January 16, 2025

Analysis

Adverse Terrain

Brazil’s experiments in labor law

The 2017 reform of Brazil’s labor law is part of a broader movement that arose over the first two decades of the twenty-first century, especially after the 2008 financial crisis, with the purpose of eroding labor rights on an international scale. This trend represented a return to the structural reforms of the 1990s, when rising neoliberal governments crafted their agendas from policies of flexibilization and the deregulation of labor relations, under the pretext that the problems of unemployment and informality were insurmountable without them. Despite their inefficacy, policy changes empowering employers in determining wages and working conditions have been repeatedly prescribed over the past four decades as a way of stimulating economic growth and solving labor market problems in different countries. 

By now, a number of studies indicate the negative impacts of policies that reduce the role of labor unions and public regulation in labor markets. The reforms have deepened social inequalities and created job precariousness by legalizing contracts that guarantee fewer employer obligations. The proliferation of these contracts has consequently affected union organization and representation in ways profoundly challenging to workers’ collective action. 

The Brazilian scenario is no exception.1 Five years after the implementation of the reform, unionization rates in the country have fallen to 8.4 percent, which is equivalent to 8.4 million union members out of 100.7 million employed individuals in 2023. This is the lowest percentage in the official data series that began in 2012, when the unionization rate was nearly double (16.1 percent).2 In ten years, the share of the Brazilian workforce organized into unions has fallen by half. 

Several simultaneous and interrelated factors are at play to produce this result, which cannot be exclusively pinned on labor reform. These are economic, political, and ideological factors that contribute to delegitimizing and discrediting trade unions, leading to workers’ indifference toward organizations meant to represent them. Although the ongoing erosion of workers’ rights in Brazil is not limited to those measures adopted in 2017, they are a milestone and a crucial dimension of this process. The unionization rate fell from 16 percent to 14.4 percent between 2012 and 2017 and to 11 percent in 2019, which points to the decisive impact of the reform on this downward trend.3 The number of union members is falling in all sectors of economic activity, including the public sector, where unionization is traditionally higher, from 28.1 percent to 18.3 percent between 2012 and 2023. The situation is more dramatic among precarious workers, as the fragility of their occupations, while not preventing unionization, makes it more difficult: employees in the private sector without a formal employment contract have a unionization rate of 3.7 percent, the self-employed 5.0 percent, and domestic services 2.0 percent in 2023.  

The total effect of these trends has been self-reinforcing in empowering employers and reducing workers’ control over their own lives. This significance can be seen in the declining unionization rate among youth: in 2022, the unionization of the population aged between 15 and 29 stood at 5 percent. Many young people enter the labor market in precarious occupations and are unable to move into more stable and protected jobs over the years. The legal attack on the Brazilian union movement not only fragments existing workers’ organizations, but, in the recent national context, has allowed a culture of entrepreneurial ideology to spread as the most readily available perspective through which young workers understand their material situation. 

The 2017 labor reform contributed to this scenario in several ways. Firstly, precarious contracts inhibit worker organization by increasing job turnover, leading to low wages and weak labor rights associated with them. Secondly, the multiplication of contractual forms—effectively misclassifications—hinders the perception of a sense of common belonging and, therefore, the creation of a collective identity. Thirdly, the amendments have clearly anti-union features, with a number of measures aimed at circumventing the role of unions.

Back to the 1990s?

The changes approved by Michel Temer’s presidential administration in 2017 were largely built upon projects begun in the 1990s to make wages and employer obligations more flexible. Law 13.467 (which instituted the union reform) was part of a package that included Law 13.429, which allowed for the expansion of subcontracting for work previously performed by direct employees. Both laws were based on the premise that the Brazilian Labor Code (CLT), the law that governs labor relations in Brazil, was outdated and archaic, stifling employers’ freedom, restricting free enterprise, and discouraging hiring. 

Among employers, politicians, and columnists in the mainstream press who pressed for reform, the common argument stressed the need to “modernize” labor relations in order to adapt to transformations in the productive structure of the capitalist economy, and technological innovations intensified by uberization and the development of artificial intelligence. Invoking what businesspeople in Brazil refer to as a need for “legal certainty” for capitalist investment,  they argued that direct understanding between the interested parties “taking into account people’s wishes and realities,” rather than legal rights for labor, would enable companies to “safely conduct business.” The reforms were passed amid a chorus of claims  that “social rights must be made more flexible if there are to be jobs,” on the grounds that “you’ll never be able to tackle unemployment by expanding rights alone.” Attacking labor legislation that supposedly promoted injustice, and condemning the “activism” of the courts, proponents of modernization advocated for private contractual legal standards over universal ones—standards to be agreed to, if possible, on an individual basis and not collectively. As Justice Ives Gandra Martins Filho, former president of the Superior Labor Court (TST) at the time of the reforms, argued, reform would ensure “prestige to collective negotiation” and “break legislative rigidity.” The result, however, has been to relieve companies from assuming liability for the whole of their workforce, and the state from maintaining its obligation to the welfare of its citizens. 

Dimensions of precariousness

By weakening unions, the 2017 changes to Brazilian labor law have had the effect of relaxing health and safety standards for workers, reducing inspections of employers, and making it more difficult for workers to access Brazil’s Labor Court. 

The changes also legitimated forms of precarious employment previously considered illegal. Take the case of zero-hours contracts, through which employers are allowed to count working hours according to their needs, without being required to guarantee their employees a set working day or ensure a minimum wage. Other practices weaken the employment relationship generally. Hiring workers as permanent freelancers evades employment law, for example, as it allows employers to falsely classify labor as self-employed and shifts onto the worker, who has become a de facto entrepreneur, the burden of securing their individual social protection.

Such new kinds of work relationships were legalized incrementally before the 2017 labor law reform: legislation in 2005 allowed for companies made up of a single person, defined as a “Legal Person” (PJ), to provide professional services; and in 2008 legislation established the legal category of “Individual Microentrepreneurs” (MEIs) that pay reduced social security contributions for self-employed people up to one employee. Once established, the process of “pejotização” or “pejotization” and the use of MEIs spread to different sectors. Such contractual relationships promote the de-standardization of working hours and wages, as they seek to eliminate idle time considered “non-productive” insofar as the employer determines it not to contribute to capital growth. In terms of working hours, rest, and income, these contracts create greater uncertainty in the lives of those who make their time available to the company, since pay can vary according to the demand for work and the way in which the employer calculates the working day. Being at the company’s disposal is no longer considered working time, as the time clock only starts ticking if the hours worked generate profit for the employer. It is therefore a way of increasing productivity to the detriment of living standards.

The pay cut alongside the replacement of employees by freelancers, MEIs, and PJs reduce social security contributions, impacting social security revenues. 4In this respect, these contracts affect both hired individuals as well as their communities. As the state loses revenues intended to fund public programs, the discourse in favor of austerity has perversely strengthened the stigma of public-sector failures. This unleashes a continuous process of labor and social security reforms and spending cuts, especially in the field of health and education, restricting the social citizenship of future generations. In addition to the fact that precarious contracts reduce tax revenues, workers with precarious contracts find it difficult to make continuous contributions and, without accumulating the necessary contribution time, are unable to exercise their right to retirement.

The reform also authorized the inversion of the hierarchy of regulatory instruments. Until the 2017 labor law reforms, labor agreements could only improve upon employment law where they were more favorable than the wages and working conditions established by legislation. The 2017 law allows private agreements to supersede public regulations even where they provide lower wages and worse working conditions, allowing the least favorable rule for workers to take precedence over the others. Instead of strengthening unions, as some argued the reform would, it became feasible for unions to consent to reducing rights guaranteed by law. Thus, the argument of encouraging collective bargaining disguises the real objective of the reform: to reduce labor costs.

Obstacles to union action

The reform undermines trade union prerogatives by making it possible to ratify employment terminations without union participation, previously thought essential to ensure that workers are not harmed and do not give up their rights when they are dismissed. The reforms also allow workers whose salaries are twice the social security ceiling to negotiate some rights individually, on the assumption that they are able to negotiate on an equal basis with their employers. Making negotiation an individual process promotes differentiation between workers according to their bargaining power and makes unions redundant in the worker’s eyes. Furthermore, the law contains clauses allowing companies to create committees to represent workers in the workplace and negotiate on their behalf. This not only introduces competition with unions, but also broadens the employer’s power to unilaterally determine conditions for the hiring, use, and pay of labor. 

Although some of these forms of contracting, such as the intermittent contract, have little impact on aggregate labor market performance, they bring significant challenges to union organization. Contractual diversification—which is even happening in the public sector, previously protected by its own contracting system—and liberalized  subcontracting undermine union representation and fragment how workers experience their collective enterprise. Being salaried, self-employed, or subcontracted changes the conditions in which people work, affecting the way they do or do not see themselves as workers, the relationships they establish with their colleagues, and their willingness to join unions. While formal employees have guaranteed rights, the self-employed in a disguised employment relationship work without rights or union protection. Subcontracted workers, as a rule, receive lower wages and fewer benefits than those guaranteed by the company that is doing the outsourcing. In addition, subcontracting fragments labor collectives into distinct professional “categories,” which, according to Brazilian labor law, means they will be represented by different unions. These unions are generally weaker than those who represent non-subcontracted workers and negotiate collective agreements that are less protective.

Teleworking and other forms of remote work—not widely adopted in the first years after the reform—expanded during the Covid-19 pandemic due to social distancing, creating an additional challenge for unions’ ability to organize workers subject to territorial dispersion. Platform work contributes to this, along with the distancing of workers from the union, since they are not gathered in the same workplace, which has repercussions on forms of sociability and the construction of solidarity networks. 

The reform has also shaped worker ideology. The reforms are based on an entrepreneurial, neoliberal ethic, in which labor is measured against accumulating property ownership. That ethic is spreading among workers, fostering illusions about the power of personal abilities and freedoms, nurturing self-sufficiency expectations and the often illusory dream of running one’s own business. By praising the advantages of self-employment, the ideology of entrepreneurship distances workers from collective organization and the struggle for rights. This undermines trade unionism in two ways: by encouraging individualism and competitiveness, and by weakening solidarity—after all, it’s about bearing the inherent risks of free enterprise in order to secure a position in the market. Entrepreneurship has been used to justify precariousness and the rolling back of rights, and this has had a demobilizing effect. Moreover, the cult of meritocracy makes trade unions, as well as any form of association, supposedly unnecessary, since everything depends on the effort and competence of individuals. It’s also important to mention the smear campaigns against unions, anti-union practices promoted by companies, as well as the political and ideological environment that has been shaped by the rise of conservatism and the extreme right, especially during Jair Bolsonaro’s term in office (2019–2022), marked by political positions against the union movement and progressive social movements. 

Yet no hegemony is absolute. There are cracks, crevices, through which organizations are built and actions are carried out to defend rights, although not without conflicts and contradictions. Workers who experience exploitation and precariousness on a daily basis see the need to organize in order to reduce their vulnerability. However, this organization increasingly does not necessarily take the form of a trade union. Workers more heavily exposed to precarious work, such as casual workers and the self-employed, have been setting up alternative organizations to trade unions, such as associations, cooperatives, and collectives. On the one hand, there is a widespread misunderstanding in Brazil that the informal and self-employed do not “have the right” to join unions. On the other hand, there is a movement to delegitimize and reject the union form because, given their working conditions, precarious workers, as a rule, do not feel represented by the union. The very nature of the Brazilian union structure contributes to this perception, since the rules governing union organization in Brazil have fostered the existence of bureaucratized, registry-like entities that exercise a monopoly on grassroots representation and solid sources of funding, the most important of which is the so-called “union tax.” According to a widespread view, unions are inefficient, only interested in collecting fees from members and maintaining the bureaucratic structure, rather than representing the interests of workers in their government-granted jurisdictions.  

But what are workers’ interests and to whom should they be addressed? There is no consensus on this. The experience of some of the informal and falsely self-employed contradicts the discourse of autonomy and free enterprise, allowing them to claim their status as workers from the state and employers. Others form associations not to defend labor rights, but searching to improve their situation “in the market,” in a similar model to that of clubs or trade associations:  delivery and app drivers, for example, benefit from discounts on the purchase of vehicles, gas, insurance, , as well as insurance for the goods they transport. For other categories, such as caregivers for the elderly and children, initiatives to promote professional development, service provisions, or even the intermediation of the workforce stand out.5 In other words, there is a wide range of scenarios and perspectives that have grown to fill the gaps of an atrophied union movement in Brazil, comprising both solidarity values and individualistic benefits as reasons for collective organization. In the same way that some trade unions are more representative or more or less proactive and have varying political and ideological profiles, there are different types of associations—some of which have not ruled out the possibility of becoming trade unions in order to better undertake the mission of organizing, representing, and mobilizing workers.   

Changes in occupational structure and the expansion of hiring methods enabled by the labor reform, coupled with competition from other forms of social organization, have contributed to a decline in the unionization rate. Other obstacles the unions face are expressed in the reduction of collective agreements and conventions. Contrary to the rhetoric that the reform would stimulate collective negotiation, several analyses carried out using Mediador, the collective-bargaining registration system maintained by the federal government’s Labor Relations Office, indicate that the number of regulatory instruments negotiated fell after the reform, by 19 percent in terms of agreements and 10 percent in terms of collective bargaining agreements, between 2012 and 2022. 6

Besides struggling to reach agreements, the results tend to be worse. The negotiation process is marked by greater pressure from employers to introduce contract clauses that downgrade working conditions, in accordance with changes introduced into legislation after the reform.7 Meanwhile, many collective agreements and past practices now include fees to be charged to all workers who benefit from the negotiation process, as a kind of contribution for the work done by the unions. The so-called “negotiating fee” became a strategy for unions to try to compensate for the loss of revenue, since the reform made the collection of union dues—one of the three contributions provided for in Brazilian law—conditional on the worker’s prior consent. This measure followed the guidelines of the 1998 decision by the Superior Labor Court (TST) and the 2003 decision by the Federal Supreme Court (STF), which restricted the collection of the other two compulsory contributions (confederation and member benefits) to affiliated workers, on the grounds that making them compulsory violated freedom of association. The STF’s decision was reviewed in 2023, given that, with the end of the compulsory union dues after the reform, unions lost practically all their previously guaranteed sources of funding, leaving them with only monthly fees paid voluntarily by an increasingly smaller number of union members.8 Following this ruling, trade unions can collect dues from all workers, even non-members, as long as they are approved by grassroots meetings. 

Reduced resources have affected the ability of trade unions to promote grassroots actions and support social movements in defense of citizenship rights. Unions have started to cut back on their expenses, laying off staff, divesting assets, cutting services and communication costs, while at the same time adopting initiatives to increase their income, such as unionization campaigns. However, attracting new workers is impeded by the proliferation of different types of contracts and the aforementioned subjective issues, which lead to indifference or a negative perception of unions.9

The future of the trade union movement

The reform has drawn significant criticism from the trade union movement. Although a fair number of union leaders have bought into the discourse of modernizing labor relations as a means to strengthen unions, a broad majority has proposed repealing the reform. The Priority Agenda of the Working Class, signed by seven trade union federations and presented to the 2018 election candidates, calls for the repeal of only parts of the reform, indicating either the existence of benefits from the reform, or the lack of consensus among the federations on what should be repealed.10

The position in favor of repealing the “regressive milestones” of the reform was agreed upon mid-pandemic, during the National Conference of the Working Class (CONCLAT), organized by the Forum of Trade Union Confederations.11 The repeal flag made a strong comeback in the 2022 presidential campaign. After hinting at a possible repeal in his government program, Lula backtracked and instead suggested reviewing  points of the reform, in order to accommodate sectors of the trade union movement that defended this position.12 Upon taking office, Lula set up a tripartite task force to discuss a new regulatory framework for labor relations, but talks have stalled. Repeal remains a distant project with no concrete action taken thus far. 

In the meantime, in addition to confronting a drop in unionization rates, unions continue to face difficulties in mobilizing members. Participation in demonstrations has been very low, reflecting a weak commitment to political demands that go beyond the economic-corporate sphere and growing depoliticization of the labor movement. The May 1, 2024 fiasco—no more than two thousand people attended the demonstration, which included the presence of Lula—was an example, in addition to lackluster attendance for the march to Brasilia in defense of the working class agenda, held that same month, of how the legislative changes have affected the very ability to mobilize around labor agendas. Strikes, which soared significantly from 555 in 2011 to 2,114 in  2016, fell dramatically to 649 in 2020 at the peak of the pandemic. While structural changes in the labor market, the economic crisis, and the health crisis certainly contributed to this shift, the expansion of informality and disguised employment relationships also played an important role in making workers more vulnerable in joining strikes. Of course, this hasn’t entirely stopped strike activity, as demonstrated by the “app strike” carried out by couriers in 2020, but increased precarity has posed challenges for informal worker organization. While strikes increased after the pandemic, they are still below those recorded between 2013 and 2018. There were 1,132 strikes in 2023.13 Furthermore, strikes today tend to be defensive, in favor of maintaining the working conditions in place or advocating against rights infringements. Precarity has shaped the content of the demands made and reduced strike duration. Strikes have become significantly shorter, with the majority only lasting a single day. 

Present-day demonstrations carry different meanings. The disputes surrounding the regulation of platform work exemplifies the different positions taken by unions and associations, which remain divided between defending the CLT, self-employment, and a compromise that guarantees some level of rights. After setting up a tripartite task force to draw up proposals to regulate the transportation of goods, people, and “other activities carried out by means of technological platforms,” the government presented a controversial Supplementary Bill (PLP 12/2024) that is limited to passenger transportation in four-wheeled vehicles. Many workers have rejected the proposed regulations, arguing that the “autonomy with rights” model promoted by the government represents an attack on their freedom to conduct business. Drivers and couriers, fearful that the proposed rules would be extended to them, held rallies in several capitals across the country against the project. The demonstrations not only represent a criticism of government intervention, but they also reflect a popular rejection of the unions and union confederations, who claim to represent non-unionized workers at the negotiating table.14

In addition to being weakened by the legislation, the trade union movement has been abandoned by the workers it sets out to organize. Successive advancements toward greater flexibility and subcontracted work, culminating in the 2017 labor reform, have made it difficult for unions to reach out to the grassroots, especially in the most precarious segments of the labor force. Despite these hardships, however, unions are not doomed to disappear. A recent survey suggested that unions have room to grow: 19 percent of workers surveyed “never participated, but would like to join a union.”15 The necessity of a more durable and organized movement to address these expressed needs is evident, for example, in the campaign against the “6×1” work shift (six days on, one day off), launched by the Life Beyond Work (Vida Além do Trabalho, VAT) movement.16 By undermining the basis of existing class relations to workers’ collective disadvantage, the legal changes themselves create the social material for new organization, giving the trade union movement the opportunity to embrace the demands of precarious workers revitalizing the country’s labor movement. It should not be forgotten that the reduction of working hours is a historic flag of the trade union movement and that the fight to reduce working hours to forty hours a week with no reduction in wages has been on the agenda of the trade union federations since the first Lula government. Will not having a leading role in the campaign launched by VAT prevent trade unions from joining this movement? 

Translation: Marina Ribatski

  1.  This article revisits and updates arguments developed in other works, especially: Galvão, Andréia; Krein, José Dari. Labor counter-reform and the weakening of public labor institutions. Revista do Tribunal Regional do Trabalho da 15ª Região. v.53, p.89-106, 2018. Galvão, Andréia. Labor reform: effects and prospects for unions In: José Dari Krein et al., (Org.) Labor reform in Brazil: promises and reality. Campinas: Curt Nimuendajú, 2019, p. 199-223.

  2. Data from the IBGE’s National Continuous Household Sample Survey. Cf. https://agenciadenoticias.ibge.gov.br/agencia-noticias/2012-agencia-de-noticias/noticias/40445-em-2023-numero-de-sindicalizados-cai-para-8-4-milhoes-o-menor-desde-2012

  3.  The drop continues even after the recovery in employment levels and the increase in the working population seen, especially after 2021, when the effects of the Covid-19 pandemic on the labor market began to reverse. In 2022, the unionization rate falls below double digits, reaching 9.2 percent, and drops even further in 2023, as mentioned above (8.4 percent).

  4. Editor’s note: In the United States, the International Brotherhood of Carpenters refer to the similar growth of independent contracting as “tax fraud” for this reason.

  5. Galvão, Andréia; Lemos, Patrícia; Trópia, Patrícia. Union strategies for organizing workers affected by precariousness in Brazil In: Sandro Pereira Silva et al. (Org.) Labor regulation and workers’ collective action in Brazil in the 21st century, Brasília: Associação dos Funcionários do Ipea, 2024, p. 172-195.

  6. Silva e Campos, op. Cit, p. 16.

  7. Ana Paula Colombi, Ana Paula;, Marilane Teixeira, Marilane and , Patrícia Pelatieri, Patrícia., “Impacts of the labor reform on collective bargaining: a comparison between the 2016 and 2019 collective bargaining instruments”. Krein, José Dari et al. (Org.) O trabalho pós Reforma-Trabalhista (2017). Campinas: Cesit, 2021, vol. 2, p. 525-564.

  8. Available data indicates a 98% reduction in union tax collection between 2017 and 2022. See https://www.poder360.com.br/economia/contribuicao-sindical-despenca-98-em-5-anos/

  9. In 2018, the Social Confidence Index for trade unions reached its lowest level in 15 years, 35 points, on a scale of 0 to 100. In 2023, it rose to 48, but it is the third worst rated institution among the 20 surveyed by the Institute for Intelligence in Research and Consulting (IPEC). See https://www.ipecinteligencia.com.br/Repository/Files/2223/230196_ICS_INDICE_CONFIANCA_SOCIAL_2023.pdf

  10. CSB, CTB, CUT, Força Sindical, Intersindical, Nova Central and UGT. Available at https://www.dieese.org.br/documentossindicais/2018/agendaPrioritariaClasseTrabalhadora/index.html?page=1.pdf.

  11. The document is signed by: CSB, CTB, CUT, Força Sindical, Intersindical Central, Intersindical Instrumento de Luta e Organização da Classe Trabalhadora, Nova Central, Pública and UGT. Available at https://www.dieese.org.br/documentossindicais/2022/CONCLAT-pautas-centrais-sindicais-07-abril.html

  12.  The Revoga Já (Repeal Now) movement, set up on the initiative of the São Paulo Lawyers’ Union, adopted the slogan “No Worker Without Rights.”

  13.  All the data is from Dieese Strike Monitoring System  (Sistema de Acompanhamento de Greves do Dieese).

  14. See, for example, https://www.otempo.com.br/cidades/sindicato-nao-motoristas-de-aplicativo-protestam-contra-regulamentacao-em-bh-1.3346675

  15. Brazilian Society Analysis Center, Working Class Survey, 2024, p. 9.

  16. his is a work schedule of six days a week followed by one day off. Considering the legal working day of 44 hours a week, this represents a daily working day of 7 hours and 20 minutes, disregarding any overtime. The movement launched a petition, endorsed by almost 3 million people, and gave rise to a proposal for an amendment to the Constitution that also signals a reduction in the working day. See https://peticaopublica.com.br/pview.aspx?pi=BR135067

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