By CARLOS ÁGUEDO PAIVA & ALLAN LEMOS ROCHA*
Part of the left has a partial and insufficient understanding of the indicator that represents the “unemployment rate” and how it impacts the elections
“The day the delivery man meets the owner of the burger joint and understands that they are the same class, we will have a tough fight” (Paulo Galo in an interview with the portal UOL).
Entrepreneurship and the 2024 municipal elections
Much has been written about the 2024 elections and the left’s poor performance in these elections. One of the topics that has been attracting attention is unemployment. Many analysts are surprised by the discrepancy between the drop in unemployment over the two years of Lula’s administration and the rather modest increase in the number of mayoral elections won by the PT and parties closer to its ideological spectrum (PSOL, PCdoB, PSB, PV and Rede) in the recent elections. As we will try to demonstrate in the next section, the perception of such a “disconnection” involves a partial and insufficient understanding of this peculiar indicator that is the “unemployment rate”.
The second theme is, in a way, an offshoot of the first: the issue of entrepreneurship and the lack of projects and policies from left-wing parties for precarious workers, without formal employment contracts, who are being forced to enter the periphery of the system. Many analysts associate the unsatisfactory performance of the left with the programmatic deficiencies for this particular group. Rosana Pinheiro Machado has been dedicating herself for years to the theme of the relationship between precarious work and the growing conservatism among certain segments of the poorest population.
It is worth reading the interview that the researcher gave to Deutsche Welle and which was reproduced in the Capital letter two years ago. Equally premonitory was the interview given to the newspaper Brazil of Fact in the middle of this year. Around the seventh minute, Rosana Pinheiro Machado warns that “we often forget that the people who are defending the dismantling of social welfare are people who have not had access to many of the benefits of the welfare state, who are in the informal sector, who are out there working as street vendors 15 hours a day. It is with these people that a left-wing project has to dialogue. We have to think of ways to include these people, with more social rights, more provision of goods and rights”.
But not everyone agrees with this diagnosis. In an article recently published on the website the earth is round, Lincoln Secco criticizes Rosana Pinheiro Machado's criticism. His assessment is far from dogmatic and has two dimensions. First, he draws attention to the fact that it was during the Lula 1 and 2 governments that the Simples Nacional and the Individual Microentrepreneur (MEI) program were instituted. In other words, Lincoln Secco seeks to show that it is not true that the left does not have this public as its focus, that it ignores it, that it does not have programs for it.
But that doesn’t stop him from also taking aim at other sides. He even describes Tábata Amaral’s “Young Entrepreneur” program (which was incorporated into Guilherme Boulos’ platform in the second round) as “miraculous.” He tries to demonstrate the error of those who defend the need for new programs for young entrepreneurs by arguing that “according to a survey by FGV-Ibre, 70% of self-employed workers want CLT and this percentage reaches 75,6% of informal workers with an income of up to one minimum wage.” With this simple casual comparison of left-wing statements with empirical data, we can see that the analyses are not being calibrated by reality, but by subjective impressions.
In an interview given to the newspaper The Globe On 27/10/2024, Vladimir Safatle also criticizes the left’s concessions to programs in favor of “entrepreneurship.” His focus is on Boulos’ incorporation of Tábata and Marçal’s proposals in the second round of the campaign. And he says that incorporating Marçal’s projects is suicide. In his words: “For years, USP has been conducting research, in which I participate, that dissects the extent of the psychological devastation that the discourse of entrepreneurship causes in people. The “you against everyone else, without anyone’s help; the “everyone competing all the time.” People in precarious situations, in economic vulnerability, forced to be entrepreneurs of their own suffering. Assuming this as an irreversible fact is suicidal for the left. We know nothing about entrepreneurship. Nothing. No one has ever been an entrepreneur on the left. In this field, Pablo Marçal has already won. He sells you R$120 million as if he were an entrepreneur, even if it is nothing.”
It seems to us that it is Lincoln Secco and Vladimir Safatle who “subjectify” the issue. We do not believe that there is a single social scientist and/or theorist on the left who questions the psychological violence represented by taking on a challenge as great as that of “making it in life individually” despite having a meager material base (whether in financial terms or in terms of professional training). There can be no doubt that this is an enormous challenge; bordering on the unbearable. And we also do not know of a single author who claims that workers are the agents of the precariousness of work in the contemporary world.
Contrary to what Lincoln Secco seems to believe, there is not a single scholar of the contemporary labor market who suggests that “workers would rather work as app drivers or street vendors than have a stable, well-paid job.” To be honest, the percentage (between 70 and 75%) of those who express a “subjective” desire to return to the good old days of Fordism seems low to us. We can only understand the information given by Lincoln Secco that a quarter of precarious workers feel more comfortable as “entrepreneurs” than as “Fordist wage earners” as denial (in Freud’s sense) and ideological inculcation (in Marx’s sense).
The problem is that it doesn’t matter what workers “want” (or don’t want); it is an imposition defined by the new patterns of capital reproduction. As Carl Benedikt Frey explained to us in The Technology Trap, robotization is now carrying out the automation and negation of industrial labor that Marx predicted for the end of the 19th century and beginning of the 20th century. And as Yanis Varoufakis has been trying to teach us, the process of redefining the role of labor in the contemporary world is absolutely radical, and it calls into question the very mode of capitalist production. What is important to understand is that this segment of precarious workers is growing and will continue to grow. This has serious repercussions in terms of public policies, social programs, and political dialogue.
The only one of the three Brazilian social scientists mentioned above who seems to have a clear understanding of this is Rosana Pinheiro Machado. And she does not propose that we replicate the ideological apology for entrepreneurship, so dear to conservatives. What she proposes is that we reflect on this reality and create policies aimed at the qualified inclusion of these workers in the emerging social order. A social order that, in principle, will be mercantile. But that can no longer be limited to the principles of neoliberalism. On the contrary: the enormous inequality between the agents operating in the new market – from the technofeudal monopolies of the cloud and finance, to the precarious workers who work through apps – imposes a regulatory pattern that is much more complex and sophisticated than the old and outdated Fordist regulation. This is what we have to think about.
One of the counterarguments given by Vladimir Safatle to Rosana Pinheiro Machado’s thesis is revealing. According to the author, we on the left “know nothing about entrepreneurship. Nothing. No one has ever been an entrepreneur on the left.” This is the kind of counterargument that has the flavor of a slip of the tongue, because it says much more than intended.
First, it reveals how limited the “leftist camp” is for Vladimir Safatle. Apparently, it would be limited to wage earners (nucleated by factory workers) and intellectuals (nucleated by university professors and researchers, like himself). Vladimir Safatle seems to ignore the number of people from the leftist camp who, due to the impositions of the capitalist market itself, are already operating (usually reluctantly) as “entrepreneurs”.[I]
Furthermore, Vladimir Safatle underestimates the intellectual production and projects already developed in the left-wing field to – in the wake of what Rosana Pinheiro Machado proposes – contemplate and incorporate agents who have been expelled from the traditional formal labor market. The authors of this article are just some of the many who have already produced works on this topic. We will present some of our proposals in the last section of this text.
But the most serious point is yet another. Even if Vladimir Safatle were right in claiming that the left has no experience, reading or project for the “entrepreneurial precariat”, our shortcomings do not justify our continuing to ignore this social group. On the contrary: if we understand that this is a segment whose demographic, economic, political and cultural expression is growing in the crisis of bourgeois society, the fact that we have neglected it until now would be one more reason to dedicate all our efforts to the observation, analysis and development of social projects for it.
As Vladimir Safatle well knows, from Socrates to Einstein – including Hegel, Marx and Freud – the greatest scientists and philosophers have taught us that the answer to a question is the unfolding of a well-formulated, well-articulated question. It doesn’t matter if Pablo Marçal and the entrepreneurial demagogues have been working on the subject for decades. Their “answers” to the problems posed by the deterioration of the wage labor market are determined by the (ideological, partial, simplistic) pattern of questioning adopted.
To claim that we cannot respond better is to claim that we are not able to articulate new questions in new terms. Which, ultimately, involves claiming that the question does not matter and is not relevant to us. This is a mistake. It is more than relevant. It is imposing. Because this is the segment that has been incorporating the majority of workers entering the market. Let's see.
The illusion of low unemployment
First of all, it is important to clarify that there is more than one survey on employment and unemployment in Brazil. We are using data from the Continuous Quarterly National Household Sample Survey (PNADC/T) as a reference. Starting in the last quarter of 2015, the PNADC/T began to differentiate between formally employed and informally employed workers. This is why we are taking 2015 as our starting point.
Table 1: Evolution of the Labor Market between 2015 and 2024
| Variables | PIA | Out Force Labor | Labor Market | Unemployed | Busy Pop | ||||
| No. | Tax | Total | Informal | Formal | |||||
| 2015 | 4 quarter | 161.679 | 60.092 | 101.588 | 9.222 | 9,08% | 92.366 | 35.361 | 57.005 |
| 2024 | 2 quarter | 176.081 | 66.709 | 109.371 | 7.541 | 6,89% | 101.830 | 39.324 | 62.506 |
| Var. 2015-24 | Abs | 14.402 | 6.617 | 7.783 | -1.681 | -2,19% | 9.464 | 3.963 | 5.501 |
| % | 8,91% | 11,01% | 7,66% | -18,23% | -24,12% | 10,25% | 11,21% | 9,65% | |
In the first column with numerical data, we have information on the Working Age Population (PIA), that is, the group of people aged 14 or over. In the third line of this column (as in the others) we have the absolute variation between the two periods; and, just below, the percentage variation. Between 2015 and 2024, the PIA grew by 8,91%.
In the column to the side, we have the number of people who, despite being of working age, are not in the job market. These people are neither employed nor unemployed: they are simply not looking for work. In absolute terms, the growth of this segment is lower than the PIA, but in relative terms (percentages) it is higher: the group of people outside the job market grew by 11,01%. This growth is inseparable from the growth in the coverage of social benefits, especially (but not only) Bolsa Família. And its consequence is, by removing people from the market, depressing the unemployment rate.
In the third column with numerical data, we have the evolution of the number of people who are in the labor market. The relative expansion of this segment is the lowest among all segments with positive growth: it was 7,66%. In absolute terms, the number of people who entered the labor market exceeded the number of those who did not enter by one million, one hundred and sixty-six thousand people.
The number of unemployed people, in turn, fell by 1 million, six hundred and eighty-one thousand people, a percentage drop of -18,23%. However, the unemployment rate decreased more significantly. Why? Because it is also impacted by the percentage drop in the Labor Market in relation to the PIA (from 62,8% in 2015 to 62,1% in 2024). Finally, we have the evolution of employment. Of the increase of 9 million and 464 thousand jobs between 2015 and 2024, 42% of the total are informal jobs; and 58% are formal jobs. Thus, informal employment grew more in percentage terms (11,21%) than formal employment (9,65%).
In short: the recent fall in unemployment is inseparable from the relatively low growth of the labor market (due to a lower growth in the PIA and the significant growth in the number of people out of the market) and is due, in relative terms, more to the growth of informal work than to the growth of formal work. But that is not all. There is more to consider.
The first is: what is “formal employment”? Anyone who looks at the data with a “Fordist mindset” immediately thinks of: (i) workers with formal employment contracts; and (ii) civil servants. … That’s right; that’s right. But in 2015st century Brazil, after the creation of MEIs, a new category of formally employed agents emerged. They themselves: the MEI. Between 2024 and 6, 434 million 1 new individual businesses were created. Note that this number is greater than the variation in the number of formally employed employees between these two years, which was (see Table 5, above) 501 million and XNUMX thousand new jobs. How is this possible?
Simple: Individual Microenterprises are often an extraordinary source of income. Many workers who are formally employed in the “20th century” and who do not have a commitment to exclusive dedication create MEIs to provide services that guarantee them extra income. But this is not their main source of income.
Unfortunately, it is not possible to know – not even through access to the PNADC/T microdata – how many “formally” employed people have only MEI as their main source of income and how many have another source of income. This prevents us from being more assertive regarding the evolution of “formality” in recent years. But it does not prevent us from carrying out an exercise that can help us understand the problem we want to point out.
Let's imagine that 50% of the MEIs created between 2015 and 2024 are the only source of income for their creators; and that the other 50% are businesses aimed at supplementing their income. And let's divide the total employed population into three categories: Informal, Formal XNUMXth Century (i.e.: formal workers and civil servants) and “Formal MEI”. And let's see what results we get from this exercise.
Quadro 2: Evolution of the Informal, Formal XX and Formal MEI Employed Population between 2015 and 2024
What is the result of our exercise? The growth in strictly formal employment – in the sense of the last century – would have been around 2 million and 282 thousand workers; 24,11% of the 9 million and 464 thousand new jobs. The growth of formal MEI corresponds to 3 million and 220 thousand jobs; 34% of the growth in total employed people and 58,5% of the growth in formal employed people. And informal workers account for 41,87% of new employed people. In this simulation, if we take informal and formal MEI jobs together, they would account for 75,89% of the new jobs created in the last decade.
It is worth emphasizing this point: this is a simulation; a mere hypothesis. We are in contact with IBGE technicians to assess the possibility of having access to more rigorous data on the division of formal employment growth, differentiating “formal MEI” from “formal traditional”.[ii] But we believe that, even though it is merely hypothetical, this simulation can help some left-wing analysts who do not understand why the recent elections were not a “Lula government celebration” to start looking at economic reality with a little more complexity and not point the accusatory finger so vehemently at the people on the bottom floor.
To conclude, a brief note that seems to corroborate the above developments. The Institute for Management Development (IMD) creates a ranking The annual competitiveness ranking for the 64 largest economies in the world. The ranking has its strengths and weaknesses. It is not our purpose to analyze it critically here. What interests us is just one point. Although Brazil ranks sixtieth in the overall ranking, it ranks third in the world in the entrepreneurship criterion. Does that mean anything? … Yes, of course it does. The world observes and admires this characteristic of Brazilians of “daring and hoping.” The right takes political advantage of this peculiarity of ours. And a portion – not insignificant – of the left thinks that the subject does not interest us. … Who is wrong?
What to do?
The left is unable to develop programs for the “entrepreneurial precariat” because it either considers them an “impossible agent” – almost a science fiction character – or, if they are real, they take them as just any businessman, a representative of capital and, therefore, an exploiter. And what has the left’s project always been for the entrepreneur-exploiters? Public regulation, aimed at suppressing their freedom and, therefore, their ability to exploit.
All traditional proposals aim to restrict its action: reducing and controlling employees' working hours; imposing high safety standards; imposing and monitoring the quality and health of products; imposing working conditions that are appropriate to the well-being and health of workers; limiting overtime and ensuring differentiated payment for it; controlling the quantity produced and the value of sales with a view to carrying out correct and rigorous tax collection.
In short: all actions are moving in the same direction: imposing higher costs and lower profits on business owners and greater comfort, well-being and remuneration on workers. Yes, ok. But what happens when the business owner and the worker are the same person? Or are they members of the same family? Or when the partners in a micro-enterprise participate in all the functions of the activity: they are directors, machine operators, drivers, delivery people, secretaries, collectors and security guards?
In these cases, regulating the labor process with a view to depressing the rate of (self)exploitation only leads to a depression in workers' incomes. And the left is at a loss. We could give thousands (without any exaggeration!) of examples. But we will give just one, which seems to us to be sufficiently enlightening.
In 2015 – that is, two years after the “it’s not just R$0,20” festivities – Paradoxo Consultoria Econômica (owned by two left-wing microentrepreneurs who signed this text) was contacted by a Federal Government Ministry with a view to putting together a plan aimed at reducing the cost of living in the country’s metropolitan regions. We presented a proposal based on confronting and reducing the degree of monopoly of large businesses and large service providers.
The idea was very simple and was based on the theory of contestability pricing. For example: instead of city governments setting bus, taxi and subway fare prices, they defined an upper limit and, at the same time, encouraged the development of alternative modes of transport, characterized by free entry and low costs, such as the famous Tuk tuk, motorcycle taxis and apps with the same profile as Uber, but controlled by municipal cooperatives with support from city halls.
Among all these alternative modes, the one that seemed most promising to us was the tuk-tuk, as it is characterized by carrying several passengers, who pay prices negotiated with the driver. Despite being less comfortable than a taxi (or Uber, in birth status), the fact that it operates at lower prices and is a door-to-door alternative would force transport companies to operate at rates below the ceiling, with a view to guaranteeing their consumer market.
Along with this basic idea, we introduced several others, such as: (a) fruit and vegetable markets and products from family agriculture and agribusiness in peripheral neighborhoods and near supermarkets and hypermarkets; (b) creation of an application to identify mini-markets that offered products at below-average prices in each neighborhood of the city; (c) offering courses for microentrepreneurs on pricing, marketing and profitability, involving concepts such as contribution margin, total cost and direct cost, financial advantages of cash sales (and the possibility of granting discounts for receiving in cash); among many others.
It is worth noting that this project (which we have only outlined above) would involve tackling three major national social, political and economic problems with a single movement: (1) the low profitability of microenterprises in general; (2) the high cost of living for the low-income population, forced to acquire their goods and services in systems marked by oligopolization and financialization (of large commercial groups) and excessive regulation of the transportation sector (which institutionally consolidates oligopolies and monopolies in public transportation systems); (3) the eternal specter of inflation, which sustains the Central Bank's scorching interest rate policy and depresses the availability of Treasury resources for spending on investments, industrial policy and social policies.
Despite its scope, our project did not move forward. In fact, we submitted a proposal for consulting services, but no one was hired. And the initial project was thrown out. Why? Firstly, because, despite the Federal Government having contacted us, it soon became clear that the changes we proposed were subject to municipal legislation and regulation. But that was not the main reason. The underlying problem was that, after contacting city governments whose governments were aligned with the Federal Government, the feedback we received was very negative. In the general perception, the proposals violated the fundamental clauses of the “left-wing” administrations. Which ones? Practically all of them. Let’s see.
The first proposal was to legalize tuk-tuks and motorcycle taxis; that is, a transportation system that – in the view of municipal regulators – put the lives of users and drivers at risk. Furthermore, if the system were adopted under the terms we proposed – with users and drivers freely negotiating prices – there would be no way to monitor the profits of the “entrepreneurs”. Therefore, it would be very difficult to tax them appropriately. We received the response that the idea was intriguing, but it would have to be properly evaluated by the relevant municipal bodies, involving, at the very least, the Departments of Labor, Transportation, Health, Public Works and Finance. … Among countless other agencies; of course.
There were several concerns about farmers' markets. First of all, there were operating costs, since it would be necessary to regulate and monitor the installation of tents, as well as the quality and health of the products sold. In addition, there was the problem of ensuring that the vendors were, in fact, family producers. And finally, there was the problem of the high costs of urban cleaning after the markets closed.
The creation of the application with the aim of indicating the markets that were operating with lower prices was hampered by the costs of its production, the lack of reliable sources of information on prices and the fear of interfering with the competition. As well as, of course, the legality of this action and the possible political retaliation from large trade groups against managers who came to implement the idea.
An even more “serious” problem has emerged regarding management courses: how to define what constitutes good management practices? Not even Sebrae does this! Sebrae has a list of consultants who pass its formal qualification assessments. But Sebrae does not recommend this or that consultant who advocates this or that management standard. To do so would imply being held responsible for any management failures. And the rule in politics is the same as in traffic: when in doubt, do not overtake.
We are not denying any relevance to the “buts” pointed out by the municipal managers with whom we have spoken directly or from whom we have received feedback through mediators. It is clear that politically interfering in competition standards with a view to supporting microentrepreneurs and expanding their capacity to appropriate income and confront the degree of monopoly of large capitalist groups is something that must be planned rigorously, with a detailed assessment of the costs and benefits of each action. Without a doubt. So far, we are all going. There is no controversy.
Our point is different: to pretend that we can do nothing, that we have nothing to offer other than copying and replicating the “philanthropic coaching” of the Marçais of life is to profoundly underestimate the size, diversity and intelligence of the left. There is no shortage of proposals. Nor is there a lack of critical mass and intelligence. What is lacking is interest; what is lacking is a sense of urgency; what is lacking is the will to think and change. This is the hard core of the crisis of the contemporary left.
The world is changing at an absolutely unprecedented speed. And it is revolutionizing the lives of millions of people who are being thrown into the tsunami of a profoundly unequal market without a boat, without a buoy, without a board, without support and without a sense of direction. While the left observes everything from the rock of its unshakable certainties. And when, eventually, it finds itself in power, it exercises with pleasure and enjoyment what it considers its primary mission: to regulate, restrict, prohibit, prevent and tax commercial activities. After all, every businessman is an exploiter and we need to work for the benefit of the working class. Right? … That’s it!
*Carlos Águedo Paiva He has a PhD in Economics from Unicamp..
*Allan Lemos Rocha has a master's degree in Urban and Regional Planning from UFRGS.
Notes
[I] At this point, Vladimir Safatle distances himself from Lincoln Secco. Paraphrasing Mano Brown, Lincoln Secco reminds us that “the outskirts are a thousand heads thinking differently” and that, in the favela (which does not exhaust the outskirts) there is everything: “there are businessmen, self-employed workers, informal workers, laborers, teachers, waste pickers, singers, poets, fascists, socialists and everything else you could want to find. There are poor people on the right and there are poor people on the left.”
[ii] It seems to us that there is an urgent need to update the national statistical system with regard to labor market insertion patterns. Classifying workers into just two groups – formal and informal – no longer accounts for the complexity of contemporary labor relations. It is necessary to differentiate the formalization pattern. Employees in the private sector with formal employment contracts and public servants are salaried and are subject to an (increasingly) particular and peculiar pattern of social contributions and direct taxes (with deductions from their payroll). Individual microentrepreneurs and workers who organize themselves in cooperatives to provide services to the public sector (such as garbage collectors, for example) or to the private sector (outsourced workers) are in a kind of limbo between salaried workers (formal workers in the 20th century) and “self-employed” workers (informal workers in the 20th century). They need to be recognized in their particularity. Otherwise, we will not be able to rigorously analyze their relative expression and the public policies necessary for the effective socioeconomic inclusion of this new segment of workers.
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