Advances and retreats for neolibera
Gustavo Codas, an adviser to Brazil's main trade union federation, CUT (United Workers Centre), outlines the neoliberal crisis in Latin America's largest Brazil was hit by the neoliberal wave later than most of the other Latin American countries. Only the 1994 election of President Fernando Henrique Cardoso finally consolidated a political block capable of imposing the necessary neoliberal "reforms."
Import taxes were lowered from 43% at the end of the 1980s to 16% in the early 1990s. New tariff reductions followed, with the development of the Mercosur common market with Argentina, Paraguay and Uruguay, and the 1994 introduction of the Real Plan. This brought inflation down dramatically, but involved a 30% overvaluation of the real in relation to the US dollar. This contributed to a significant boom in imports in 1995 and 1996.
As in other countries, references to the "world market" have become the centre of conservative political discourse over the last decade. The essential preoccupation becomes that of the "competitiveness" corporations (and the "nation"), which means the reduction of "Brazilian costs," principally labour costs. "The question is not deciding whether globalisation is a good thing or not; it is simply a fact,"
Don't buy a Hyundai!
repeated Cardoso at an international seminar on employment in April.
The economic and social results of these policies are disastrous. Entire sectors of industry and agriculture have been destroyed, for example, textiles, shoes, toys, auto equipment and capital goods. The production of electronic goods 1s increasingly occurring with foreign parts. In sectors that have resisted, there has been a strong movement toward the fusion and absorption of national enterprises by multinational financial groups and (Slave) labour
One third of industrial jobs have been destroyed. According to the DIESSE Inter-union Institute, the unemployment rate has increased from 10% in the 1980s to 14% in the 1990s. Between 1994 and 1996, 400,000 agricultural jobs were lost. And 20% of middle management jobs were lost between 1989 and 1994. These losses continue, leading to the new phenomenon of mass unemployment among the "middle class." The jobs of more than half of the work force are precarious, while the average length of work contracts has
The use of child labour has increased considerably. Brazil has almost four million child workers, earning an average salary around 20% of the minimum wage. About 30% of these children work more than 40 hours a week. Working conditions bordering on slavery have also expanded.
The neoliberal program has degraded income distribution; the ratio of the income of the richest 10% and the poorest 40% was 6.36 in 1996, higher than during the "lost decade" of the 1980s.
Brusquely confronted by international reality, corporations have reacted with massive layoffs and a pitiless pressure on the pace of work. This is supported by intense ideological propaganda demandıng "Japanese methods" and "total quality. This has resulted in an annual 7% increase in productivity during the 1990s, despite an investment level that has fluctuated between 15 and 17%, in comparison to 25% during the 1970s.
Moreover, around half of the labour force has been forced to accept overtime, so that businesses continue to lay off workers even during periods of strong
This new situation has had a very clear impact on union activity and led to a clear reduction in the number of strikes. The peasantry has been the only popular sector capable of confronting the situation.
In the context of an increase in the level of misery, the resolute action of the rural Landless Movement (MST) has won the support of the majority of the population for its demands and checked the attempts of the federal government to ignore the problem and politically marginalise it. At the moment, the Workers Party (PI) and the CUT (United Workers Centre) are attempting to re-launch popular mobilizations.
Since 1990, dozens of public enterprises (or those partly owned by the state) have been put on sale in areas such as steel, petrochemicals and fertilizers. These
The San Diego-based Support Com- national corporations of Europe, Asia mittee for Maquiladora Workers and the Washington-based Campaign for Labor Rights launched a national boycott of Hyundai products on October 25. The aim is to pressure Hyundai and its associated Han Young feeder plant to recognize the Independent Metal Workers Union (STIMAHCS) affiliated with the Authentic Labor Front (FAT).
Supporters of the Han Young workers distributed leaflets and demonstrated at plants in several cities. In Salt Lake City, Utah, for example, a group of AFSCME and OCAW members, Teamsters, University of Utah and high school students held a demonstration and press conference in front of the local Hyundai
"Under NAFTA, the North American Free Trade Agreement we live in one common market that includes Canada, Mexico and the United States," explains organiser Dan La Botz. "The multi18 International Viewpoint #295 and America stalk workers in the NAFTA area, looking for prey, for workers who can be forced to accept $4.00 per day.
"We say that if there is one North American common market, then there is also one North American common labor movement: Canadians, Mexicans, and Americans must stand together to demand human rights for workers, to demand workers' rights to organize a union, to bargain collectively and to do so without fear of firing or other forms of Mexican Labor News and Analysis, Vol. 2, No. 20, 2 Campaign for Labor Rights 1247 "E" Street SE, Washington, DC 20003 <CLR@igc.apc.org> ® (541) 3445410 http://www.compugraph.com/clr Support Committee for Maquiladora Workers at <scmw@juno.com> or ® (619) 542-0826 "Boycott Hyundai!" bumper stickers are available. $1.00 each or 10 for $6.00 (add $2.50 shipping/handling per
Order from: Labor/Community Alliance P.O. Box 5077, Fresno Ca 93755.
sales at first gave preference to national industrial and financial capital. The latter were allowed to pay with public bonds that were not (and are still not) worth their face value, and were therefore converted on extremely advantageous terms. The privatisations thus raised 13.6 billion dollars on paper, but only 5 billion in real income for the state.
Multinational groups were allowed to participate in a second round of privatisations. The Cardoso government unleashed a process of constitutional and legislative reforms in 1995 to enlarge the arena of privatisation to new sectors like oil, telecommunications, electrical energy, ports, railroads and roads, as well as a giant mining company, the Vale do Rio Doce (CVRD). At the same time, the government tried to increase the presence of private capital in education, health care and social security, from which the state was trying to withdraw.
The second wave of privatisations re-
deficit in the trade balance that threatens lism inforced the presence of foreign capital. This was one of the goals of the Real Plan: attracting capital to finance the growing national debt. This corresponds to the recent tendency of international capital to invest mainly in the service and infrastructure sectors. The problem for Brazil is that this type of investment has a smaller impact on exports and the chronic balance of trade deficit than investment in extraction or manufacturing industries. Labour market deregulation
The centre of the neoliberal program concerns the labour market. The high level of unemployment, the fragility of mechanisms for protecting the unemployed and the defensive posture of the union movement has given free rein to the creation of a new regime of professional relations. Brazilian neoliberals propose the withdrawal of the state from its role as guarantor of the right to work, and on the contrary take action against the unions in order to weaken their ability to organize and
Thus the government is in the process of modifying legislation to allow the development of temporary labour and make layoffs easier. The Labour Court, which in Brazil is charged with intervening over working conditions, has established precedents threatening elementary rights that have been part of labour contracts for many years. New legislation on strikes threatens fines so large that union treasuries could not possibly pay them.
Whenever this does not suffice to control labour conflicts, the Cardoso government has resorted to police and military violence to defeat the struggles. In 1995, it ordered the military occupation of striking oil refineries. At the end of 1996, the army held training exercises in Rio Grande do
Sul state, simulating an assault against worker occupations of plantations. The government of various states have also ütilized police against demonstrators, strikers and landless peasants.
The Real plan
The great leap forward for neoliberalism came in 1994, when Cardoso was
Finance Minister. Since 1992, Brazil had registered a net inflow of capital after a decade of outflows, and the Real Plan, introduced in 1994, took advantage of this to finance a new wave of imports, which allowed a reduction of inflation. The plan allowed the combination of all the aspects of the neoliberal project, designed to obey so-called "objective" economic laws. But the model has not kept its promises.
Almost all the categories of the balance of current accounts are in greater and greater deficit, except for the cash remittances of Brazilians working in Japan. The estimated trade deficit for 1997
To finance the deficit, it is necessary to attract an increasing flow of foreign capital. This is done through the privatisation programme, and through the very high real interest rates offered by the statecontrolled banks. Although this has allowed the balancing of the foreign debt to a certain degree, it has also increased internal contradictions, in the form of a considerable increase in the internal public
This reached $259 billion in 1996, and carries an average interest rate of nearly 20%. The sale of 16 state enterprises in 1997, including the Vale do Rio Doce mining group, will only generate income equivalent to three months of
To deal with the weight of this debt, the government is trying to organize a decrease in public expenditures, especially public services essential to the population Of course, this also serves their other ambition: opening these sectors to private
The interest on the debt represented $48 billion in 1996 (6% of the GNP), while government budgets for education and health were only $24 billion (including less than $500 million in investments). The salary of public workers has been frozen for two years despite 33% inflation over this period
To restrain the threat of a two-sided crisis, both budgetary and international, the government is combining two types of measures. It is accentuating traits of social barbarism - reducing social protection, attacking wages, increasing the insecurity of employment, etc. - under the pretext of increasing the country's "competitiveness"
and increasing exports. At the sane time, it is increasing state intervention in the ser increases in exports.
The average level of import taxes is only 12%. But this average is deceptive:
some products are taxed at 35 to 70%, which creates real commercial barriers while some raw materials, semi-finishe products and equipment are taxed at less than 2%. These rates are encouraging the transformation of the country into a gian free trade zone on the model of the
Mexican maquiladoras.
Social barbarism
The government has not succeeded in ending the stagnation of exports (and a decrease in their value added), nor the to grow to $12 billion this year. The only truly effective measure to restrain imports has been the deflation of the economy at the end of 1995. But repeating such a measure would provoke new political tensions in a country which already has some 10 million unemployed. Such a scenario would also lead to a mediocre level of economic growth, on the order of 3% per year, This would barely allow for the absorption of youth joining the labour market, never mind reabsorb the army of
In the face of this increase in social barbarism, the Brazilian left must renew popular mobilization and re-adopt a programmatic confrontation with neoliberalism. The National March for Agrarian Reform, Jobs and Justice organized by The MST that reached the federal capital in April was an important step on this path; it won impressive popular support and placed the federal government on the
The significant reduction of the inflation rate thanks to the Real Plan helped Cardoso win the 1994 election against Lula da Silva of the Workers Party (PT). But it is unlikely that continued low inflation will have as dramatic an effect on voters in the next elections. They will be looking for more.