Outside formality


Source: Jornal da Globo, 21/01/2005


The economy grew strongly in 2004 and, with it, the number of formal jobs, formal jobs and all labor rights also grew. Brazil has statistics that attest to these conclusions.

But there is another part of the Brazilian economy where the numbers are uncertain. It is the gray area where informals, street vendors and professionals, small businesses and service providers live.
In general, they are not in the informality because they want to, but because of the bureaucracy to run a business and the tax burden too high.

Dona Edna likes to show and even teaches what she does, a specialized massage to remove impurities from internal organs, but she prefers not to show her face. What she does is informal, without registration, without receipt and without tax.

“I stay in this informality not because I want to, but because I have no other way”.

45% of the workforce in metropolitan regions are in the informal sector, says a survey, even with the recent recovery of formal employment.

Informality has advanced in sectors such as services, which employ a lot in large cities. A typical case is that of Edna Carreira, an informal travel agent.

When he needs to move through the formal sector of the economy, in contact with large companies that need a note, for example, he uses an agency that serves as a front for hundreds of informal agents.

"Whatever you work for, you have to pay taxes, 80% of my profit margin would be compromised, the work would be practically unviable".

Informality helps many people, and many companies, to generate income and survive, but it is detrimental to the country, and it is one of the main causes that prevent the economy from growing further.

“Informality is growing, companies are being pushed into the informal economy. The role that we are committed to is to break this informality circuit and bring everyone to formality ”, says Joseph Couri, from the Micro and Small Business Union.

The union that represents small and micro companies says that there are five million formal micro companies and eleven million those that do not register or collect taxes.

“There is no sector that does not suffer from unfair competition, because the tax burden is high, justice is slow, bureaucracy is enormous, you have less opportunity. If the government does not prioritize the fight against informality, will it not diminish in Brazil ?, analyzes Emerson Kapaz, from the Instituto Ética Concorrencial.