Inequality and extreme poverty grow steadily in post-coup Brazil

If the proposed pension reform passes, Brazil’s social crisis could become increasingly grave

"We are witnessing a clear increase in the number of homeless people in Brazilian cities"
"We are witnessing a clear increase in the number of homeless people in Brazilian cities" - Rovena Rosa/Agência Brasil

A survey by consulting firm LCA Consultores based on recent data released by the Brazilian Institute of Geography and Statistics (IBGE) has pointed out that the number of people living in extreme poverty in Brazil has grown by more than 1 million. Released last Wednesday (11), the data show yet more evidence of what any of us who walk around Brazilian cities has seen firsthand.

We are witnessing a clear increase in the number of homeless people and beggars at traffic lights, outside grocery stores, and the like. For residents of the metropolitan area of São Paulo, it’s a shocking new picture where more and more people are informally selling products on the subway, including candies and devices, or even “art” by musicians, singers, and poets who ride subway trains in search of bread and butter.

It’s not just extreme poverty that has gone up. The data show there is a current trend to maintain and expand social inequalities in the country. The LCA Consultores survey has revealed that the poorest 5% of the Brazilian population are no longer increasing their real income – as it happened during the Workers’ Party administrations [in 2003-2006, 2007-2010, 2011-2014, and 2015-2016] – and their average income has dropped 18% in 2016.

Let’s look at the example of domestic workers. The average income of this mass of laborers – mostly black women – has grown by 76% above inflation between 2003 and 2014 [during the Luiz Inácio Lula da Silva administrations].

The economics formula here is simple: When the number of people hiring domestic workers is the same or bigger, and there are less domestic workers in the job market, this scenario tends to push up their wages. And there were actually less women providing domestic work [in the period].

While in the 1990s in Brazil 19% of occupied women worked in domestic service, in 2014 the figure dropped to 15%.

However, the number of domestic workers in the country has increased substantially after 2016 [the year when president Dilma Rousseff was ousted and Michel Temer took office]. This is because, in times of crisis, with shortage of jobs and wage drops, women find domestic service to be the only alternative for labor insertion. Following the same logic, when there are more domestic laborers looking for work, wages tend to drop. In 2017, the wages of domestic workers have dropped 8.3% over 2016.

There are two main reasons behind the latest data on the increase of extreme poverty and inequality and the drop in working-class incomes.

One is the increase in unemployment. In 2017, the number of unemployed people has doubled in Brazil over 2014. The lack of jobs and public policies and services, as well as the cuts in existing public services and policies, tends to increase extreme poverty.

Most unemployed people are at the bottom of the socioeconomic pyramid. This is the demographic that has suffered more with the cuts that the coupist president Michel Temer has made in the conditional cash transfer program Bolsa Família, which has impacted 326,000 Brazilian households. The nonexistence of public policies on housing, meal centers, or income generation makes this situation even more tragic.

According to the Law of Supply and Demand, the more unemployed workers looking for jobs, the lower the wages offered to them. Along these lines, unemployment helps to push down the wages of people who are employed, reducing incomes and increasing the inequality between Capital and Work.

The second reason behind those data is that the jobs created in the period are, for the most part, precarious work – and pay lower wages. This is all due to [president Temer’s] Labor Reform, which turns what used to be “odd jobs” into “legitimate work.”

This way, the number of employed people in the country once again is up, but these new jobs conform to rules of precarious work, with low wages, no fundamental rights, and temporary employment relationships.

2017 was the first year in Brazil’s history when informal workers outnumbered formal workers. As if this weren’t enough, the decline in the real value of the minimum wage over the last two years is also contributing to reduce workers’ incomes, especially for the poorest, which are mainly women, black people, and the youth.

And we haven't hit rock bottom yet! If the pension reform passes, this social crisis can become increasingly grave. If it weren’t for Brazil’s Social Security program [that is now in danger], the number of people living in extreme poverty in the country would be 12% larger!

These are the data on the damage inflicted to Brazil after the coup. First they ousted Dilma. Then, they started to take away rights. They have frozen public expenditures, pushed inflation down, slowed down economic growth, increased inequality, exacerbated income concentration, and made dire poverty skyrocket.

* Juliane Furno is a doctoral student in the Economic Development program at the University of Campinas (UNICAMP), a political educator for the Unified Workers Central (Central Única dos Trabalhadores – CUT) and a member of the Brazilian social movement Levante Popular da Juventude.

Edited by: Daniela Stefano | Translated by: Aline Scátola and reviewed by Pedro Ribeiro Nogueira