FGV: Informal economy reaches minimum in ten years despite Pibinho


O Globo Online - Rio de Janeiro / RJ - ECONOMY - 10/07/2013

RIO - The so-called underground economy, production of goods and services not reported to the government, corresponded to 16,6% of GDP in 2012, the year in which the economy as a whole had an increase of only 0,9%. It is the lowest rate registered for the informal economy since the beginning of the series in 2003 and represents a decrease of 0,3 percentage point in relation to 2011. In values, it totaled R $ 730 billion, according to an estimate released this Wednesday by the Brazilian Institute Competition Ethics (Etco) in conjunction with the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV).

The strong labor market, with the generation of formal jobs, explains this behavior, according to FGV / IBRE Applied Economics researcher Fernando de Holanda Barbosa Filho.

- Informality falls systematically, even in years of crisis, which means that institutionally we are improving, but the smaller falls are signaling an exhaustion - he says.

Barbosa Filho emphasizes that the signs of job depletion, income and credit this year may impact the next results.

- The economy is no longer helping as before. Credit expansion has stopped, and with that, part of the stimulus to formalize as well. The trend is not continuing. We need institutional change, de-bureaucracy and deregulation of the labor market, although this is highly unlikely to happen.

Research recently released by SPC Brasil and the National Confederation of Shopkeepers showed that almost half (49%) of the interviewees do not know what to do to regularize their business. In addition, among those who want to expand the business this year, the majority do not intend to formalize it because they fear bureaucracy, falling income and new costs.

For Roberto Abdenur, Executive President of ETCO, the formal labor market has reached its limit due to two major factors: the rigidity of labor laws and the low level of education of Brazilians.

- If, on the one hand, softening rigid labor laws and reducing bureaucracy are increasingly essential tasks, investing in education is much more than a goal, it is an obligation for a nation that claims to be strong and positioned among the main economies in the world - he said.