Tag: Underground Economy Index

Underground economy stagnates in 2012

After five years in decline, the Underground Economy Index, released by the ETCO in conjunction with the Brazilian Institute of Economics of the Getúlio Vargas Foundation (IBRE / FGV), stop falling and remains at around 17%. According to the researchers, this is a sign that the formalization process has reached its institutional limit.

The estimate of 16,9% in relation to GDP for 2012 represents a difference considered residual compared to 17% in 2011 and confirms the trend, already pointed out by IBRE / FGV researchers in June, that one of the main responsible parties reached its limit by the successive falls of IES: the growth of formal employment.

With the exception of 2009, an atypical year for the economy due to the global crisis, since 2007 the Brazilian HEI had declined by 0,7 percentage points per year, going from 20,2% in 2006 to 17% in 2011. “In large part , this drop is explained by the significant increase in the formal labor market observed in recent years and which is a consequence of the good performance of the Brazilian economy in the period, even during the 2009 crisis ”, analyzes the researcher at IBRE / FGV, responsible for preparing from IES, Fernando de Holanda Barbosa Filho.

The Netherlands believes, however, that this growth in the formal labor market has reached its limit and points to two major factors as an obstacle to the continuation of this evolution. One of them, well known, is the rigidity of labor laws, which, according to him, "tie the economy". The other, less obvious, but with a lot of impact on reducing informality, is the level of education of Brazilians. “According to Pnad, between 2002 and 2011, informality in the labor market dropped 10 percentage points, from 43% to 32% of the total employed population. The increase in the 22 million people who were educated between 2001 and 2011, accounts for 64% of this drop ”, emphasizes the researcher. But the still low level of qualification acts as a limiting factor in the informality relationship.

For Roberto Abdenur, chief executive of ETCO, “these numbers bring new and rich possibilities with regard to the improvement of the labor market in the country and the consequent reduction of informality” in the economy. “If, on the one hand, softening rigid labor laws is an increasingly essential mission, 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” , highlights Abdenur.

Informal work stops falling in the country

Source: Época Negócios Online - 27/11/2012

Mass social inclusion process that allowed the emergence of class C was interrupted

The process of mass social inclusion that led to the emergence of a new middle class, access to credit and the acquisition of durable goods, marks of the Brazilian economy in the last decade, was interrupted. This year, for the first time since 2001, informality in the labor market has not dropped. It was unchanged. The data are from the Underground Economy Index (IES), prepared by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre / FGV) in partnership with the Brazilian Institute of Competition Ethics (Etco).

In 2012, workers without a formal contract, who traditionally receive lower wages than formal workers, remained with practically the same participation in the GDP, of 16,9%, an advance of only 0,1 percentage point in relation to the previous year, considered a residual difference. A year earlier, in 2010, the informal economy corresponded to 17,7% of GDP.

Informality dropped by 0,7 percentage points each year since 2007, having retracted by 1,2% from 2009 to 2010. Between 2003 and 2010, the number of formal jobs in the country grew 53,6%, according to data International Labor Organization (ILO). The main cause of the good results in this period was the expansion of formal employment. With the slowdown in Brazilian growth, estimated at 1,5% in 2012, the natural tendency is for formality to also slow down.

“There is a parallel Brazil that contributes to the economy, but on the outside. It occurs more in the universe of micro and small companies, however, it compromises the balance of the business environment ”, highlighted the president of Etco, Roberto Abdenur.

The study classifies this black economy as an underground economy, which corresponds to any activity not reported to the government, which does not generate taxes, nor any labor guarantees for the employee. “Informality is a fever, a symptom of the disease, not the disease itself. Therefore, the solution is not related to the tightening of inspection, to the extinction of informality, because its reverse is not formalization. It is necessary to attack the causes ”, analyzed the researcher from Ibre / FGV, responsible for preparing the IES, Fernando Barbosa Filho.

A study released in August by the Brazilian Institute of Economics (Ibre) of the Getulio Vargas Foundation (FGV), shows that the increase in the average education level of Brazilian workers has a direct impact in reducing informality in the labor market. It is estimated that 60% of the general drop in informality can be explained by the increase in the worker's education.

Interview with Roberto Abdenur, president of the ETCO Institute

27/11/2012 - Interview with Roberto Abdenur, president of the ETCO Institute

[iframe width = ”600 ″ height =” 490 ″ src = ”http://www.youtube.com/embed/y_vMHd2Lnng?hl=en&fs=1&rel=0 ″ frameborder =” 0 ″ allowfullscreen]

Clipping Type: TV
Subject: Miscellaneous
Date: 27/11/2012 - 12:33
Broadcaster: Globo News
Program: Checking Account
Duration: 00:10:17

Informal work stops falling

Estadão - 27/11/2012

For the first time since 2001, the process of mass social inclusion has stopped this year

The mass social inclusion process was interrupted, which led to the emergence of a new middle class, access to credit and the acquisition of durable goods, marks of the Brazilian economy in the last decade. This year, for the first time since 2001, informality in the labor market has not dropped. It was unchanged.

In 2012, workers without a formal contract, who traditionally receive lower wages than formal workers, remained with practically the same participation in the GDP, of 16,9%, an advance of only 0,1 percentage point in relation to the previous year, considered a residual difference.

According to the Underground Economy Index (IES), prepared by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre / FGV) in partnership with the Brazilian Institute of Competitive Ethics (ETCO) since 2003, informality dropped by 0,7 percentage point every year since 2007, having retracted by 1,2% from 2009 to 2010.

“There is a parallel Brazil that contributes to the economy, but on the outside. It occurs more in the universe of micro and small companies, however, it compromises the balance of the business environment ”, highlighted the president of Etco, Roberto Abdenur.

As an underground economy, the survey understands any activity that is not reported to the government, which does not generate taxes, nor does it guarantee workers any labor. “Informality is a fever, a symptom of the disease, not the disease itself. Therefore, the solution is not related to the tightening of inspection, to the extinction of informality, because its reverse is not formalization. It is necessary to attack the causes ”, analyzed the researcher from Ibre / FGV, responsible for preparing the IES, Fernando Barbosa Filho.

Barriers

The limitation of the informality retraction process, according to the economist, is directly related to educational barriers and the rigidity of labor laws, according to Barbosa. It is based on statistics from the National Household Sample Survey (Pnad), from IBGE, to conclude that the growth in the number of employees with a formal contract of 10 percentage points, in the period from 2002 to 2011, was directly related to the advance of schooling of the population.

“The increase in the 22 million people who have been educated, according to PNAD, accounts for 64% of this drop (in informality)”, noted Barbosa Filho, adding that an even greater advance in the level of education of the Brazilian population would also have an effect on the sector Currently, the service provider is primarily responsible for the growth of the labor market and is recognized for having a higher degree of informality than the industry.

Although stationary, the underground economy in Brazil is still inferior to that of neighboring countries, but it far surpasses that of developed countries, such as the United States.

Underground economy is still big in Brazil

Source: Jornal do Comércio - RS - 24/09/2012

The Underground Economy Index (HEI), which measures the percentage of informal work, reached 16,8% of the Gross Domestic Product (GDP) in the last year, at an estimated value of R $ 695,7 billion. The data are from a semiannual study carried out by the Brazilian Institute of Ethics in Competition (ETCO) in partnership with the Brazilian Institute of Economics of the Getulio Vargas Foundation (IBRE / FGV). However, this is the lowest percentage registered since 2003. However, the data also indicate that the growth in formal employment, which is one of the main factors responsible for this fall, should stagnate as of 2012. And, according to the researcher responsible for the study from IBRE / FGV, Fernando de Holanda, credit expansion continues to be one of the biggest motivators of formal work. ETCO Chief Executive Roberto Abdenur highlights the urgency of measures to boost employment. “We are in a favorable moment for the revision of a series of rules that have historically been preventing the healthy growth of our economy. Rules that push small entrepreneurs into informality, that indirectly favor the production and trade of illegal products, and facilitate tax fraud ”, he concludes.

One of the less publicized related effects since the federal government decided to lower taxes in order to combat the crisis that broke out in September 2008 has not been remembered. It is the fact that, with less taxes, informality has also decreased in Brazil, which is good for everyone, especially businessmen. The tax relief from the government's incentive policy contributed to the reduction of the growth rate of the informal economy in relation to the Gross Domestic Product (GDP). The evolution of the informal economy was only 2% between December 2008 and June 2009, almost one percentage point above the 1,1% accumulated GDP variation in the first half.

Taxing less on a larger basis is ideal for an economy such as that of our country, especially if we take into account the fact that classes D and E are being incorporated into consumption. This is so true that the so-called white line of household appliances, such as refrigerators, washing machines or dishwashers, are selling like never before. As in all crises, also in this one, which we are going through, although with problems, it left lessons that can be valuable, if well used. One of them is precisely this, spoken for years by the most respected economists in Brazil and remembered by businessmen who bear heavy tax burdens: less taxes equate to less tax evasion and an increase in the number of people who have the courage to enter commerce, work or be formal microentrepreneurs in different segments of the economy. So, that federal, state and municipal authorities do not miss the chance to study how to maintain certain incentives and, even better, facilitate the integration of those who want to work under the legislation. As long as it is simple, cheap and easy to fulfill, without bureaucracy and unnecessary costs. It will be better for everyone.