Brazil & Southern Cone - November 2023

During his election campaign last year, Brazil’s President Luiz Inácio Lula da Silva had rattled investors with talk about undoing the labour market liberalisation undertaken by his party’s archenemy, centre-right former president Michel Temer (2016-2019).

Too many workers are getting sub-par pay and don’t have contracts that extend them the appropriate legal benefits, like health and pension coverage, Lula had argued. But in an effort to portray a more centrist image and allay concerns from business, he later backtracked and said he would no longer seek to scrap the 2017 law that gave workers and employers more freedom to negotiate their own contracts. Instead he would seek to reach an accord with certain industries offering low-paying part-time jobs, the so-called gig economy, and particularly transportation and food delivery apps such as Uber, iFood, and others.

But after nearly a year in office, he has struggled to even reach a limited agreement between government, labour unions, and app companies. Labour Minister Luiz Marinho said in October that there was resistance particularly by food delivery apps but that the government would send a bill to congress even without a previous accord.

However, it’s not always only the entrepreneurs who don’t want to be bound by stricter regulations. In some cases, gig workers don’t either. “Workers today don’t want to be formal employees,” said Eduardo Lima de Souza, president of AMASP, an association of courier workers in São Paulo. What unions ask for is better pay and working conditions.

Judges not politicians

Like in the US, this battle in Brazil is being fought not only in congress but in the courts as well. But it’s so far been a bit of a free-for-all in the courts, with sentences going in all directions without setting a clear precedent. In October, a regional labour court ordered food delivery company Rappi to hire all couriers who for at least six months made only occasional deliveries between 2017 and 2023. Rappi, which was fined 1% of its 2022 revenue, will appeal. Uber too was told that it must register all drivers as formal workers, which of course means paying social security contributions and respecting tomes of labour rules and regulations, many of them sensible, others utterly outdated and unrealistic. 

But upper courts tend to have a different view. Supreme Court Justice Alexandre de Moraes recently annulled a ruling by a regional labour court in favour of an app driver, saying that the legal status of such drivers is primarily a commercial relationship, not a labour one. That could mean that any attempts to extend existing labour laws to the gig economy may fail.

• Not just Brazil

Brazil isn’t the only country grappling with the issue of how to give gig economy workers better labour conditions. The US government in October 2022 proposed landmark legislation that would strengthen benefits such as federal minimum wage and collective bargaining rights for gig economy workers.

While Lula may not have made much progress in formalising contracts for the country’s 1.5m app workers, he created just as many formal jobs the traditional way, through economic growth. Unemployment fell to 7.7% in September, the lowest level since the first quarter of 2015.

Giggers work more

A recent survey by the national statistics agency IBGE showed that 1.5m workers are active in the country’s gig economy, equivalent to 1.7% of the private sector workforce. Of those, the vast majority (more than 80%) were male and most had mid-level education. Gig workers laboured 46 hours per week on average, compared with 39.6 hours in the rest of the private sector. Only 36% of them contributed to retirement, versus 61% for all other private sector workers, the IBGE study showed.