End of the 6×1 scale: PEC can negatively impact trade and increase informality
This sector, due to the change proposed by federal deputy Erika Hilton (PSol-SP), through the Life Beyond Work (VAT) movement, is among those that may feel the most negative impacts with the reduction in working hours: “This will force the store owner to , in some way, compensate for the absence of one salesperson with another”, highlights the economist, social relations enthusiast and professor at FAAP–SP, Sillas Souza.
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Furthermore, the change could also cause an increase in informality in labor relations, which today, in Brazil, already reaches almost 40%, highlighted the economist. In an interview with Brazil 61Sillas Souza highlighted the biggest impacts that the proposal could have on the market, the economy and Brazilian society:
Brasil 61: Professor, do Brazilians work because they like it or do they work because they have to?
Prof. Chairs: There is a guiding axiom of all traditional economic science, called the utilitarian principle of rationality. The name is ugly, but its idea is simple. According to her, any person, at any time, will prefer to obtain, whenever possible, the maximum possible advantages for the minimum possible sacrifices. If economic science is correct, and we understand that work represents, in some way, some sacrifice, we can think that Brazilians, Afghans, Americans, Russians and even Benedictine priests would prefer not to work, if they could.
In fact, our Bussunda (remember him?) said that. When asked if he liked working, he replied yes, but he preferred vacations. On point! In other words, even if we like our professions and feel happy in our jobs, leisure, especially paid work, is preferable. Therefore, without exception, work will represent some type of sacrifice, both for Brazilians and for any other nationality.
Brasil 61: How is Brazilian productivity?
Prof. Chairs: The average productivity of our workforce is low and there is no reason to assume that it will stop being so in the coming years. An average Brazilian needs 5 hours to produce what an average American produces in 1 hour, 4 hours to be on par with a European, or around 1h30 to produce what an average Chinese produces.
In economic sciences, theoretical divergences are abundant, but the notion that advances in productivity are equivalent to advances in income is not one of them. Increasing productivity is, mathematically, the same thing as savings.
This is not a complex concept. If a production needs fewer resources, such as inputs, time or money, than it did before, what is left over is wealth. Think of an omelet that would take 3 eggs and 2 minutes of “beating” to result in a diameter of 20 cm and 3 cm high. If it is possible to beat the eggs faster, for example, you can achieve the same parameters with 2 eggs. This is increased productivity, so it’s savings and savings equals more money in your pocket!
Brazil 61: Many countries have already adopted what the PEC proposes, the reduction of working hours. What has it been like in these places?
Prof. Chairs: In most countries, these measures have had positive effects, such as more leisure time for workers, which resulted in more time with family, more rest and, in many cases, increased attendance at professional development courses. These, and other things combined, resulted in increases in productivity and this increase sort of made up for the hours not worked.
However, what happened in these countries, as far as I see, will not happen in Brazil, at least not for the majority of workers, and the reasons are diverse. The formal and informal institutions involved, here and there, are very different. Our labor market, our labor legislation and, most importantly, our average productivity is significantly different from these countries. Our labor market is marked by informality that reaches almost 40%, that is, for these people the change will not mean any advantage and, depending on how the additional labor costs will be passed on in some sectors, it is quite reasonable to assume that this informality grows.
Brasil 61: And here in Brazil, what do you think the impact of the measure would be? Could any possible reaction from business owners, trying to offset their initial costs, lead them to pass these costs on to the final prices?
Prof. Chairs: Sectors in which the majority of workers are CLT workers and their functions are not directly associated with the final production of goods or services should benefit. I would place in this group employees in freelance professional offices or other sectors where working time is not the most important performance variable.
However, these professionals are not the majority by far. For informal workers, as we said before, nothing significant will change and with that we exclude around 40% of workers. The services sector, which is the largest and most important sector of our economy, is where the negative impacts are likely to be felt. It is quite difficult to admit that a person who works in commerce, who, therefore, depends on sales for their income, can maintain them at the same level, reducing one day’s journey. Nothing suggests that people will change the way they shop because of shorter employee hours. They will continue to buy as they always have. This will force the retailer to, in some way, compensate for the absence of one salesperson with another.
This new hiring may occur “inside”, with CLT and all costs involved; “outside”, without labor costs, but still with legal costs and risks or, as is to be expected, adopting “Pjotization” mechanisms. In all cases, costs increased without any offsetting gains. These costs, we can bet on it, will be passed on to prices in one way or another, leaving everyone, including employees with a lower workload, poorer.
Brasil 61: Couldn’t this cause a rebound effect, making people work more?
Prof. Chairs: It can happen. Many of these workers, I venture to think that the majority, will try to get other jobs during their time off. Two effects, both bad for the economy, will result from this.
First: for those who succeed, we will have the opposite effect of the proposal, as instead of 36 hours a week, there will now be 72. Less idleness, therefore, will be equivalent to less productivity.
Second: The majority won’t get it, but more people offering jobs means more competition for vacancies, which will motivate entrepreneurs to reduce average salaries. We have a potential situation in which many people will work twice as hard, to earn a little more than they did before. This does not seem advantageous to me and this is the scenario that should affect the majority of workers. Could it be, then, that the gain concentrated among the richest CLT employees compensates for the loss among the poorest? I’m afraid not.
Brasil 61: The change would have a direct impact on labor laws, governed by the CLT, wouldn’t it? Any adjustment to the existing model today would mobilize less effort and bring a similar result, do you believe that?
Prof. Chairs: Yes. To pass, there will be a need to change the CLT, something that has already happened before. But I insist, there are simpler things that can be done, with more concrete, faster and more efficient effects. I believe that if we implemented hiring in Brazil by hourly work, instead of “by monthly package” as it is today, with possibilities to make hours more flexible, there would be gains for both workers and entrepreneurs. The government would, as it already does today, regulate situations in which the disparity between bargaining power between employers and workers is disproportionate. But the world works that way and I don’t think they are dissatisfied.
Brazil 61: In general, if it passes, who would the PEC have a deeper impact on?
Prof. Chairs: The commerce sector would be the most negatively affected, perhaps the sectors where productivity is not associated with the intensity of hours and work would benefit most.
By Brasil 61
