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When it Comes to Labour Unions, Brazil is Not Venezuela

Brazil is really learning how to be modern. This week the Congress approved the new Labour Laws, making up-to-date the labour laws created by President Getulio Vargas over 70 years ago.

May 2, 2017 // 4:13PM

The Labour Unions are not happy. By the new law, they will lose over 60% of their money. Let me explain: in Brazil, ALL workers make a compulsory contribution to the Unions. Now, with the new Labour Law approved, they lost around US$3.1bn in “free cash” to finance their socialist and communist protests. We say that the “left people” in Brazil are the “caviar left”, because they have a great life and make good money. Whether this money is legal or not, though, is up for debate.

Let me be clear, I am not saying that all Unions are on the “left side”, but let’s say that almost 100% are.

But with the new Labour Law, it is not just the Unions. The new laws are being put in place to modernize the economy, make Brazil more competitive. These laws are not perfect, but they are a good start.

To fight the impending new reality, nationwide strikes led by Brazilian unions to protest President Michel Temer's austerity measures crippled public transport in several major cities across the nation early on Friday, as factories, businesses and schools closed. In the economic hub of Sao Paulo, the main tourist draw Rio de Janeiro and several other metropolitan areas, protesters used barricades of burning tires and other materials to block highways and access to major airports.

Ironically, the Unions, in attempting to position themselves as “protectors of jobs in the country”, are blocking the main roads and putting public transport to a halt. And, of course, all of them are using masks (like in Venezuela) so as not to be recognized by the police or the people trying to go to work. My question here is: if the Unions are the Super Heroes and protectors they claim to be, why do they need to hide their faces? Brazil is a democracy, give us the right to make our own decision.

Police clashed with demonstrators in several cities, blocking protesters from entering airports and firing tear gas in efforts to free roadways. Hundreds of videos showing people with masks behaving violently (referred to as “Black Blocks”) are being spread through social media.

By around 10:30AM Tuesday most of the incidents have dissipated. People continued to arrive to work (even if late). Protests are still happening, but the “biggest strike in the history”, as was announced by Paulo Pereira da Silva, the president of trade union group Forca Sindical, turned out to be a total failure.

Many workers were expected to heed the call to strike for 24 hours starting just after midnight Friday, due in part to anger about progression this week of congressional bills to weaken labour regulations and efforts to change social security that would force many Brazilians to work years longer before drawing a pension. In addition, the strike was extended to the holiday weekend ahead of Labour Day on Monday.

"Temer does not even want to negotiate," Vagner Freitas, president of the Central Workers Union (CUT), Brazil's biggest labour confederation, said in a statement. "He just wants to meet the demands of the businessmen who financed the coup precisely to end social security and legalize the exploitation of workers." This phrase made me laugh…after 13 years of Lula and his crew financing the Unions and giving easy money to these people, now they are angry at President Temer, who stooped monthly donations to all Unions and political oriented NGO’s.

Let’s make clear here that I rejected the union's criticism, because I believe the government was working to undo the economic damage wrought under the Workers Party rule, which had the backing of the CUT (biggest labour union). Lula and his crew left the legacy of 13 million unemployed workers.

Lula’s party is facing dozens of lawsuits, and today they finally realized that they lost control of the country and people are tired of lies, corruption and fake “super heroes” who made billions through corruption, bribes, etc., to keep themselves in power.

The Pension Fund reform is under way. Most of the media covering Brazil is suggesting that the people are against these reforms, but that is not entirely accurate.

Naturally, someone will lose out on the Pension Fund reform, but the bulk of the population will remain untouched by it. The loud minority is making a lot of noise because their contributions to the system during their lives do not cover what they are receiving today. This mistake will be corrected.

Let’s look at the reality of Brazil’s economy: Brazil ended a 22-month streak of formal job losses in February in a sign that the economy may be emerging from the worst recession in a century.

The country added 35,612 jobs in February in the first monthly increase since March 2015, with many of the positions generated in services, agriculture and manufacturing.

Brazil’s two-year recession under Dilma Roussef’s administration destroyed three million jobs and caused the unemployment rate to soar to a record 12.6%. While the weak labour market helped policymakers to tame inflation, it is also hindering a rebound in growth. Economists from Itau said this week that it may take almost another full year before Brazil’s jobless rate finally peaks.

A breakdown of the figures provided by the Labour Ministry showed that job growth was mainly concentrated in the south, south-east and centre-west of the country, while positions continue to close in the north and north-east.

The government struck a confident note on the release of more positive numbers. "The rise shows that the measures adopted by the government over the last seven months are putting our country back on track," said Ronaldo Nogueira, the labour minister.

In his speech on Thursday afternoon Temer highlighted other positive economic news, including rapidly falling inflation, a successful infrastructure auction and Moody’s recent decision to upgrade Brazil’s rating outlook.

Improvements in Latin America’s largest economy are coming, including a growing flow of foreign direct investment and an improving trade surplus.

Brazil’s gross domestic product contracted 7.2% in the past two years, and analysts in a weekly Central Bank survey expect growth of only 0.48% in 2017.

Brazilians are carrying out reforms to change this situation, to create jobs and economic growth. Simple and easy to understand.

Americas Macro Policy & Government Brazil

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