Informal economy reaches minimum in ten years despite Pibinho, says FGV

Jornal do Comércio - RS - Porto Alegre / RS - ECONOMY - 10/07/2013

O Globo Agency

The so-called underground economy, production of goods and services not reported to the government, corresponded to 16,6% of GDP in 2012, the lowest rate recorded in a decade. The mark was reached in the year in which the economy as a whole had an increase of only 0,9% 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 on Wednesday by the Brazilian Institute of Competition Ethics (Etco) in conjunction with the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV).

The strong job 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.

ETCO's executive president, Roberto Abdenur, says, however, that although the picture is positive, Brazil is still far from international levels of informality, which are around 10%. He cites bureaucracy, insecurity in the economy, ignorance about the step by step to formalize and low schooling as factors that have also hampered formalization. "With the current level of indebtedness, there is a slowdown in credit, which seems to indicate the tendency of the rate to stay where it is, close to 16%", he evaluates.

Barbosa Filho also considers 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, reduce bureaucracy and deregulate 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.

 

ETCO and Ibre / FGV: the underground economy slows down

São Paulo, July 10, 2013 - The Underground Economy Index (IES), released today by the Brazilian Institute of Competition Ethics (ETCO) in conjunction with the Brazilian Institute of Economics of the Getulio Vargas Foundation (IBRE / FGV), reached the 16,5% mark at the end of 2012, which represents a reduction 0,3 percentage point over the previous year.

In absolute figures, the estimate is that the underground economy in 2012 - the production of goods and services not reported to the government, which is outside the national GDP - has exceeded R $ 730 billion.

"In general, despite the reduction in the rate of decline of the index, the result is still positive, as it is necessary to take into account that, even with the low performance of the economy in the year, informality continues to fall", says the researcher from IBRE / FGV Fernando de Holanda Barbosa Filho.

Despite the positive reading, in the last two years there has been a slowdown in the rate of decline of the underground economy in the country. “This slowdown is basically due to the decline in formal contracts by the industry and the growth of the service sector, which is intensive at hand and is very dynamic, but has higher levels of informality than the industry ”, explains Barbosa Filho.

"In spite of the government's effort to create measures that facilitate formalization, especially in the sectors of commerce and services, where small entrepreneurs predominate, membership levels in these sectors are still quite low", evaluates ETCO's Executive President, Roberto Abdenur.

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, “in addition to these issues, it is worth remembering that, since the end of 2012, it is observed that the growth of the formal labor market has reached its limit due to two major factors: the rigidity of labor laws and the low level of Brazilian schooling ”. He points out that “if, on the one hand, softening rigid labor laws and reducing red tape 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 major economies in the world ”.

Informality, in addition to its relationship with organized crime and precarious working relationships, brings direct damage to society, creates an environment of transgression, stimulates opportunistic economic behavior, with a drop in the quality of investment and a reduction in growth potential of the Brazilian economy. In addition, it causes a reduction in government resources for social programs and investments in infrastructure.

 

PEC gives more rights to domestic workers, but informal are still the majority

Source: G1

Ibre / FGV researcher says that informality should increase with the law.
Secretariat of Policies for Women and the union bet on regularization.

Approved last Tuesday (26) by the Senate, the so-called PEC of domestic workers gives more rights to professionals in the category. According to data from the Brazilian Institute of Geography and Statistics (IBGE), however, most of these workers are still informal.

Of every ten domestic workers, only three were registered in the employment card, according to data from the National Household Sample Survey (Pnad) of 2011. The informality rate among these employees reaches 69%, and is even higher among women , which are more than 93,6% of this market. For them, informality is 70,7%, against 53% among men.

Domestic workers - formalization (Photo: Editoria de Arte / G1)

The data takes into account workers such as drivers, caregivers, monthly employees and even day laborers, forming a universe of 6,6 million workers.

According to the Union of Employees and Domestic Workers of São Paulo (Sindoméstica-SP), informality among monthly workers reaches 63%, with the other 47% having a portfolio.

“It is one of the most informal sectors of the economy, for sure”, says Fernando de Holanda Barbosa Filho, professor at the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV).

Informality is even more pronounced in the Northeast region, where only 14% of domestic workers have a formal contract, against 36% in the Southeast.

Between 2001 and 2011, the formalization rate among domestic workers grew by 31,8%, while the number of domestic workers grew by 11,95%. Between 2009 and 2011, the rate rose by only 3 percentage points, from 26,4% to 29,3%, a difference considered small by the National Secretary for the Evaluation of Policies and Economic Autonomy of Women, of the Secretariat of Policies for Women of the Presidency of the Republic, Tatau Godinho.

Greater or lesser formalization?
Tatau believes, however, that the formalization will increase with the Domestic PEC.

“The expectation is that the legislation will increase formalization because we believe that there is an increase in the recognition in Brazilian society that this is a right”, says Tatau. “I do not believe it will decrease, even because those who are very afraid are because they do not comply with what they already have today.

The same opinion has the president of Sindoméstica-SP, Eliana Gomes Menezes: “it should improve because the boss will respect employees more. Today, several people came to ask questions about how to formalize ”, he says.

But researcher Fernando de Holanda Barbosa Filho, from Ibre, believes that PEC das Domésticas will increase the degree of informality in the market due to the increase in labor costs. “Regarding the law, what is observed is that it tends to increase informality, possibly there will be an exchange (from housekeepers to day laborers), replacing one type with another. The government is going to anticipate a natural process, since this work was being reduced, but it would take some years ”, says Barbosa.

The average salary of domestic workers is increasing at a high pace between 2009 and 2011, according to PNAD. The increase was 18% for workers with a formal contract and 29,7% for those without a formal contract.

The researcher, who develops the Underground Economy Index (IES) in partnership with the Brazilian Institute of Ethics in Competition (Etco), believes that the adjustment will not be immediate; it should happen gradually.

For the Secretariat of Policies for Women of the Presidency of the Republic, the number of domestic workers in the country is already decreasing, partly because women seek other forms of work and partly because families are organizing in another way.

Citing the reduction from 12% to less than 3% in the number of domestic workers who lived in the house where they work, between 1995 and 2009, Tatau Godinho sees a “brutal change in labor relations, domestic life, division of labor between women and men ”. "Society is learning to agree with a relationship that is not servile, it is work".

Roberto Abdenur speaks to CBN about the Underground Economy Index

ETCO's Executive President - Roberto Abdenur, gave an interview to Rádio CBN on 18/12/12 where he talks about the Underground Economy Index and the stagnation of its results in the last study.

Listen and interview here:
[audio: https: //www.etco.org.br/audio/181212-Radio-CBN_Entrevista-Roberto-Abdenur_IES.mp3] Download the audio file here (mp3)