By LAURO MATTEI*
Globo Group’s misleading prophecies about labor reform and the labor market in Brazil
O jornal The Globe of September 15, 2024 prophesied in its editorial: “The effect of the 2017 labor reform is positive”. Based on a study by FGV Projetos and authored by Bruno Ottoni, it is stated that the law met specific demands and “allowed Brazil to achieve the highest number of jobs and reach the lowest unemployment rate since 2012”. In addition, it is highlighted that the average income of the economically active population increased by 4,8% in the second quarter of 2024 compared to the same quarter of the previous year.
The current expansion in employment is being credited to the fact that the 2017 labor reform “increased business confidence in hiring formal workers, discouraging the labor litigation industry, since the number of adventurous labor lawsuits fell.” According to the editorial, this is the main legacy of the labor reform.
Among other benefits, according to the editorial, is the introduction of new contractual modalities: part-time work and intermittent work. In the first case, it is mentioned that despite being a common practice among several professional areas, the law allowed this modality to have a better legal framework and faster hiring.
In the second case, it is reported that this modality is more suited to the service sector, especially in the bars, restaurants and hotels sectors. Thus, it is reported that in the period between January 2020 and July 2024, out of every 10 intermittent hires, seven of them were made in the previously mentioned sectors.
The aforementioned editorial concludes by highlighting a lesson from the reform: “one must analyze proposals without prejudice and then analyze results based on evidence. Michel Temer’s labor reform is proof that change for the better is possible in Brazil.”
Following this lesson that the newspaper The Globe wants to teach us, we will present other evidence that follows opposite paths. But first it is important to highlight the most relevant aspect of this editorial: the entire argument was built based on a study that does not represent 6% of what the labor market in Brazil actually is. In other words, the new hiring modalities (partial and intermittent) do not represent the dynamics of the current labor market, since it follows its traditional logic.
To this end, we will present several empirical pieces of evidence relating to the full period of the labor reform (2017-2024-2nd half-year) to show its true effects. Analyzing the behavior of people aged 14 or over employed in the reference week by position in the occupation and categories of the main job in the full-time period (2017-2024), we observe that: (a) there was a greater growth in private sector employees without a formal employment contract in relation to those with a formal employment contract. In terms of amounts, those without formal employment contracts increased from 10.775 million (2nd half of 2017 to 13.797 million in the 2nd half of 2024.
(b) That domestic work fell significantly during the pandemic and no longer reached the mark of 5.928 million jobs existing in 2017, when only 30% were formalized; c) that in the second half of 2024 only 25% of this category had a formal employment contract.
This information – and many others – reveal that the problems in the labor market have expanded after the reform, leading to an even greater degree of precariousness in labor relations and, consequently, in the living conditions of the Brazilian working class.
Another piece of evidence in this direction concerns the unemployment rate of people aged 14 or over observed in the reference week among men and women in the same period (2017-2024). In the case of men, it is noted that this percentage was 49,3% in 2017, falling to 45,8% in the second quarter of 2024.
Women, on the other hand, went from a level of 50,7% at the beginning of the series to reach 54,2% in the 2nd quarter of 2024. It is worth noting that this percentage increased during the pandemic and has not decreased since then. This information reveals the great gender disparity that still persists in the country's labor market.
This indicator also allows us to analyze the behavior of the gender unemployment rate that prevails in the country. In 2017, this rate was 11,5% for men and 15,2% for women. It is worth noting that at the height of the pandemic (2021), the unemployment rate for women reached its peak (around 18%), while that for men was practically identical to that seen in 2017. In the last two years, these rates have fallen to 5,6% (men) and 8,6% (women).
There is also a set of indicators that could be mentioned as relevant elements that point in the opposite direction to that mentioned by the editorial. The Globe. On the one hand, there was a significant increase in the number of self-employed workers during the period under consideration. In addition, we see that the informality of the labor market in Brazil remains high, that is, from 39,7% recorded in 2017 to 38,6% today.
All of the information mentioned above is part of what labor market scholars classify as “precariousness,” a subject that the so-called labor reform has practically not changed at all; on the contrary, in some cases it has ended up encouraging and stimulating this process.
It is undeniable that the 2017 reform contributed to the precariousness of labor relations in the country, while at the same time suppressing historically acquired labor rights. However, what is striking is that only at a time when the labor market is showing significant improvements are people trying to credit them to the labor reform.
These heralds of backwardness forget to mention that it is the policies of increasing wages and stimulating employment, combined with the macroeconomic policies recently adopted by the current government, that are driving the country's economic growth, expanding job opportunities and improving the income level of significant portions of the population.
* Laura Mattei He is a professor at the Department of Economics and International Relations and at the postgraduate program in Business Administration, both at UFSC..
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