The People are Left to Watch the Ships Go In and Out : Five Voices Speaking Out on the Unemployment Crisis and Capital Flows in São Paulo, Brazil.

Transcription

1 The People are Left to Watch the Ships Go In and Out : Five Voices Speaking Out on the Unemployment Crisis and Capital Flows in São Paulo, Brazil. Simone Buechler Department of Urban Planning Columbia University Prepared for delivery at the 2001 meeting of the Latin American Studies Association, Washington, DC, September 6-8, 2001

2 Workers, trade union activists, industrial managers, government officials, and Wall Street investment bankers linked to São Paulo s labor market often have conflicting, but also sometimes surprisingly similar views on the unemployment crisis in São Paulo, Brazil. What emerges from my interviews conducted from 1996 to 2000 is a struggle between economic and political actors as to how São Paulo will be able to participate in the global economy in a way that will benefit each one of them. Many actors are fearful of what is happening to the labor market. This paper is an experiment in multi-vocality. While I would not call São Paulo a post-industrial city, it is a city where industrial employment fell by almost 40 percent from 1985 to 1998 in both the Municipality of São Paulo and the ABCD region, the industrial municipalities within the Metropolitan Region of São Paulo. However, 29 percent of the workers in the ABCD were still employed in the industrial sector. Women s participation in the industrial sector decreased even more substantially than of men. However, these statistics do not reflect the complexity of the employment situation which involves both internal and external flexibilization of production. The complexly intermeshed processes of economic globalization, economic crises, increasing competition, relocation, and technological and organizational restructuring has lead to a type of labor market restructuring that has resulted in unemployment and more precarious work for many workers. The informal sector fits into the spaces either not occupied, abandoned, or created by capitalist production. Globalization was a common word tossed around in the media and among all the actors interviewed in When the inhabitants of the squatter settlements were not blaming the government for causing the unemployment, they blamed globalization, a disembodied evil force. Many other actors such as government officials at all levels, industrial managers, and even labor union activists, have conveniently blamed the nebulously defined force of globalization in order to justify their actions. This is not to deny that each of these actors has had to respond to the global economic changes taking place and more specifically to greater international competition. For at least a decade, trade union activists, government officials at all levels, and industrial managers have been debating the optimal degree of openness for Brazil s trade and the 2

3 use of imported technology to modernize production processes, but as a result lay off workers. Union activists claimed that their sectors had lost hundreds of thousands of jobs due to imports. A labor union activist at Força Sindical, a more politically conservative national confederation of unions, was quite critical of the neo-liberal model, but basically had accepted that this was the model within which they were going to have to work. During a discussion we were having on the federal government s new policy of loosening strictures in labor contracts and making labor more flexible in order to get Brazil ready to compete globally, the activist told me that the situation is Bad with [the measures], but would be worse without them because this is what we are living.... We are not isolated. We are part of an economy [that is] highly industrial [and] globalized. And it isn t only us, unfortunately, that are passing and living [through this]. This is, in reality, the result of a model. Right? It is called productive restructuring, industrial conversion, the adjustment measures.... are happening with a few small differences... in the European countries, passing through Asia and arriving in the Americas.... [It is] a model that privileges speculative capital, easy money, rather than applied funds for production [or] money applied to really developing the economies of countries. It therefore leaves us totally vulnerable. This capital is not subject to any controls. It can flee... leaving countries bankrupt, like what happened to Mexico [and] Asia.... It is impossible [to counter] because we are dependent upon international capital, upon foreign capital here in this country so unfortunately we are at its mercy. This is one side. The other side... is that we are in favor of measures to modernize the relationship between capital and labor,.... We are the eighth [largest] economy in the world and we have labor relations that are highly antiquated. This union activist seemed both fatalistic, as well as hopeful that changing labor relations would allow Brazil to continue being a productive economy. In discussing the high unemployment rate in São Paulo, a union activist in the Metallurgy Confederation told me, We feel it a lot because the ABC [region] is the major industrial pole that we have. So, we were hard hit. To give you an idea, we used to have150,000 associates and today we have 80,000, so there are 70,000 workers that are out there [without employment]. It is 3

4 something, if you visualize the closing of an enterprise and you compare it with that city in the United States that the whole world talks about -- Detroit. The whole world talks about the ABC region as having a bit of that reality. The difference is that we do not think that it is irreversible like they say. We think that it is possible to make good use of the national industry and that is what we are fighting for.... This union activist, therefore, also was hopeful, although distressed about the severity of the current employment situation. The workers longed for the days when there was employment and they could leave badly paid jobs or abusive bosses. Speaking about the late 1970s, Maria José, who was part of an education program of the Metallurgy Union for unemployed workers, argued that, It was good, because it was like this: You worked in a firm and then you found another [job] which paid a bit more.... The first day that I went [out in search of a job], I saw three or four jobs. I did the test and I looked at which one would pay more. Then I chose. If that one did not work out, I would just go to another one. Another female participant of the program, Nelba, joined into the conversation, and added. These days everything is contracted [out]. It is by contract through an agency- two months, three and goodbye! You have to leave. Maria José responded, And today they are crushing us. The boss is crushing many of the employees, because there are many people who are unemployed. I am suffering in my work [and] you know why? Because I have a small son. It is humiliating. It is the truth. I am going through humiliation on top of humiliation but have to stay quiet because I need [the job]. It is not that I do not have capabilities. I know how to do many things. But it is so bad that if one goes out to sell clothes, one does not sell anymore and when one does sell, then it is not paid for. They do not have money to pay. If you make snacks to sell outside [then people do not pay you], [I know] because I already lived doing that. I already had a bar. I already did many things. I already worked eight years as a self-employed worker, but today it does not work. The other day my boss said she would hit the employees in the face. So, on the part of this worker, there seems to be a willingness to take on more precarious work, but not to the extent of total humiliation. The response of the president of the union of garment workers of São Paulo and Osasco 4

5 to workers like Maria José was: It is difficult. There is unemployment. There is change. But if she lowers her head and accepts everything in the way that she is accepting it, she will return to being a slave. And before, [with] slavery, it was only I that was black. Today, the slaves are all those who depend upon employment. When I told an investment banker on Wall Street working with Brazil what some of the trade unionists and industrial workers had told me about Brazil losing employment and industries due to globalization and the opening of the market, he responded, The markets should be open with few limitations. Certain industries cannot compete. But they can t just protect them. When I asked another investment banker located in New York, but working with Brazil for his reaction to the complaints of my informants in the slums that their lives are deteriorating due to the rise in unemployment, he exclaimed, the party is over. It seemed that he was also worrying whether the party was over for him and his investors. Not only has there been a decrease in employment, but the employment that is available has become more precarious because of the loss of benefits, the rise in temporary work, and the increase in outsourcing of services and production. Especially women can often be found in the more precarious jobs. Economists, investment bankers, and government officials often argue that in order for Brazil to compete, it needs a more flexible labor market, that is, new labor regulations that permit temporary contracts and lower costs. However, such measures have resulted in lower salaries and generally a more precarious labor market for workers. Homeworkers and temporarily hired workers are growing in numbers. A trade union activist for one of the garment unions said, some firms fire an employee but then work with him as an outsourced worker. Thereby the employee does not have the right to the 13 th month bonus, the guarantee fund, and ultimately to all the rights that had been won. What do they do? The clothing firms rent a shed, send the machinery and outsource... or they fire a seamstress [or] the cutter and they go and produce in their homes. A trade union activist for a chemical union agreed with her colleague s assessment but saw it as an old phenomenon that dated to the 1960s but had escalated in the 1990s. She said, The contracted worker earns 5

6 less and generally he, [the employer], is not fair [because he does not provide] health insurance that the others have. There is even a distinction with the presents that the firms give [to their employees], Christmas baskets, those little things. A lack of respect goes along with being badly paid. There was a sense of despair and nostalgia in both of their voices as they saw all the hard fought rights by their unions being lost. An official working at the Brazilian Labor Ministry said,... we need to introduce new labor contracts to make the system more flexible. And as you know with globalization [and] international competitiveness, if the system is too rigid, it is not able to adjust, to change. Unlike the union activists, the official did not believe in holding on to an old system. The managers at Bom Chocolate, a multinational owned chocolate factory, claimed that they had not been interested in the new less rigid contracts. I want to make one thing very clear, we are using agencies since we have a technical stalemate. We do not want to earn money on the backs of the workers, and furthermore we are passing all the benefits given to our regular employees to the temporary workers. Simply because it is a large volume of people we need. We would need to mobilize many people to contract these people, and so in reality, [our] gain is the service [of hiring] that we leave to the agency. Taking a bit of a defensive attitude, the industrial managers explained how they used the new more flexible systems to survive. Parafusos, a small screw factory in Diadema, a municipality in the ABCD region, has six employees and is not directly linked to international markets or companies. Eduardo began the factory in 1989 with a partner and very little capital. It is a first-tier supplier that usually works without contracts. Eduardo has one larger Brazilian client who manufactures televisions to whom he sells 30 to 40% of his production and the rest is sold to other small producers primarily in São Paulo. Eduardo argued that the opening of the market to imports negatively affected Brazilian industries because of the lack of technology and the inefficiencies of the national state. The Brazilian industry, he explained, does not produce the latest machines, so the machines are primarily imported.... The opening of the country s market opened our eyes to the fact that 6

7 the world is ahead. That was important, but on the other hand you opened up competition with the Asiatic tigers, and for us here, that meant the bankruptcy of the Brazilian industry. We can not fairly compete and why? Because of the culture of the Brazilian governors... here I will tell you like it is, because it is them.... Because it is like this, when you spend more than you collect, it is impossible to be a good administrator in this way... excess social security payments, a lot of things that make the money leave. And so what happens? This forces an increase in taxes. They have to take from those who produce, those who manufacture, those who buy, in order to maintain that inefficient administrative machine. Eduardo continued that, With this oscillating economy you can not predict the days ahead. Before the Chinese crisis over there, Brazil was more or less [stable] and the whole world believed that the country was tranquil.... The problem is that the volatile capital that they use there, can be withdrawn whenever they want and however they want, leaving the people to watch the ships [go out to sea]. All this directly affects us here, especially the small enterprises.... More than 70 percent of the Brazilian workforce works in small and medium enterprises. Although Eduardo wanted to buy Brazilian machines for his factory he found that the Chinese were making exactly the same machine for $15,000 instead of $60,000. In fact, it was even a bit faster. Eduardo s firm itself is also in competition with Chinese screw factories due to their prices. He claims that the reason that they still have clients is because of the quality of their goods and because the smaller Brazilian firms only need small quantities. In addition, time constraints encourages a few Brazilian firms to buy from local producers. Smaller firms like Milton s screw factory also had to lay off four of his ten original employees. The owner contended that the market fell and so they had to dismiss employees. He argued that unemployment is in general a function of the economic situation rather than technology. The various opinions presented here show that simplistic dichotomies do not explain the complexity of the Brazilian situation. Through the use of multi-vocality, a more nuanced picture emerges. All the actors agree that Brazil is part of a world system, but they do not agree in the inevitability that workers have to give up stable work. Some think there are niches for national 7

8 firms to fill, such as smaller firms that can supply parts rapidly. Although there were different degrees of pessimism, all of the actors presented a gloomy picture. The still ongoing unemployment crisis of the late 1990s was generally regarded as different from the other crises that have marred Brazilian economic history. According to the actors interviewed, this difference was due to the further opening of the market and the level of the interest rates and taxes. Informalization was seen as an integral part of the process of industrial restructuring and globalization. The role that the national government has played in industrial restructuring is considered important even at a time when scholars and states themselves are questioning their role in the new global economy. Only with industrialization in the 20 th century was there a growing formal sector with labor regulations, unions, and social protection. Since the beginning of the 1970s we have seen a breakdown of this formal economic system (Bromley 2001). The question remains whether there will be a further deterioration of employment opportunities and labor rights all over the world. Where will those countries that have maintained a certain level of labor formality find themselves in the future? 8