Negotiating minimum wages in Santa Catarina: time to turn the tide in collective bargaining.

In a somewhat unexpected turn of events, negotiations between representatives of labor unions, advised by DIEESE, and business owners in Santa Catarina, held this Tuesday (January 12th), led to an agreement for the readjustment of the 4 tiers of the State Minimum Wage. The negotiation was finalized in the second round, which is rare in the twelve-year history of campaigns for the readjustment of state minimum wages. The readjustment averaged 10,5%, a small gain compared to last year's inflation (10,16%).  

Although the modest real gain was not what the workers hoped for, the resources will certainly be allocated to the acquisition of basic necessities (food, clothing, small services), which benefits the workers and, by extension, the whole society. This includes sectors of the business community that live off their business and not speculation. This benefit will occur, also due to the reach that the State Minimum Wage Law has in Santa Catarina, where many thousands of workers currently base their income on the minimum wage.  

According to the IBGE's Annual Industrial Survey (PIA, from the Brazilian Institute of Geography and Statistics), the weight of personnel expenses in the total industrial cost is 9,4%, including salaries and social charges. This is the cost of labor in industry. Of course, this cost is higher in Services and Commerce, also varying according to the size of the companies and other factors. But the problems of companies in general are located in other costs, such as raw materials, exchange rates, interest rates, industrial policy, freight, etc. The cost of labor is the solution, not only because it produces new value, but also because it is the workers, fundamentally, who will consume the manufactured products. The rich are a minority; they cannot handle the internal consumption of a country. Crises in the capitalist system, for 300 years, have occurred when there are surplus products on the shelves and not when there are shortages (with exceptions, of course, because the system moves through permanent crises).   

Currently in the country, the two main macroeconomic problems are inflation and low growth. The inflationary problem has nothing to do with wage increases. Current inflation is caused by costs (currency devaluation, freight, due to the criminal fuel pricing policy, etc.), it has nothing to do with wages. This is evidenced by the fact that hunger has increased again in the country because unemployment has risen and wages have fallen in real terms, a consequence of the 2016 coup.  

One of the main triggers for price increases in general, possibly the most important, is the extortionate increase in the prices of petroleum derivatives. That is, Petrobras' pricing policy, the PPI (Import Parity Pricing Policy), which is based on dollarization and linking fuel prices to international oil price fluctuations. This policy is directly responsible for the increase in food prices and, therefore, for the accelerated return of chronic hunger in the country. It is a policy operated to fill the pockets of foreign speculators at the expense of the nation.  

Besides inflation, the other central economic problem is low growth: the coup plotters of 2016 said that simply removing President Dilma would bring about a return to growth. According to the Central Bank's Focus survey (03/01/22), GDP (Gross Domestic Product) growth in 2022 is not expected to exceed 0,36%. If this forecast is confirmed, between 2019 and 2022 GDP will have a meager growth of 0,5% per year. This figure for the Bolsonaro government is only higher than that of Michel Temer's government, when there was an average decrease of -0,13% per year between 2016 and 2018. If the GDP forecast for this year from the Focus survey (0,36%) is confirmed, the 2022 GDP will return to 2013 levels.  

The low growth during the coup administrations (Temer/Bolsonaro) stems, in large part, from the destruction of the domestic market, that is, from wage stagnation, increased unemployment, and the end of real minimum wage gains. This is not theory. The virtuous effects of real minimum wage increases in the recent period between 2004 and 2016 are still very much alive in our memories. Wage increases, especially minimum wages, are not a problem for the country; on the contrary, they are the solution. When wages increase, individual employers experience a temporary increase in costs, which they must manage immediately. But they gain significantly from the expansion of the domestic consumer market and the increase in clientele.   

With the negotiation of minimum wages, the cost of labor (in the total industrial cost) increased by 0,99% (10,50% over 9,4%), precisely in the part of the business cost that produces new value. Machinery and equipment do not produce value; they only transfer it to goods. The negotiation of minimum wages will provide approximately R$140 or R$150,00 per month for those who produce all the wealth of the state, which is the worker. This worker will then consume most of the goods produced. Why has the country been in recession or economic stagnation for six or seven years? Because, among other reasons, the consumer market is being destroyed by the coup. Destruction of rights and wages has never led to economic growth in any country in the world. On the contrary, if the domestic consumer market is destroyed, the country's dependence on external markets increases, as is concretely happening with Brazil.  

It's interesting to pay attention to the case of Spain, which revoked the labor counter-reform approved in 2012 on January 1st. Through tripartite negotiation, they eliminated the legislation that only harmed labor. The changes brought about by the decree-law of December 30, 2021, in Spain, stem from negotiations involving companies, unions, and parties that make up the government, which support the Spanish Socialist Workers' Party (PSOE), which is in charge of the country. Spain implemented the labor reform in 2012 with the discourse that it would generate jobs. The country has an unemployment rate of 14,5% (a rate similar to that of Brazil), one of the highest in the European Union.  

Spain's labor reform a decade ago was one of the bases for the counter-reform carried out in Brazil in 2017, under the coup government of Michel Temer. There, as here, the excuse was to generate jobs. Since the counter-reform, the number of unemployed and precariously employed workers (informal, unemployed, and discouraged) in Brazil has jumped from 52,3 million to 61,3 million, according to IBGE (Brazilian Institute of Geography and Statistics). This means that, with the counter-reform, nine million compatriots, a number equivalent to almost three times the population of neighboring Uruguay, have seen their living and working conditions worsen significantly. These are the facts.