ORGANIZED LABOR IN BRAZIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83S00855R000100160004-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 27
• Document Creation Date: December 21, 2016
• Document Release Date: July 28, 2008
• Sequence Number: 4
• Publication Date: September 1, 1982
• Content Type: REPORT

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Directorate of Confidential
Intelligence
Organized Labor
in Brazil
State Dept. review completed
Confidential
ALA 82-10125
September 1982
424
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Directorate of Confidential
Intelligence
in Brazil
Organized Labor
This paper has been prepared by
Office of African and Latin American Analysis.
Comments and queries are welcome and may be
addressed to the Chief South American Division,
ALA
This paper has been coordinated with the
Directorate of Operations and the National
Intelligence Council.
Confidential
ALA 82-10125
September 1982
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Confidential
Overview
Information available
as of 30 August 1982
was used in this report.
in Brazil
Organized Labor
For years Brazilian labor was co-opted politically by the government.
Specific measures and corporatist policies to ensure that it would not
provide a rallying point for dissidence kept it a relatively safe vassal of the
state. The military regime that came to power in 1964, moreover, only
reinforced the corporatist labor tradition of predecessor civilian
governments.
Beginning in 1978, however, the broader process of abertura (or Brazilian
political liberalization) and the gradual erosion of the corporatist frame-
work of labor relations led to changes in the way the central government
dealt with labor. As a result, there was a return to high levels of strikes and
the emergence of some independent labor leaders who had the capacity to
mobilize worker protest. Thus:
? Workers in 1979-80 struck successfully in record numbers for higher
wages and better working conditions and demonstrated their capacity to
pressure government and business.
? Unions, particularly those belonging to key economic sectors in urban
areas, took concrete actions to influence government policies and to
promote labor unity.
? Labor last year convened the first Conference of the Working Classes to
plan the formation of a single labor confederation, a move the regime
consistently has opposed and considers illegal.
As the crucial November elections approach, labor is poised to play its
most direct role in the political process in almost two decades. A new grass-
roots workers' party, led by a charismatic former union chief, is actively
seeking to forge a labor constituency with the help of influential elements
within the Catholic Church. Other newly formed political parties also are
wooing labor and claiming to represent its interests.
Labor, in spite of its longer term potential to emerge as a force of national
influence, still faces important challenges such as:
? The legacy of Brazil's corporatist labor tradition.
? Lack of labor unity, broadly based leadership, and common political
ground.
? The regime's sensitivity to the potential political activism of workers.
? Rank-and-file concern that open pursuit of a political role could jeopar-
dize recent gains.
Because of these challenges, we do not expect that organized labor will
make any substantial inroads into the political process in 1982-83. Still, the
experience of greater activity in the political process will probably build
iii Confidential
ALA 82-10125
September 1982
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confidence and establish precedents for a wider role in future years,
achievements that could have substantial importance should abertura bring
even more opportunities for cooperation with other sectors of society.
Irrespective of how labor's role evolves in the short and long term, we
expect that there will be a generally higher incidence of strikes in this
decade than in the 1964-78 period. The government probably will remain
more tolerant of strikes if they emphasize legitimate bread-and-butter
issues and avoid political ones, and labor therefore will not be as reluctant
to strike as in the past. Labor fractiousness in any particular year will tend
to be driven by the conditions of the economy.
As opportunities permit, labor will continue to broaden its role by
becoming more representative of workers, organizing itself more effective-
ly, entering the political arena on labor-related issues, and developing a
more effective dialogue with management.
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Confidential
Introduction 1
Labor and the State 1
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examines factors influencing political stability in Brazil. We believe the
future direction and role of Brazil's evolving labor movement are key
factors in assessing the prospects for political stability in Brazil. Labor is,
however, only one of several elements that are likely to affect the course of
Brazil's development.
the most recent contribution to a series of building-block papers that
This research paper,) lis
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Confidential
Organized Labor
in Brazil
After a long period of relative dormancy, Brazil's
fledgling labor movement is slowly broadening its
political role, a development largely a result of the
government's gradual liberalization policies. As the
crucial November elections approach-every level of
elective office will be contested and the results will
influence the presidential succession in 1985-labor is
poised to play its most direct political role in two
decades. At the same time, the traditional corporatist
relations between labor, business, and government are
eroding, and less paternalistic ones are evolving. The
political effects of these complex and interrelated
changes are beginning to appear, but labor still has to
contend with constraints on its political role and on its
ability to change the structure of labor relations.
The US labor attache believes that the next several
years may be crucial in determining the longer term
shape and direction of the Brazilian labor movement.
To evaluate that view, this paper examines the in-
creased activism of labor and labor's relations with
various sectors of society-the state, business, the
church, political parties, and the radical left. In so
doing, it assesses the prospects for labor as a factor for
political change in the context of the upcoming elec-
tions and the longer term process of political
liberalization.
Authoritarian military rule and a long tradition of
state domination of labor through a corporatist system
has precluded labor's emergence as a unified political
force capable of challenging the regime. The virtual
exclusion of labor from the political process since
1964, in fact, resulted from deliberate government
actions. Unable to act autonomously as a pressure
group or to influence government policies substantial-
ly, Brazilian labor failed to evolve significantly in
social or political terms until recently.
Since President Ernesto Geisel (1974-79) initiated a
modest liberalization program, however, Brazil has
undergone a significant evolution toward a more open
and responsive political system. We believe President
Joao Figueiredo, inaugurated in March 1979, has
reinforced this process and improved the prospects for
a civilian successor when he steps down in early 1985.
Specific actions undertaken by Figueiredo to promote
liberalization include: a broad amnesty for political
prisoners and exiles; a new law permitting more
political parties; relaxation of restrictions on media,
student and labor activities; and the first popular
gubernatorial elections-slated for November-since
1965.
Labor has been a chief beneficiary of the govern-
ment's gradual liberalization policies. Since 1978
labor has been increasingly active in criticizing gov-
ernment policies, promoting its economic and political
interests, cooperating with other sectors of society,
and questioning the corporatist model of labor rela-
tions. Labor's relations with the state, however, re-
main the predominant factor shaping the movement's
role in society and determining its future direction.
The Geisel Government
The US Embassy and most observers agree that an
illegal strike in May 1978 by Sao Paulo metalwork-
ers-regarded as Brazil's best organized and most
militant-initiated a period of new activism by orga-
nized labor. For the first time since 1964, a segment
of the labor movement successfully challenged the
government in support of wage demands and obtained
for itself a settlement substantially exceeding the
official index. Government and management accepted
negotiated settlements and did not attempt to enforce
the antistrike provisions of the labor code. Similar
strikes took place in 1978, mainly in the metallurgical
industry of Sao Paulo, and were settled on the same
basis.
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Brazilian Labor Organization
and Characteristics
Great diversity exists within organized labor, both
geographically and by sector. The movement includes
a minority of modern-minded industrial workers
whose outlook often contrasts sharply with that of
the majority of workers who are still tied to tradi-
tional values. The industrial workers, who are em-
ployed by large multinationals, state entities, and
modern national firms, are concentrated in about 300
unions mainly in southeast Brazil. They are vocal,
well organized, and politically conscious, but not
representative of labor as a whole.
Of Brazil's 23 states, several contain a disproportion-
ate number of labor unions and union members. Sao
Paulo and Rio de Janeiro, for example, together
contain more than half of Brazil's nonagricultural
union workers, while Rio Grande do Sul, Parana, and
Ceara contain more than one-third of union workers
in agriculture. Almost half of Brazil's urban unions
are located in three states-Sao Paulo, Rio Grande
do Sul, Rio de Janeiro-and a similar percentage of
rural unions are situated in five states.
Brazil's labor development has thus been shaped by
regional influences. The Sao Paulo area, which ac-
counts for about half of national industrial output
and employment, is the hub of the labor movement.
The Sao Paulo unions, moreover, are sufficiently
large and well organized to provide its leaders with
an independent base; they are likely to continue
playing the definitive role in labor' development. The
Rio de Janeiro area, perhaps because of an economic
base of commerce and tourism, is least militant and
exhibits the greatest conformity to the labor struc-
ture outlined by the labor code.
Labor relations in the south, which comprises the
states of Santa Catarina, Parana, and Rio Grande do
Sul, are characterized by a high level of labor
awareness and relatively sophisticated unions. The
Rio Grande do Sul area, moreover, reflects the
region's greater. European tradition and demography.
By contrast, unions in northeast Brazil generally
operate within the corporatist structure, with rural,
agricultural workers outnumbering those in urban
areas.
The majority of workers do not belong to unions. As
of 1979 total union membership was almost 9 mil-
lion, or roughly one-fifth of the approximately 44
million in the labor force. Nationwide population in
1980 was estimated at 119 million. Of the 9 million
union rank and file, however, less than half pay union
dues in addition to the mandatory tax collected by
the government.
More than twice as many persons work in nonagricul-
tural occupations as those in agriculture. The num-
ber of union members in agriculture, however, is
about equal to the number in all the nonagricultural
sectors combined. The number of women making up
the labor force has increased steadily since 1950 and
now stands at almost 30 percent, but the number of
female union workers represents only about 12 per-
cent of the labor force and 16 percent of total union
membership.
The labor code created'three hierarchical levels of
organization. The "sindicato" or union local usually
represents a specific sector (for example, metallurgi-
cal, transport) in one or more counties. It provides
social welfare services and deals with workplace
grievances. The federation generally is composed of
at least five "sindicatos," in the same state. Confeder-
ations are national bodies and are composed of at
least three federations. The latter two organizations
deal mainly with political and administrative matters
and usually have close contact with Labor Ministry
officials.
As of 1979, the government recognized 4,247 unions,
141 federations, and 8 confederations. Despite this
organization, however, labor is relatively undisci-
plined and difficult to mobilize on a broad scale..
Only the National Confederation of Agricultural
Workers has real control over its membership al-
though agricultural workers traditionally have been
less politically aware and militant than their
counterparts.
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The Geisel government responded in a measured way
by issuing a decree in August 1978 recognizing that
certain legal prohibitions on strikes were ineffective
and unrealistic. Although the decree continued to ban
walkouts in particular sectors-public utilities and
health services-it recognized the legitimacy of
strikes. The Geisel government later made clear it
would tolerate strikes as long as they were:
? Limited to nonessential sectors.
? Nonviolent.
? Focused on bread-and-butter objectives.
? Nonpolitical and nonideological.
? Not seeking the support of unions in unrelated
sectors.
The fact that the 1978 strikes and almost all subse-
quent ones adhered to the criteria established by
Brasilia almost certainly influenced the government's
moderate stance and helped labor's cause. Even so, for
a regime that had routinely and harshly stifled worker
protest, the toleration of strikes represented a signifi-
cant change.
The Figueiredo Government
In the past three years, organized labor has chal-
lenged Brasilia to a degree unprecedented since 1964.
Moreover, as a result of the government's evolving
liberalization measures and the relaxation of controls
on labor activities, labor in general has been increas-
ingly aggressive and vocal in defending its economic
interests. Despite the challenge, Brasilia has generally
responded with moderation. Indeed, government
spokesmen frequently have cited labor activism as an
inevitable and positive result of a more open political
system.
President Figueiredo, the fifth retired general to rule
Brazil since 1964, faced a major strike upon taking
office in early 1979. Two days before his inaugura-
tion,. the metalworkers' unions in Sao Paulo went on
strike after failing to negotiate a new contract. The
strike lasted 15 days and involved 250,000 workers in
500 plants.
Labor Minister Murillo Macedo eventually inter-
vened with the striking unions, replacing their chiefs
by invoking the labor code. The government neverthe-
less permitted the deposed leaders to continue negoti-
ating for the unions, and a compromise was finally
achieved after a government-imposed cooling-off peri-
od. Brasilia later allowed the union chiefs to reassume
their posts, however, reinforcing labor's belief that
strikes could be used as a bargaining tool.
Figueiredo's first year in office witnessed more labor
activism-131 strikes in just the first two months and
430 for the year-than at any time since 1964. On
May Day, for example, rallies were held in major
cities for the first time since the military takeover,
drawing 130,000 attendees in Sao Paulo alone. For
the most part, the strikes-almost invariably over
economic issues-were settled without significant
public inconvenience and in many cases on terms
decidedly favoring labor. Brasilia approved settle-
ments in excess of the inflation rate because salaries
had been held down over the years.
New Wage Law. The Figueiredo government's strate-
gy in the face of the wave of strikes of 1979 was a
mixture of pragmatism and some genuine sympa-
thy-far from the heavyhandedness of the past. This
attitude was reflected in the new national wage
legislation promulgated by Brasilia in November
1979, which was designed to:
? Bring labor peace through higher salaries.
? Favor the lowest paid workers.
? Undercut the position of union chiefs in wage
negotiations.
The wage law, still in force, grants automatic twice-
yearly increases based on a government inflation
index; under the old legislation, wages were adjusted
annually. The lowest paid workers now receive raises
slightly above the rate of inflation, while the best paid
workers are granted increases slightly below the infla-
tion rate. In addition, workers are permitted to negoti-
ate directly with management for further increases
based on productivity.
The new wage policy has contributed to a .remarkable
reduction of strikes and labor agitation. Major strikes,
for example, fell from 430 in 1979 to 190 in 1980 and
only 20 last year according to the unions' statistical
bureau. Rising unemployment later in. 1981, particu-
larly in the industrial sector, also acted as a deterrent
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Figure 1
Real Minimum Wage Trends
in Sao Paulo and Rio de Janeiro
Figure 2
Unemployment
Percentage of work force unemployed
in metropolitan areas
i 1 i i I I I I I I I i 1 1
1961 65 70 75 80
Belo Horizonte
Rio de Janeiro
Salvador
Sao Paulo
Porto Alegre
May
82
to strikes, but we believe the government's wage
policy was the first factor to have an impact.
Aspects of the wage policy, however, have been a
source of continuing controversy between Planning
Minister Antonio Delfim Netto and some industrial-
ists on one side, and Labor Minister Macedo on the
other. Delfim Netto and his supporters claim the law
is inflationary and imprecise regarding increases in
productivity, and have sought to modify it. The Labor
Minister, on the other hand, has vigorously-and so
far successfully-defended the policy as socially just
and politically wise. Although President Figueiredo
has thus far sided with the Labor Ministry, pressures
from certain business sectors and the Planning Minis-
try are building against parts of the wage policy and
we believe modifications are possible after the elec-
tions in November.
The 1980 Metalworkers" Strike. Despite its beneficial
effect in significantly reducing the number of strikes,
the wage law did not prevent one of Brazil's most
controversial and well-publicized strikes-a six-week
walkout by over 200,000 Sao Paulo metalworkers in
the spring of 1980 that was actively supported by the
church. The strike amply demonstrated the potential
of organized labor in important sectors to confront
management and the government and to heighten
tensions to a dangerous level. But it also demonstrated
Brasilia's firm opposition to what it regarded as
politically motivated labor activism and its determina-
tion to confront the challenge.
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Confidential
The metalworkers, mostly from Sao Paulo's industrial
suburbs, walked off the job demanding a 15-percent
wage increase beyond the scheduled automatic adjust-
ment. Management, with the concurrence of Brasilia,
offered 5 percent. Led by Brazil's most prominent
labor figure, Sao Bernardo union chief Luis Inacio da
Silva (better known as "Lula"), the metalworkers held
huge rallies and marches almost daily to pressure
management and the government to give in.
Lula's role in the wage negotiations complicated the
situation. He was removed by the government from
his post in 1979 for leading the 15-day strike but was
permitted later to reassume the presidency of his
union. In 1980, however, statements of some workers
indicated an underlying question about whether he
was acting in their interests when he excessively
dragged out the negotiations. Many media observers
and labor leaders believe Lula overplayed his hand by
holding out for unreasonable terms to enhance his
political image. (He was then in the midst of organiz-
ing a Worker's Party (PT) and utilized the publicity to
gain national exposure.)
Following unsuccessful mediation efforts and a re-
gional labor court decision pronouncing the strike
illegal, Brasilia arrested Lula and other union leaders
and permanently removed them from their posts.
Under the National Security Law, they were tried
and convicted for inciting workers to strike, but
remained free until the conviction was successfully
appealed. Although labor's political activity, which
rose in 1978-79 with the emergence of Lula, dimin-
ished noticeably in the aftermath of his displacement,
events of the past year have again rekindled labor's
political involvement.
Conference of the Working Classes. The level of
union activism and rhetoric reached a new high in
August 1981, when more than 5,000 worker-delegates
attended the first Conference of the Working Classes
(CONCLAT). The meeting was organized to forge
labor unity, to bring union concerns to Brasilia's
attention, and to lay the groundwork for establishing
a single national labor confederation (CUT). Although
the conference failed to foster unity-it actually
underscored divisions-it nevertheless demonstrated
that diverse union leaders with conflicting interests
want to work for common goals.
The conference leveled the standard charges at Brasi-
lia, protested unemployment and the cost of living,
called for reforms in agrarian and social security
programs, and demanded job security. Most of the
discussion, however, focused on the advisability of
calling a national strike and how to proceed with the
establishment of CUT.' After much debate,
CONCLAT agreed to designate 1 October 1981 a
"national day of protest" and to simultaneously deliv-
er a list of labor demands to Brasilia, with a response
requested by 16 November.
The "national day of protest" failed to produce
significant demonstrations. Although 5,000 persons
gathered in Sao Paulo and staged a peaceful rally,
gatherings in other cities were disappointing. The
efforts of Lula and other labor leaders, moreover, to
personally present demands to acting President
Aureliano Chaves were unsuccessful. As a result,
labor leaders met on 16 November to consider a
general strike, but instead decided to debate the
question further and to prepare for CONCLAT II,
originally scheduled for August 1982.
The low-key, almost restrained nature of the Novem-
ber meeting in our view reflected rank-and-file fears
of the effects of the recession that has gripped Brazil
since 1981. Although many workers remained dissat-
isfied with working conditions, wages, and general
government policies, the primary goal of the rank and
file in the face of massive layoffs and high unemploy-
ment was-and remains job retention.
'A variety of published accounts make clear that CONCLAT
brought into the open divergences within labor on these and other
issues. The unions affiliated with Lula and his PT, which are
supported by the Catholic Church, favored the independence of
unions and were cautious about a general strike. The president of
the Confederation of Agricultural Workers, Jose Francisco da
Silva, and the president of the Sao Paulo Metalworkers Federation,
Joaquim dos Santos Andrade, led the forces which supported the
unification of unions and a general strike. Although moderate
voices dominated CONCLAT, radical elements were present in
force and worked energetically to influence the conference. Groups
such as the Brazilian Communist Party (PCB), the Communist
Party of Brazil (PC do B), and the October 8 Revolutionary
Movement (MR-8), supported da Silva and Andrade to diminish
Lula's influence. The government, believing that the Lula-church
alliance posed greater dangers, ironically took a number of steps
that helped bolster the radical forces.
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The Importance of CONCLA T II. Labor leaders have
continued their factional debates and political infight-
ing while preparing for CONCLAT II. Thus, the
president of the Sao Paulo Electrical Workers Federa-
tion, Antonio Magri, proposed in January that the
conference be postponed until 1983 to avoid election
year politics. He also disagreed with the creation of a
single confederation, favored by most CONCLAT
leaders, rind with the method for selecting delegates
established at the first conference.
spare protests
from union chiefs active in CONCLAT. His propos-
als, according to the Consulate in Sao Paulo, were
aimed at diminishing the influence of divergent
groups-Lula's Workers' Party forces and supporters
of the Brazilian Communist Party-that might other-
wise increase their influence at CONCLAT II.
Magri's position, however, apparently has gained
support since January. Labor leaders in July voted to
postpone CONCLAT II until 1983, citing the possi-
bility that partisan politics prior to the elections and
lack of grass-roots organization might complicate the
conference. They were slated to meet in September
1982 to assess the situation and to set a date in 1983
for a new conference.
We believe the success or failure of CONCLAT II
will depend on the extent to which rank-and-file
sentiment-and the economy-has changed and on
the outcome of ongoing factional disputes. Consider-
ing the fundamental ideological, regional, and sec-
toral differences between labor groups, however, the
prospects for unity-at least at the next conference-
do not appear promising. Brasilia's few public state-
ments reflect a wariness of CONCLAT, in particular
its efforts to create a single confederation, but it
probably will permit preparations for a second confer-
ence to proceed in the hope that divisions once again
will overcome efforts to forge unity, instead prolong-
ing the existing disarray. We believe that the govern-
ment, if it feels labor has increased its political
involvement to unacceptable levels, could nevertheless
curtail some of CONCLAT's activities.
We concur with the US Embassy's labor attache, who
believes that a loose confederation of independent
unions is likely to emerge from the next CONCLAT
conference. He further believes that Lula probably
will be elected the titular head of the new confedera-
tion, which would act as, a central spokesman and
lobbying agent for labor; facilitate interunion commu-
nication, and serve as the focus for uniting the labor
vote in pursuit of political objectives.
Although organized labor's relationship with govern-
ment still is the dominant factor determining its
political role, its interaction with other sectors-
business, the church, newly formed political parties,
the increasingly visible radical left-are having a
greater impact on its development than in the recent
past. Significant cooperation with the church and
Lula's Workers' Party is already taking place and is
likely to continue. The prospects for labor cooperation
with the radical left are less promising, but labor's
relations with business probably will be characterized
by greater accommodation.
Business
We-and the US Consulate at Sao Paulo-believe
that labor's relations with business, particularly in the
industrial sector, are broadening in a variety of ways.
The conditional acceptability of strikes as a bargain-
ing tool has given unions leverage with management
that formerly did not exist. Business, moreover, has
recognized that some change is necessary to accom-
modate the transformations that several decades of
rapid economic growth have brought to the work-
place. The explicit government changes in wage poli-
cies have also put management on notice that it no
longer is insulated from;dealing directly with labor;
consequently it has been more willing to engage in
collective bargaining on, issues not within the govern-
ment's purview.
The new leadership of the Federation of Industries of
the State of Sao Paulo (FIESP), elected in late 1980,
symbolizes management's interest in promoting a new
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We believe the rise to prominence of Lula in the late
1970s, using the support of 300,000 Sao Paulo
metalworkers, was the most significant labor devel-
opment since the military takeover. The "Lula phe-
nomenon" demonstrated that labor was not as docile
as many observers believed and showed that, with
revitalized leadership, the movement did have poten-
tial as a political force.
Nonetheless, despite some signs that a new generation
of leaders unbeholden to the government is emerging,
most labor chiefs still are conservative in outlook, are
linked to the government, and tend to support it. The
top posts in labor confederations and smaller regional
federations, with some exceptions, are filled with
people generally responsive to Brasilia-in some
cases placed there by the Labor Ministry. Although
labor leaders periodically question the paternalistic
nature of labor relations, they work within the system
and are unable or unwilling to articulate viable
alternatives.
The labor movement continues to stiffer from leader-
ship problems that are unlikely to be resolved in the
near term. As CONCLA T I demonstrated, union
chiefs are beset by deep personal and ideological
divisions that are played upon by Brasilia and that
hinder efforts to collaborate for common goals. Labor
leaders, moreover, occasionally appear out of touch
with the rank and file by advocating positions that
unions will not support.
With the exception of Lula, who now is more a
politician than a labor leader, no union chief pos-
sesses significant national stature or the requisite
charisma to acquire it. Union chiefs such as Joaquim
dos Santos Andrade, Antonio Magri, and Jose Fran-
cisco da Silva have only a limited following beyond
their immediate areas. Since Lula's removal from
union office and involvement in politics, moreover, his
image among labor has become somewhat tarnished.
As president of a large union, he could routinely fill a
stadium with 50,000 workers; but as president of the
Workers' Party, he has engendered the opposition of
many former supporters, while having to compete
with established politicians for a labor constituency.
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da Silva ("Lula')
Consequently, he is having mixed success so far; even
in the Sao Paulo region, in attempting to convert his
labor base into an effective political organization.
This suggests that the attainment of labor leadership
does not easily translate into a political following.
We believe it will be difficult in the short term for the
"Lula phenomenon" to repeat itself. While in part a
spontaneous development, his emergence also was the
result of an ideal confluence of factors. It is unlikely
that similar circumstances will arise and produce
like results, but other factors conceivably could
create a climate leading to the emergence of a new
Lula over time.
Although Lula's departure from the formal union
scene has created something of a leadership gap
within labor that may undermine in the short term
the movement's potential for political influence, it is
not likely to represent a severe obstacle in the long
run. In a climate of continuing political liberaliza-
tion, we believe the newly formed political parties are
likely-albeit in an uncoordinated manner-to in-
creasingly respond to and articulate labor concerns.
The leadership function thus should become a less
critical factor within labor than when the movement
was virtually excluded from the political arena.
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relationship with labor.' FIESP, long accused by labor
of being a government rubberstamp under its old
leadership, is now more aggressive and frequently
questions and criticizes Brasilia's policies. Although
its political influence is still limited, it has taken the
lead in demonstrating new attitudes toward labor, is
more sensitive to the intricacies of the bargaining
process, and is less likely to let disputes result in
strikes. Following its lead, the business community is
more willing to negotiate outside the formal legal
structures of the government and labor courts that in
the past overwhelmingly favored management.
According to various union chiefs, labor remains wary
of business leadership, largely because it is concerned
about possible duplicity. There is probably merit in
this caution, since in contrast to its privately expressed
general support of some labor goals, for example, we
know from press sources that FIESP has conducted a
fierce public campaign to modify the salary law. The
massive layoffs during late 1981 in Sao Paulo, viewed
by labor as excessive and inopportune (some came just
before Christmas), also rankled the unions and even
drew criticism from government officials.
Moreover, the more flexible approach to labor-man-
agement relations has not been uniformly applied by
the business community. Brazil's business sector, like
many others in the world, is characterized by dichoto-
my in terms of practices. On the one hand, state
entities, modern national firms, and some multina-
tionals have been highly innovative in improving
relations with labor. On the other hand, traditional
family firms and smaller commercial companies have
continued to rely on the government as an intermedi-
ary with labor. One reason for this latter pattern,
that labor costs are a larger percentage of overall
production expenditures for smaller firms.
The prominence of multinationals, representing over
20 percent of Brazil's business sector, has made them
important in setting the tone for labor-management
relations, especially in the Sao Paulo industrial belt.
2 Considered Brazil's most important industrial lobby, FIESP unites
109 employer associations and acts as a limited political agent for
major firms. Its location in the industrial heartland has brought
members into close contact-and often conflict-with the largest
and most militant unions.
According to the American Embassy, US firms,
experienced in labor management relations, generally
have responded in a measured way, neither making
gratuitous concessions to labor nor refusing to
negotiate. A number of German companies, however,
have periodically adopted a hard line by refusing to
negotiate with labor and expecting government
intervention.'
In a climate of continued economic austerity-a real
possibility in view of the continued pressures arising
from Brazil's international payments problems-we
believe there will be greater accommodation between
labor and business. As both sectors feel the brunt of
Brasilia's economic policies, moreover, the prospects
for joint political pressure on issues of common con-
cern will probably increase. Even in a climate of
relative prosperity, labor (for economic reasons) and
business (to ensure labor peace) also will probably
draw closer as the government reduces its role in
labor-management relations. The traditional adver-
sarial relations between labor and business and labor's
continued wariness, however, would pose obstacles to
the emergence of a consistent and effective political
coalition.
most segments of labor consider
the church an important ally, welcome its backing,
and use its support to strengthen their position. The
church's close identification with labor stems mostly
from a coincidence of views on economic and social
issues. For example, the church long has supported
labor's contention that the cost of Brazil's "economic
miracle" was disproportionately borne by the workers.
It not only supports labor's grievances and efforts to
prod the regime to reform outdated labor laws, but
champions increased union participation in the politi-
cal process.
' In a surprise move, perhaps to counteract this image, Volks-
wagen-Brazil's largest private employer-has established elected
workers commissions to represent its work force. Although the
commissions are still in a trial period and have met with consider-
able skepticism from unions, the initiative, nevertheless, may signal
a new approach by German firms in Brazil.
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The Sao Paulo archdiocese, under the leadership of
Paulo Cardinal Evaristo Arns, has been in the fore-
front of church support for labor. During the 1980
metalworkers' strike, the local church backed de-
mands for higher wages, greater benefits, and more
political freedom. It also sponsored marches and
rallies, helped distribute food to strikers, and permit-
ted unions to use church facilities when the govern-
ment closed union offices. The church's assistance
enabled the metalworkers to prolong the strike and
contributed to the most serious deterioration in
church-state relations in a decade.
The church's most controversial initiative, however,
has been the use of its so-called base communities,
that is, grass-roots activist groups, to promote Lula's
Workers' Party. Cardinal Arns has been the most
active in this area; although not all churchmen sup-
port his position, we believe most think it is consistent
with the church's role. The base communities, which
reportedly number 80,000 with about 3 million mem-
bers throughout Brazil, vary greatly in their degree of
political involvement and support for labor. They are
significant because they represent potential vehicles
which the PT can use to project its appeal beyond its
labor base and forge a new political coalition. State-
ments by government spokesmen indicate Brasilia is
extremely wary and critical of the church's involve-
ment with the PT.
The church's association with labor and its involve-
ment with the PT are not accepted by all segments of
labor
These labo
chiefs, which included a former supporter of Lula,
charged that the church has excessive
influence over the PT, a development that they say
could invite a political backlash or government coun-
termeasures that would affect labor negatively. Lula's
rivals, moreover, resent that he has taken advantage
of the church's backing to further his ambitions and
enhance the political base of the PT. As the church's
involvement with the PT continues, especially in an
election year, its role is likely to become even more
controversial.
difficulties with the government arise. Although Lula
disavows Brasilia's charges of an ideological connec-
tion between the PT and the church, his party proba-
bly will continue to receive and discreetly seek the
continued strong support of most church leaders.
Political Parties
As a result of the regime's party reform in 1979, five
new groupings have emerged-all seeking labor's
allegiance to varying degrees. Despite the parties'
efforts to woo labor, there has been little evident
readiness by the rank and file to identify with a
specific party. To be sure, Lula's PT commands
significant labor support in Sao Paulo and other
urban areas, but press reporting also reflects substan-
tial backing for the Brazilian Democratic Movement
Party (PMDB), the largest and strongest opposition
grouping. Leonel Brizola's Democratic Workers' Par-
ty (PDT) also could win significant labor votes, partic-
ularly in Rio Grande do Sul and Rio de Janeiro, his
former political strongholds. Even the government's
Social Democratic Party (PDS) probably will receive
sizable labor support in rural areas and in the north-
eastern part of the country, mainly because of its
extensive organization, patronage, and the appeal of
certain candidates. 25X1
For the foreseeable future, we believe it is improbable
that labor can find the common political ground to25X1
vote in a bloc. Indeed, the regime-imposed party
reform is likely to diffuse rather than coalesce labor's
electoral potential. Politicians from all parties, many
with legitimate labor credentials, are now vying for
the same constituency, yet no individual or party can
command a majority of the labor vote. 25X1
The PT nevertheless stands out in several respects as a
potential focus of labor's political activity. It is the
only grouping supported by the church, and its leader-
ship is composed primarily of former labor activists
with little political experience or firm ideological
convictions. Although Lula insists that the PT is a
grass-roots party-the only true one in Brazil-it was
his charisma and the reputation he acquired as a labor
leader that were instrumental in the founding of the
party. Of the three smaller parties, we believe the PT
We nevertheless concur with the US Embassy's as-
sessment that the church is likely to continue its vocal
support of labor and will defend labor's interests when
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stands the best chance to survive Brasilia's electoral
machinations and fulfill the legal criteria to remain a
party based on its grass-roots support. The US Em-
bassy, moreover, believes the PT has perhaps the most
significant political potential of all Brazil's political
parties.
Although Lula has ambitiously declared his candida-
cy for the governorship of Sao Paulo, he is realistic
about his political future and the PT's prospects.
his foremost goals are to
consolidate the party as a distinct political force in
Sao Paulo, to broaden its base, and to strengthen its
national organization. He realizes that this will take
time and he probably does not expect the party to do
well initially. In our opinion, if the PT were to win
substantially more than 15 percent of the Sao Paulo
vote in November's elections, this would represent a
major political surprise.
To broaden the PT's appeal beyond its currently
espoused democratic-socialist philosophy, Lula is
seeking to transcend his urban labor base. In so doing,
the political orientation of the PT and of labor could
diverge because their interests, while closely linked,
are not identical. Labor could be more susceptible to
radical influence if the PT were to shift slowly to the
political center, but the PT itself would be likely to
become a more viable party with greater prospects for
growth in a political environment still dominated and
closely watched by Brasilia. Much will depend on
Lula personally, and on how skillfully he can operate
in an evolving political setting.
Radical Left
The radical left is composed of the Communist Party
of Brazil (PC do B), the October 8 Revolutionary
Movement (MR-8), the Socialist Convergence (CS),
and a scattering of other smaller, less significant
groups. Other than sharing a general goal of infiltra-
tion and control of key unions, it does not appear
unified behind a particular strategy or tactic, nor has
it been successful in generating rank-and-file support
for its ideology.
Radical left involvement with labor remains mostly
clandestine ____]and
is concentrated in the Bank Workers, Agricultural
Workers, Communications Workers' Confederations,
and Lula's PT. The orthodox Brazilian Communist
Party (PCB), mostly because of leadership changes
and its campaign to attain legalization, has advocated
less militant positions and cooperation with moderate
union forces. Its orientation could change, however, if
it fails to achieve legalization and its militant wing
gains ascendancy in the party.
The left in general and the radical left in particular
has played a minor role in labor affairs since 1964.
Until the late 1970s, both were virtually excluded
from union activity; most members had been jailed,
killed, sent into exile, ors forced underground. The
government's amnesty in 1979, however, freed all
political prisoners and permitted exiles to return.
Since then, leftist activists have been more outspoken
and aggressive in union affairs. The moderates, how-
ever, have successfully kept the radical left on the
periphery. The widespread strikes of 1978-79 and all
major labor developments have taken place without
the radical left's instigation.
Moderate labor forces, particularly the leaderships,
are vulnerable in several respects to the radical left.
Many leaders are open to charges that they have been
ineffective in defending workers' interests and that
they obtained their positions through the government;
indeed, only a minority have risked their careers by
strongly promoting workers' goals. The return of the
exiles, moreover, has facilitated infiltration of the
unions by the left and has also brought back many
former labor and political leaders-some now consid-
ered moderate-who are questioning the framework
of labor relations.
We believe the legacy of Brazil's corporatist labor
tradition, lack of labor unity and common political
ground, and a leadership gap are major factors that
complicate labor's emergence as a cohesive political
force in the near term. Other factors include impor-
tant regional and socioeconomic differences among
workers and unions, and the prevalent labor fear that
openly pursuing a political role could jeopardize gains
already achieved.
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Transnational Organizations
The Brazilian Government has relaxed somewhat its
traditionally negative attitude toward the affiliation
and participation of labor organizations with interna-
tional groups. Three Brazilian confederations are
members of the Regional Interamerican Labor Orga-
nization (ORIT) and the International Confederation
of Free Trade Unions (ICFTU). The International
Labor Organization (ILO), moreover, has expanded
its activities dramatically in the past two years and
its proposed assistance for fiscal 1982 reportedly
amounts to $4.35 million. The Brasilia ILO office
claims that Brazil is the organization's first priority
in Latin America and that its current level of finan-
cial support will likely increase.
The Venezuela-based Latin American Labor Center
(CLA T) and a number of West German foundations
also have increased their activities with Brazilian
labor. CLA T receives significant financing from the
West German Konrad Adenauer Foundation (KAS)-
reportedly $1.7 million annually-and it tends to
promote an anti-American line. The principal West
German groups active with Brazilian labor include, in
addition to KAS, the Friedrich Ebert Foundation
(FES) and the Friedrich Naumann Foundation
(FNS).
The activities of extrahemispheric organizations in
Brazil are modest but growing. The US labor attache
reports that the directors of the FES and KAS
perceive a vacuum with respect to external assistance
for Brazilian labor development and they expect to
fill it. The attache believes foreign organizations are
apt to become an increasingly important element in
Brazilian labor development, one the attache believes
should be taken into account.
In our opinion, labor faces an uphill battle to over-
come these formidable obstacles. Brasilia still retains
the power to meet labor's challenges, exploit its
weaknesses, and keep it under control by selectively
enforcing the corporative framework that has histori-
cally ensured state control. The current shape of the
political system the government is fashioning, more-
over, presents additional short-term obstacles because
it diffuses rather than coalesces labor's potential for
political influence.
Labor's current quiescence on the strike front proba-
bly will end either if austerity proves too severe or
economic growth is resumed. In particular, the type of
changes in the salary law proposed by the Planning
Ministry will be negatively received by workers and
could provoke strikes. On the other hand, a resump-
tion of economic growth and a reduction in unemploy-
ment also could lead to strikes, since unions have in
the recent past been more likely to strike under these
circumstances.
In a climate of political liberalization, Brasilia proba-
bly will respond adroitly, sometimes sympathetically,
to its perception of labor's legitimate economic griev-
ances. In some instances, the government may even
move swiftly to preempt issues of particular interest to
labor in order to enhance its political image. Brasilia
will remain sensitive, however, to union activities that
it believes have a political end or seek the support of
other groups, and probably would react strongly-as
in the 1980 metalworkers' strike-to such activity.
Labor and business probably will make additional
progress toward accommodation despite a traditional
adversarial relationship. Many business leaders real-
ize that labor-management relations are undergoing
evolution and appear receptive to giving labor wider
participation in wage negotiations. Labor, on the
other hand, realizes that business no longer is neces-
sarily aligned with Brasilia and probably will be
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An Alternative Scenario:
Key Conditions for More
Rapid Growth in Labor's
Political Power
Future of Military Rule
A significant expansion of political liberalization and
a corresponding diminution in the direct exercise of
power by the military could accelerate labor's politi-
cal emergence.
State of Labor Unity
Greater unity-for example, the establishment of a
single workers' confederation, if permitted by Brasi-
lia-would enhance labor's potential for political and
economic influence.
Labor Cooperation With Other Sectors
Increased cooperation with the church and other
groups could enhance labor's potential as a force for
social and political change, particularly if several
groups joined to advocate or oppose particular issues.
Status of Corporative Framework
A quicker erosion of the corporative framework of
labor-management relations would reduce Brasilia's
inclined to cooperate in certain instances for mutual
interests. Important obstacles remain, however, to the
emergence of a consistent and effective political
coalition.
The church's involvement with labor is taking place
primarily through Lula's PT. We believe its role is
likely to become increasingly partisan and controver-
sial, especially in an election year, and a majority of
labor eventually may consider the church a liability
rather than an asset. Significant elements within the
church nevertheless are determined to increase the
political awareness of labor and to cooperate with the
PT, developments that will pose continuing challenges
for Brasilia.
ability to control labor, provide workers with greater
political latitude, and permit workers and employers
to bypass the government in wage negotiations.
Workers' Party Showing in November Elections
If the Workers' Party received substantially more
than 15 percent of the vote in the state of Sao Paulo
and 10 percent or more of the nationwide vote, this
would represent a major, political surprise and could
act as a catalyst for increased political activity by
labor.
Performance of the Economy
High levels of economic growth could increase the
likelihood of strikes. By the same token, little or no
growth, while initially adeterrent to strike activity,
could-if sustained provoke labor unrest.
Although the radical left remains a long-range threat,
it is unlikely to be reckless in pursuing its labor-
related goals and challenging Brasilia. The experience
of 1964 still is vivid in its memory, and it understands
that the regime-despite its espousal of liberaliza-
tion-has limits of toleration. It has thus grown more
mature and realistic about what it can accomplish.
The rank and file, moreover, is extremely wary of the
radical left not only on ideological grounds, but
because it fears -government reprisals.
We concur with the US labor attache's assessment
that the stage is being set for a resurgence of orga-
nized labor as a national force. The next several years
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are likely to be crucial, moreover, in determining the
form of Brazil's labor relations as the roles of labor,
government, and business are gradually redefined.
Although the government will retain effective power
in this sphere, labor will broaden its role by becoming
more representative of workers; organizing itself more
effectively; entering the political arena on labor-
related issues; and developing a more effective rela-
tionship with management.
Beyond three to five years, labor could acquire signifi-
cant autonomy from the state and play a more unified
and direct role in the political process. If the formal
institutions and channels governing labor's relations
with government continue to erode and less paternal-
istic ones evolve, this development will be strength-
ened. For the foreseeable future, however, we do not
believe that the fragmented labor movement will
emerge as a vanguard force for socioeconomic change
nor will it play the key political role that movements
in other countries historically have played.
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Appendix A
25X1
Development of Brazilian Labor
25X1
The US Embassy in Brasilia believes labor's emer-
gence in the past four years from a long period of
dormancy is a product of several developments, main-
ly the military government's so-called political open-
ing, and its recognition of workers' right to strike
under certain conditions. The emergence of several
labor leaders who have not been co-opted by the
government, as well as labor's widely shared belief
that it has borne a disproportionate share of costs of
economic development, also have been factors. Final-
ly, both government and business have recognized
that some change is necessary to accommodate the
transformations that several decades of rapid econom-
ic growth have brought to the workplace.
The legislation passed during the 1930s defining the
corporate system was embodied in the Consolidated
Labor Laws of 1943. This rigid code, which basically
remains in force today, prescribes the structure of
union organization and scope of labor's economic and
political activities. A hierarchy of associations repre-
senting workers and employers was created according
to both functional sector and geographic region. The
state controls the system with a permanent bureaucra-
cy which collects union funds by imposing a yearly tax
on workers equal to one day's pay, whether or not they
belong to the union. Only state-recognized unions
receive a share of the tax, and the government,
moreover, can call on the labor courts to deal severely
with unions that attempt to work outside the system.
For more than four decades, however, labor's role in
society has been defined and circumscribed by a
corporatist system characterized by legalistic labor
code and a high degree of state intervention. This
system, which originated with the first government of
President Getulio Vargas (1930-45), has remained
essentially intact over the years even though major
economic and political shifts have taken place. The
most salient results of the corporatist tradition have
been the preclusion of an autonomous labor move-
ment and the almost total state domination of labor-
management relations.
Vargas, who came to power extraconstitutionally in
the wake of an era of discredited republican govern-
ment, feared the effects of class struggle on industrial-
ization. His administration attacked the individualis-
tic tenets of liberalism and instituted an authoritarian
but rhetorically populist form of corporatism. The
state, using three basic institutions-the union, labor
courts, and the social security system-undertook to
manage-that is, curb, channel, or utilize-worker
protest and to be the sole arbiter between capital and
labor. The very structure of labor relations thus
served to give labor a government-sponsored identity
and hindered the development of workers' political
and class consciousness.
Brasilia's control of the major source of union funding
gives it considerable leverage over laborH
The majority of unions depend on the union tax to
function and are required by law to spend most of it
on specified social services such as medical and dental
assistance. This requirement has made workers not
only expect these services, but has also channeled
union activities into nonpolitical areas. The adminis-
trative and financial tasks of providing social services,
in fact, occupy the greater part of unions' energies.
Other labor activities traditionally have been limited
to providing legal representation for unions and ensur-
ing that employers comply with the law.
Successive governments, regardless of political per-
suasion, have upheld the corporatist framework of
labor relations. Although this system has checked the
autonomous political action of labor, the government's
own use of labor for political ends prior to the 1964
military takeover was common. Vargas, for example,
created the Brazilian Labor Party to capture the
urban working-class vote after he was deposed in 1945
and as a result regained the presidency through
popular elections in 1950. His protege, Joao Goulart,
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became president in 1961 and sought to bolster his
position by manipulating labor-not always success-
fully. Goulart's inept political and economic perform-
ance contributed to rampant labor strife, which in
part led the military, with broad middle class support,
to overthrow him in 1964.
The technocrats who formulated post-1964 policy
were committed to rapid growth and the attainment
of world power status for Brazil. They implemented
policies-removal of job guarantees after 10 years of
service, reduction of social security, forced payroll
deductions, false indexing of salaries-which affected
labor negatively and initiated a steady decline in real
wages. Labor was kept quiescent until 1978 by the
security apparatus and few strikes could take place
because the labor code was strictly enforced. As a
result, the rank and file and many younger labor
leaders remain strongly opposed to the military gov-
ernment and most of the policies it undertakes.
The experience of 1964 and its aftermath-many
unions were placed under direct state control and
hundreds of radical leaders jailed-left indelible im-
pressions on labor, especially among the rank and file.
In our view, labor today appears more mature and
realistic regarding what it can accomplish and less
responsive to political or ideological arguments than
in the early 1960s. It understands, moreover, the
diminishing returns that eventually would result from
excessive or unjustified labor pressures on the govern-
ment and the dubiousness of such a strategy in view of
Brasilia's moderation in recent years.
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Appendix B
Key Statistics
Figure 3
Sectorial Share GDP, 1979
Transportation and
Communications
Banking and
Liberal Professions
Agriculture
Commerce
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Table 1
Brazil: Labor Force and Union Membership a
Labor Force, 1981
Union Members, 1979
Number
(thousands)
Percent
Number
(thousands)
Percent of
Labor Force
Total
43,797
8,840
20
Men
31,753
73
7,438
23
Women
12,044
27
1,402
12
Agricultural
13,139
30
4,568
35
Nonagricultural
30,658
70
4,271
14
Secondary sector
10,686
24
2,509
23
Processing
6,876
16
Nn
NA
Construction
3,153
7
NA
NA
Other
657
1
NA
NA
Tertiary sector
14,891
34
1,912
13
869
21
4
567
31
Table 2 Table 3
Union Organizations, 1979 Urban Unions in Selected States, 1979
Total
Percent
Total
Ranking
Brazil
2,087
Sao Paulo
420
20
1
Rio Grande do Sul
277
Rio de Janeiro
212
Minas Gerais
198
Parana
123
7
120
2,087
1
21
2,160
8
141
4,247
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Table 4 Table 6
Rural Unions in Selected States, 1979 Agricultural Union Membership in Selected States,
1979
Minas Gerais
Santa Catarina
Parana
2,160
249
236
192
171
152
506
468
373
363
Brazil 4,568
Rio Grande do Sul 574
Table 5
Nonagricultural Union Membership in Selected States by Sector, 1979 a
Total Percent Industry Commerce Transportation Banking Communi- Education
(thousands) cations
Brazil 4,271
Sao Paulo 1,437
Rio de Janeiro 847
Rio Grande do Sul 344
325
192
2,507 869
981 200
341 246
235 64
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