. Most of Brazil’s current system of labor relations dates back to the code put in place by President Getúlio Vargas in 1943. Under this system, the government grants a labor organization the power to represent all the workers in a given professional category (i.e., metalworkers) for a given geographical area. The official structure is financed by a compulsory dues payment exacted from all workers. Like Mussolini’s system, on which it was modeled, the Brazilian system is one tightly controlled by the state. It distributes benefits to workers while quashing real labor independence. Starting in the 1980s, independent labor organizations like the CUT were created, and today many of these function both within and without the official structure. For more background see Stanley Gacek, “Brazil: Labor Fights Back,”NACLA Report, Vol.XXII, No. 6, March 1989, and Iram Jacome Rodrigues, “The CUT: New Unionism at a Crossroads,” NACLA Report, Vol. XXVIII, No. 6, May/June 1995. For a comparison of the U.S. and Brazilian systems see Stanley Gacek, “Revisiting the Corporatist and Contractualist Models of Labor Law Regimes: A Review of the Brazilian and American Systems”, Cardozo Law Review, August, 1994.

Tags: Brazil, Lula, PT, labor rights, union, minimum wage, leftist politics

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