This article examines the evolution of labour informality in Brazil between 2003 and 2019, a periodThis article examines the evolution of labour informality in Brazil between 2003 and 2019, a periodmarked by strong political, economic and social inflections. In the first section, we offer a briefreflection on the terms of the historical debate on informality and its relation to the transformationsof the Brazilian economy. In section two we describe the remarkable process of labourformalisation that took place in the country between 2003 and 2014, pointing out its exceptionalityand principal determinants. In section three, we note the reversal of this formalisation trend. Withthe recession of 2015–2016, informal and precarious work increased sharply, exacerbated by newlyflexible labour laws and the emergence of new precarious labour relations. We conclude that theBrazilian experience in this new century shows that the formalisation of labour relations is stronglyrelated to more general conditions of economic development and the solidity of public institutions.Furthermore, and in contrast to the views held in mainstream economics, initiatives to simplify andease the regulatory framework appear to coexist with increasing levels of precariousness andinformal work.
IntroductionIntroductionTheoretical work on informality began in the 1960s and 1970s with the studies by Hart (1973), theInternational Labour Organization’s Kenya report (ILO, 1972) and the creation of the RegionalProgramme for Latin America and the Caribbean (PREALC). The term was used in Brazil toexplain the “other side” of job and income creation, outside of wage employment, in a context inwhich the country was unable to create jobs for all those seeking work (Machado da Silva, 2003).Salaried employment has thus existed alongside a series of unorganised activities with lowproductivity and low income that fall outside the country’s legal institutional framework. Thisphenomenon is related both to the productive economic structure and, fundamentally, the politicoinstitutionalframework responsible for the regulation of wage labour in Brazil.
In this article we focus on the period between 2003 and 2019 to examine the evolution oflabour informality in Brazil. This period was marked by momentous political, economic and socialchanges that resulted in equally significant changes in labour markets. In particular, the politicalinflection in 2016, with the impeachment of then president Dilma Rousseff (Workers’ Party, PT),divides this period into two contrasting attempts to regulate labour markets. Our objective is toidentify both the structural and institutional forces that explain the impact of these alternativeforms of regulation and their significance for the lives of working people in Brazil. We argue that the Brazilian experience in this new century shows that the formalisation of labour relations isthe Brazilian experience in this new century shows that the formalisation of labour relations isstrongly related to more general conditions of economic development and the solidity of publicinstitutions – that is, the strengthening of state control and inspection apparatus for labouractivities. Furthermore, and in contrast to the views held in mainstream economics,1 initiatives tosimplify and ease the regulatory framework appear to coexist with increasing levels ofprecariousness and informal work.
We begin our analysis by offering a reflection on the terms of the historical debate onWe begin our analysis by offering a reflection on the terms of the historical debate oninformality as it developed in Brazil and its relation to the transformations of the country’seconomy. In the following section we assess the principal determinants of the remarkable processof labour formalisation that took place in the country between 2003 and 2014. The discussionreveals in particular the exceptionality of this experience in the context of Brazil’s trajectory ofinformality and inequality. In the fourth section we note the reversal of this formalisation trend.With the recession of 2015/2016 and the political right turn that followed Dilma Rousseff’simpeachment, informal and precarious work increased sharply – a change that was exacerbated bythe nature of political change in the country and the newly flexible labour laws the governmentintroduced. Our concluding sections offers an assessment of Brazil’s experience with informalityand possible future scenarios.
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