Jair Bolsonaro’s insistence in claiming that Brazil’s economic activities should return to normal, even in the face of the global outbreak of the coronavirus, has caused stern reactions and drawn protests, but goes beyond that: it makes Brazil one of the most backward countries in the world when it comes to preserving its own economy in a moment of crisis.
The measures that have already been announced by the government, coupled with the discourse that people should end their social isolation, create a dangerous concoction for the labor market. In an article published by the Perseu Abramo Foundation, Giles Azevedo, who worked as the executive secretary of former president Dilma Rousseff’s cabinet, analyses the distortions, and compares what European countries have done with the actions announced by Bolsonaro’s economic team. The inevitable conclusion is that, as the crisis gets worse, Brazil is lagging way behind.
“While the world over, the crisis is being met with the necessary urgency and concern, regardless of ideology, in Brasil, the Bolsonaro government minimizes it’s scope, delays urgent measures, and worst of all, uses the presidency, not to clarify or educate, but in his case, to put the entire population’s health at risk”.
The reasoning behind Bolsonaro’s defense of workers and companies keeping their routines is that it is necessary to maintain employment. However, the president doesn’t have to take responsibility for much, since his administration has not proposed anything consistent to preserve the labor market.
“In Brazil the government is going to allow companies to cut wages and hours by half due to the coronavirus. This is in sharp contrast to what other countries like Italy, France, Portugal and Spain have done, and counter even to what some well known neocon figures like mega investor Bill Ackmann propose”.
Among the measures the government announced on the 18th, is the allotment of vouchers for four months to those in need and informal laborers. The concession will be granted by the Federal Bank and the amounts cannot be less than other government assistance programs.
Procedures like working from home, and the anticipation of collective or individual vacations can be revised by companies within 48 hours, and with less beaurocracy. For the government, the ideal situation during this crisis, is that negotiations between employers and employees be flexible, in order to reduce cost for businesses.
In the article, Giles Azevedo points out that the consequences of this flexibility have already started being felt, and notes that the companies that comprise the São Paulo stock exchange have already lost more than a trillion Reais in market share.
“Union heads for the airline sector are informing us that Gol and Azul airlines’ proposal is mandatory unpaid leave. Workers would only keep their health plans, and (another airline) Latam will cut 50% of wages. International hotel chains are suggesting the same in São Paulo”.
What the world is doing
The decisions taken by European nations, in the face of the economic crisis caused by the spread of the virus, show us that the developed world has realized the exact opposite of what the Brazilian government is saying: in times of economic tension, it is important to act firmly to mediate relations between employers and employees.
In Italy, the “Cure Italy” decree has made available 25 billion euros to overcome the crisis and financial support for workers and companies has been a major talking point for the government. Lay offs have been suspended for 6 months and the State is guaranteeing loans for investments and debt restructuring. It’s a 10 billion euro package where “The most important part is the one on aid to workers and businesses”, says Giles.
French authorities announced they will give 300 billion to companies, and that bank loan payments will be taken up by the government. Beyond that, rents, taxes and electric, gas and water bills have been suspended.
The measures adopted in France also call into question Brazilian finance minister’s Paulo Guedes insistence on passing (social security) reforms. In the European country, any such legislation has been put aside for the duration of the calamity.
Workers can also count on stricter protective measures in Portugal. Monetary support corresponding to 66% of salaries has been established. Half will be paid for by employers, the other half by social security. Those who are self employed will receive one third of their wages, and have all tax payments postponed. People who have to be home due to schools shutting down, and cannot work remotely, will not fail courses due to absences.
The Portuguese government has opened up credit lines to help companies, postponed tax payments and is providing extraordinary support to companies so they can meet payroll requirements.
In Spain, the biggest ever sum of public funds has been mobilized: 200 billion euros. For co-ops and more vulnerable companies the amount is 17 billion. Six hundred million euros have been allocated to rent and mortgage payments for people in unstable financial situations.
The largest companies in the country are being shielded by the government, to avoid being bought out by foreigners due to the sharp fall in their valuations.
In Giles’ Azevedo analysis, the Spanish State isn’t acting to stimulate the economy, but to avoid collapse. “The idea behind the measures undertaken in the country, is to provide a response to this huge blow suffered suddenly, and to avoid as much as possible the destruction of the labor market and supply chain”.
This is the exact opposite direction than the one taken by Bolsonaro and Paulo Guedes. “If we had a real president, the situation would already be extremely dire. With Bolsonaro, the crisis gains hints of tragedy”, concludes the author.