Brazil Ignites Union Fury with Outsourcing Bill

EspañolBrazil’s Chamber of Deputies overwhelmingly approved a new law on Wednesday that would allow the nation’s companies to outsource their labor force.

Currently, Brazilian firms can only hire outsourced workers for “non-essential” jobs, such as cleaning and transportation services. If Bill 4330/04 is signed into law, it will allow companies to contract their entire labor force, core and non-core jobs alike, from outside.

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The bill’s supporters say the legislation will reduce uncertainty in hiring practices and spur job creation. However, congressmen from both the ruling Workers’ Party (PT) and the Communist Party argue the bill is a setback for labor rights and could lead to a deterioration of working conditions.

While Brazil’s lower house approved the principal text of the bill with 324 votes in favor and 137 against, it may still be amended before it is put to a vote in the Senate.

During Wednesday’s session, over 2,000 union members protested the bill outside Congress. Military police were called to the scene to prevent demonstrators from breaking into the building.

The bill contemplates important changes to the labor code, with the most controversial element permitting employers to contract out for any jobs, extending a mode of employment currently allowed only for services not essential to the firm’s operations.

“Today, there are almost 13 million subcontracted workers in Brazil, versus 35 million working as fully hired employees. These situation will reverse itself if the bill passes. A firm’s goal is only to reduce costs,” Graça Costa, the secretary of Labor Relations at Brazil’s Confederation of Workers (CUT), complained.

The union leader fears that a large proportion of Brazil’s full-time workers could end up as temporary contracted workers, but the main point of contention seems to be that the initiative relieves the subcontracted worker from having to belong to the relevant firm’s union.

Miguel Rossetto, General Secretary of the Presidency, similarly voiced the Rousseff administration’s stern opposition to the bill.

“[It’s] bad; it allows every labor relationship to be outsourced, and therefore deteriorated. It reduces wages and social security funds. It’s not good for workers. It’s not good for the country,” Rossetto told the chamber.

However, in order to reduce the contrast between the two employment statuses, the bill requires that subcontracted workers be awarded the same benefits (e.g., food and transportation vouchers, health coverage) as regular employees.

Firms, Parties Align Behind Bill

Arthur Maia, a congressman with the Solidarity Party (SD), backed the legislation, saying its goal is to bring “legal certainty” to labor relations and serve the needs of “workers, businessmen, and the Brazilian economy.”

The head of the influential Federation of the Industries of the State of São Paulo (FIESP), Paulo Skaf, backed the proposal in the interests of greater specialization.

“In construction, for instance, you don’t need a single firm to do everything. Rather, there are different firms for every stage of the construction,” he argued.

Nevertheless, CUT President Vágner Freitas labelled the bill “atrocious” and announced union protests in every state in Brazil to defend labor rights.

If it becomes law, the initiative will cover both public and private sector firms, freelance workers, and agricultural producers.

Roberto Chiocca of the Mises Brasil Institute compared current labor legislation in Brazil with Benito Mussolini’s fascist labor code, but remained skeptical of whether the reforms will change its essential limiting nature.

The policy institute expert further suggested that the current controversy boils down the potential for unions to lose out in terms of political and economic clout.

Translated by Daniel Duarte. Edited by Guillermo Jimenez and Laurie Blair.