Abstract
This chapter focuses on “external” flexibilization, the growth of unregistered salaried and self-employed workers for a firm. Through an ethnographic examination of outsourcing to sweatshops, homeworkers, and vendors for a firm, the chapter allows the reader to understand the links between the informal and formal sectors. The chapter explores Korean- and Bolivian-owned garment sweatshops, women putting together clothing tags for graphic companies who in turn work for multinational companies such as Levi Jeans, and vendors for national and international cosmetic companies. The ethnographic details allow for a closer examination of the linkages between the sectors and how global, national, and local forces come together to create an exploitative labor market especially for low-income women.
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Notes
- 1.
Like Chen et al. (1999), I will use the term homeworkers to refer to dependent subcontract workers, often called outworkers. Home-based workers refer both to dependent subcontract workers and to independent own-account workers.
- 2.
For cities other than São Paulo, see, for example, Sassen (1989, 1994) and Ross and Trachte (1990) for New York City, Park (1999) for Los Angeles, Benería and Roldán (1987) for Mexico City, and Standing (1999) generally on the flexibilization of labor globally. In some countries such as in Uruguay, this process had occurred already in the 1970s (Fortuna and Prates 1989). This chapter will not address teleworkers, who are an important and growing group of home-based workers, because the focus of my study is on low-income women, although this type of homework was growing in São Paulo.
- 3.
In addition, in 1966, Law 5107/66 established the Unemployment Guarantee Fund (FGTS). The FGTS system required employers to deposit 8 % (8.5 % since September 2001) of each employee’s formal monthly wage into an account managed by a state bank on behalf of the employee. There has been much debate about the CLT, the reason it has lasted, its origins, and its significance. French (2004:8) argues that “in the end, the labor laws became ‘real’ in Brazilian workplaces only to the extent that workers struggled to make the law as imaginary ideal into a practicing future reality.”
- 4.
- 5.
The term “informal economy” first surfaced in the Third World (Hart 1973 in Bromley and Gerry 1979). It was used to account for the unaccounted sector in national statistics and later for livelihood strategies or means to supplement income earned within the formal wage economy. The scholars that originally questioned the dichotomy of the formal and informal sectors include Benería and Roldán (1987), H. Buechler (1992), and Bromley and Gerry (1979). I could be criticized for occasionally still using the term “informal sector.” Again, I use it sparingly and as a shorthand primarily for unregistered salaried employment, petty commerce and production, and self-employment for a firm.
- 6.
The term “vendors for firms” is used to describe vendors who sell products door-to-door for firms such as Avon.
- 7.
As mentioned earlier, in this chapter and in the Introduction a guarantee fund is a fund that both the employer and the registered employee pay into while the employee is at the firm; it is required by the labor laws found in the Brazilian Constitution. Once the employee leaves, he or she is entitled to the funds; sometimes employees will have their bosses fire them and rehire them in order to have access to the fund. In addition, employees may take the money out to buy or fix up a house, as long as the house is on legally acquired land, which prevents squatters from using the money for this purpose.
- 8.
Some examples of this complex reality are unregulated workers employed by firms that pay taxes on profits, but do not give benefits to these workers, and retired workers who receive pensions while continuing to do work as unregistered workers for the firms from which they retired.
- 9.
I am not suggesting that every worker received the benefits they were entitled to before the crisis, because this certainly was not the case. The research participants just claimed that they thought this practice had escalated with the crisis because the employers thought they could more easily get away with it because of the high unemployment making workers scared to lose their jobs. In addition, it is difficult to know how many did not receive all of the benefits to which they were entitled especially since those workers who still had worker’s cards did not want to jeopardize their employment to answer any kind of systematic survey of workers. Since most of the research participants were not registered workers, my sample did not warrant making any kind of estimate of the percentage of workers who were not receiving all of the benefits to which they were entitled.
- 10.
I am indebted to Paula Montagner formerly at Seade for access to her tables, presented at the seminar “Map of Informality in the City of São Paulo” organized by CUT in August 1999, and to Sandra Brandão formerly at Seade for the disaggregation of many more statistics.
- 11.
The IBGE study, the PNAD, does not disaggregate the data by municipality, which makes it impossible for municipal governments to benefit from the information.
- 12.
The PED has been conducted since 1984 in 3,000 households per month and covers the 39 municipalities of the Greater Metropolitan Region of São Paulo. The survey captures gender, age, education, race, earnings, and hours worked.
- 13.
The PCV was created in the late 1980s and was supposed to take place every 4 years but has been less frequent. The last one was conducted in 2006, 8 years after the previous survey in 1998. While each of these studies provides interesting insights, they refer to different data sets based on different questions and different statistical universes – alternatively the Municipality of São Paulo and the Metropolitan Region of São Paulo – and are therefore not entirely comparable. I will alert the reader as to which data set and universe the information refers. When the tables and text state the Municipality of São Paulo as the universe, they refer to those living in the Municipality of São Paulo. There may be workers who are also working in the municipality but live outside of it. There is another universe that refers to those workers who live and/or work in the Municipality of São Paulo. The third universe consists of those workers that live in the Metropolitan Region of São Paulo but may work outside of it. I use two data sets for the MRSP, IBGE and Seade/Dieese PED.
- 14.
The institutions and researchers in question have decided to employ the old 1993 ILO definition – a more legalistic definition than that initially proposed by Sethuraman, resulting from the 15th Conference on Labor Statistics – but adapt it to the new realities of São Paulo and Brazil as a whole, which, in the case of Seade, signifies including salaried unregistered workers in larger firms with more than five employees (see Appendix A for the ILO definitions).
- 15.
CUT is a confederation of unions with leanings to the left of the political spectrum.
- 16.
This study followed the general recommendations of many scholars and practitioners including the members of the global research policy network Women in Informal Employment: Globalizing and Organizing (WIEGO) working with the ILO. Well aware of the fact that larger firms hire unregistered workers who cannot then be represented by the union, the unions are eager to document this phenomenon.
- 17.
Because of the existing statistics on informality and the years when there were significant changes, this chapter will concentrate on both the period between 1988 and 1998, the 10-year period with the most dramatic changes in terms of informalization in the MSP and between 1990 and 1999 for the MRSP, but also include later statistics to show any changes. From the late 1980s to the end of the 1990s in the Municipality of São Paulo, the percentage of workers in activities that can be considered “informal” continuously rose, while the percentage of workers in the “formal” sector fell dramatically from 53.7 % in 1988 to 42.8 % in 1998. In the universe of individuals living in the Municipality of São Paulo, the expansion of the informal sector can be seen in the increase from 1988 to 1998 of all types of informal sector activities. According to the 1998 Study on Living Conditions of Seade, 51.7 % of families in the Municipality of São Paulo have at least one member working in the informal sector. Most (34.2 %) had only one working in the informal sector, but 13.8 % had two members (Martins and Dobrowski 2000b:45).
- 18.
The percentage of unregistered workers in firms with six or more employees continued to increase from 46.8 % in 1996 to 51.8 % in 1999. It decreased slightly from 2000 to 2001, but then increased again in 2002, 2003, and 2005. The percentage then began decreasing again in 2007, with 52.9 % (still not even to 1999 levels, with 51.8 %) (Seade/Dieese PED 1996–2012).
- 19.
Similar trends can be seen in the Metropolitan Region of São Paulo, which includes the ABCD industrial region (Seade/Dieese PED). The concentration of industry in the ABC region does not change the trend of the informalization of the labor force. Workers have also complained to me that even if they were registered, the description of their jobs is incorrect so that their employers can pay them less without risking a confrontation with the union.
- 20.
These statistics are highly questionable because it is not easy to obtain this kind of information. As my qualitative interviews showed, those working sporadically or consistently but as daily workers for firms, as, for example, a stonemason for a construction firm, may call themselves unemployed and may not even mention this activity. Those selling cosmetics or other items door-to-door for one or two firms might also not consider themselves as employed since they lost their salaried job. Many low-income workers need to sell or produce things on the side to earn extra money. They would not consider themselves as self-employed working for a firm even if they were making more money in this activity than in their salaried job. There are all sorts of reasons why individuals might consider themselves unemployed. Someone still receiving unemployment benefits might not want to admit to being employed in other economic activities. A worker might have had a registered salaried job for a long time and be in a situation of having to make a living but still be looking for another job. Such a worker would be considered to be unemployed in the hidden unemployment category if working sporadically at other jobs but still searching for a job within the previous year.
- 21.
There had also been a steady increase in self-employed for firms between 1990 and 1998 in the Metropolitan Region of São Paulo, from 345,000 in 1990 to 547,000 in 1998, or a 59 % increase (Seade/Dieese PED 1990–1998).
- 22.
Again, these numbers might be a bit misleading. A higher percentage of higher-educated professionals who are providing service work might declare this as their primary work (in comparison to homeworkers producing in their homes). Everything from accounting to word processing and various consultancies might be considered self-employed for a firm.
- 23.
In the period since 2003, there has been a significant increase in the percentage of registered workers as the economy has improved. In the ABC region the percentage of workers without worker’s cards in the private sector went down from 12.8 % in 2002/2003 to 8.8 % on 2011/2012. If we compare one of the worst years of the unemployment crisis, 1998, with 2011, we see a 65.5 % increase in numbers of registered workers when there was an overall increase of 40.5 % more workers in the ABC region (Seade/Dieese PED 2012).
- 24.
In the Seade and Dieese PED statistics, “nonwhite” includes both black, of African descent, and brown (parda), racially mixed people, and “white” includes both white and “yellow,” of Asiatic descent. The PED surveyor is the one who determines the race of the respondent, unlike in the Brazilian national census whereby the respondent provides this information according to her or his self-definition. “Parda” includes children of different races (mestiços) including of white and black (mulatos), black and Indian (cafuzos), and Indian and white (mamelucos or caboclos) or children of one black parent and one parent of another color or race or an indigenous person. The majority of those in the nonwhite category in 2000 were of brown (81.2 %), and in the white category, most were considered white (97.1 %) with only 2.9 % having an Asiatic background (Seade 2001).
- 25.
Dieese, the inter-union’s statistical unit, calculated that the minimum salary to maintain a worker and her or his family with two children (eating the equivalent amount of one adult) including food, shelter, education, transportation, clothing, health, leisure, and insurance was R$892.44 in August 1999 (or 6.6 times the official minimum salary of R$136). The monthly basic food basket costs R$106.23 in the same month in São Paulo. This included 6 kg of meat, 7.5 l of milk, 4.5 kg of beans, and 3 kg of rice plus flour, potatoes, tomatoes, bread, and coffee. These rates are based on the Cost of Living Inflation Index with the base date of August 1999. The commercial average exchange rate to buy dollars was 1.878 in August 1999.
- 26.
The variation in income among the low- and high-skilled self-employed for firms can be seen in the statistics showing both the mean and the average income, which for those who lived and worked in the MSP was an average of R$897 but a mean of R$515 (Seade/Dieese PED 1998). The difference between the average (R$397) and the mean (R$315) salaries of unregistered salaried workers for firms of five or fewer employees was not as great, for example.
- 27.
The majority of the unregistered salaried workers in larger firms that live and/or work in the Municipality of São Paulo was in the service sector (51.6 %), but 25.3 % were in industry, 15.5 % in commerce, and 6.6 % in civil construction (Appendix B).
- 28.
Appendices C and D provide more detailed statistics also for the Municipality of São Paulo, showing the breakdown by sector and by status in employment. They disaggregate the statistics further for unregistered salaried workers depending on size of firm. These tables confirm the same trend toward more informality in each sector. Although there was an increase of 21.1 % in the number of workers in the service sector, there was a 58 % increase in the numbers of unregistered salaried workers within this sector and only a 12.63 % increase in the number of registered salaried workers. (The percentage of all service workers that are unregistered increased from 8.7 % to 11.4 %.) The overall increase in service sector jobs was primarily in producer services, largely because this was the area where there was the most tertiarization of production with industry outsourcing cleaning, food services, accounting, and packaging. In the industrial sector there was a decrease in the percentage of salaried workers with worker’s cards from 79.2 % in 1988 to 65.2 % in 1998. All types of self-employed workers also increased in the industrial sector. In the commercial sector the percentage of salaried registered workers decreased from 49.1 % to 39 % of those employed in this sector, while the percentage of unregistered salaried workers increased from 10.9 % to 14.3 %. The self-employed workers for a firm increased from 9.3 % to 10 %.
- 29.
As is the case of the women I interviewed in the favelas, I have primarily kept the names of the union leaders anonymous.
- 30.
The reason there was a decline in garment homework during the period studied, 1996–2003, in the communities I studied is that they were not located near the large clothing firms. Proximity had a large role to play as to who became involved in which kind of homework.
- 31.
The S system includes Sesi (Servico Social da Industria – Industrial Worker’s Assistance Service), Sesc (Servico Social do Comercio – Social Services for Commerce), Senai (Servico Nacional de Aprendizagem Industrial – National Labor Training System for Industry), Senac (Servico Nacional de Aprendizagem Comercial – National Labor Training System for Commerce), and Sebrae (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas – National Service for Helping Micro and Small Enterprises).
- 32.
As mentioned, there was a lot of discussion among academics, government officials, industrialists, and employers of all types and union activists about whether the high costs of registering a worker contributed significantly to the lack of competitiveness of Brazilian industry and thus to the unemployment crisis. However, when the economists examined countries such as Germany, the costs of their social benefits, and their ability, for example, to export auto parts, the economists began to question the validity of this claim, linking the high labor costs to lack of competitiveness. Technology and quality control are then seen as more of the problem. These issues are beyond the scope of this book but can be found in, for example, Posthuma (1994), Leite (2000), Pochmann (1997), Luis dos Santos and Pochmann (1999), and Amadeo et al. (1995).
- 33.
For a more extensive analysis and a detailed description of the migration of Koreans and Bolivians to São Paulo and the rise of garment sweatshops, see Simone Buechler (2004). Contact with Sidney Antonio da Silva, the priest who started a branch of the Pastoral dos Latino-Americanos and directed a Center on Migration out of his church, engages in anthropological research, and conducts research on Bolivians in São Paulo, was crucial for all the contacts I had with the Bolivian community, since the sweatshops were very well hidden and the workers and owners were understandably very suspicious, as many of them were in Brazil illegally and either owned or worked for unregistered workshops. The employees also worked long hours and had very little opportunity to give interviews. Some of the interviews were conducted under poor conditions, such as at soccer games, after and before late-night meetings, fiestas, and church, but some interviews at least with the priest and the directors of organizations and the unions were conducted in relatively quiet venues, such as their offices. Even with the priest as a contact, some of the Bolivian owners of the sweatshops failed to show up for scheduled interviews and then avoided my phone calls. While I did succeed in interviewing a Bolivian store and factory owner, workshop owners, a few garment workers, union activists, and presidents of associations working with Bolivians, the difficulty in conducting such research and the fact that I only met da Silva at the end of my year-long fieldwork in Brazil limited the number of interviews that I was able to conduct. I also rely on the written work of and interviews with da Silva. (His book has a marvelous title, Costurando Sonhos – Sewing Dreams.)
- 34.
Since 1998 some Bolivians have settled in other parts of the MRSP including to peripheral neighborhoods in the northeast, northwest, and southeast areas of the MSP and to Guarulhos, Cajamar, and the ABCD region. This decentralization is due both to fear of labor inspectors and cost. The sweatshops remain very much part of garment production in São Paulo.
- 35.
These workers might have been too scared to declare their work to the surveyors or perhaps they lived and worked in the same hidden workshop, which the surveyors going door-to-door would not find or be allowed to enter even if they did find them.
- 36.
Seventy percent of those who sought amnesty in 1998 were Bolivians, with the majority having lived in the city since 1990 as “underemployed.” The rest were mainly Koreans and Chinese (Schivartche 1998:3.7). Approximately 17,000 Bolivians applied and received amnesty in 2009, with 16,300 of these living in the State of São Paulo. The 2009 amnesty law (Law 11.961) established that any immigrant who had entered the country by February 1, 2009, would be able to receive a 2-year visa and then to apply for permanent residency (Repórter Brasil 2010 in Bermudes 2012:31).
- 37.
There are other places to enter Brazil, such as Cuiabá or Rondonia, without control points. In 1995, when there was a sharp increase in Bolivians arriving as “tourists,” the Brazilian government started to require each tourist to have US$500. “Entrepreneurs” took advantage and would lend the money, charging US$50 for the service once the “tourist” reached the other side (Da Silva 1997:88).
- 38.
On March 20, 1962, the Korean government put into effect a new Emigration Law encouraging group emigration to Latin America, including Brazil, Argentina, Paraguay, and Bolivia, and the use of work contracts for West Germany (Choi 1991:23). Unlike the Japanese migrants to Brazil, the immigrants were not subsidized by their government (Choi 1991:III, 4–5). Brazil recruited Korean farmers to settle and develop virgin lands, and the Korean government promoted this migration through group emigration policies and programs. However, the agricultural group settlement failed and the Koreans left the rural areas for the large cities. Some Koreans had bought land before leaving their country, only to find it nonexistent or uncultivable upon their arrival in Brazil. By 1974, the Brazilian military government had formally blocked the immigration of Koreans, forcing the Korean government to stop issuing passports for Brazil by May 1977. In addition, in 1975, the Korean government amended its Emigration Law, whereby persons worth more than $100,000 were not allowed to leave. Immigration brokers, however, continued to encourage migration to Brazil, promising profits of $200,000 to $300,000 in two or three months once the Koreans reached Brazil.
- 39.
Each group of immigrants seemed to blame the earlier groups for being exploitative. Some Bolivians saw both the Koreans and the earlier sweatshop owners, the Lebanese, as exploitative. The Koreans saw the Jews, often the owners of the buildings housing the sweatshops, as exploitative in their rents. In many ways this simply built upon existing stereotypes but also allowed the Koreans to blame the Jews for having to exploit the Bolivians, because they were having to pay so much in rent.
- 40.
The second wave of Korean immigrants, mostly illegal, made up the majority of the garment workshop and store owners in the 1980s and 1990s. Some of these migrants brought capital and often had been involved with the garment industry in Korea (Choi 1991:III and 98). The garment industry was seen as a sector where profits could be made in a short period of time.
- 41.
By 1989 50 % of the Koreans were involved in the wholesale of clothes, 15 % were retail sellers of clothes, 20 % were clothing producers, and 5 % were involved as intermediaries selling clothing to wholesale or retail stores. Only .1 % were still involved in agriculture, 1 % were professional such as lawyers and doctors, and 8.9 % had other professions (Brazilian Association of Koreans in Choi 1991:211). Some clothing producers also became joint owners of a shopping center where they could then sell their goods, especially since rents for stores in Bom Retiro had gotten so high (Paes Manso 1998:32). Many heads of families were involved in all of the related activities, such as designing, cutting, bringing the cloth to the workshops, packing, and selling the pieces.
- 42.
In the 1960s and 1970s, the Korean textile industry was also booming, suggesting that the Koreans had brought some of these skills with them, which then contributed to the success of the Koreans in the Brazilian garment and textile industries. Although Japanese, Jews, Arabs, and Armenians were also involved in the industry, they tended not to be direct competition for the Koreans since they were in other areas. The Japanese were involved more in the selling of clothing for infants and the Jews more in textiles (Choi 1991:104–105).
- 43.
According to Kyeyoung Park (1999:669), some Korean-Brazilian garment sweatshop owners have since moved to Los Angeles, using Mexican and El Salvadoran workers, and from there some have moved to the Caribbean and other places that have lower taxes. Korean-Brazilians have been quite successful in the US garment industry. Many continue to have ties with Brazil. These Korean migrants often stayed 15–23 years in Brazil before relocating to the United States. However, most of the first-wave Korean immigrants to South America in the 1960s and 1970s (about 100,000) have remained there and have often fared better than those who migrated to the United States. Some of those who migrated eventually returned to Brazil. The ones who migrated from Brazil often had established family networks elsewhere (Park 1999).
- 44.
I am following the terminology presented by Chen et al. (1999:605 and 609) who use the term homeworkers to refer specifically to dependent subcontracted workers or “outworkers” and home-based workers to refer to both dependent and independent “own-account” or self-employed workers. Homework is a subset of home-based work. Home-based work does not refer to unpaid housework or unpaid subsistence production.
- 45.
Similar statistics were unavailable to me for just São Paulo. The accuracy of these statistics is highly questionable given the difficulties of collecting such data and the variability of the different statistical studies conducted in the different cities in Brazil.
- 46.
The putting-out system is also called the workshop and the domestic system. The work is contracted by a central agent to workers in their homes or in workshops. It was often used in cloth production in Europe but also the production of ironware such as pins, pots, and pans. It existed already in the fifteenth century but became most prominent by the seventeenth and eighteenth centuries. It remained prominent until the industrial revolution in the nineteenth century in Europe and also the United States.
- 47.
Although Chen et al. (1999) claim that home-based work is an important source of employment throughout the world, the studies they cite refer primarily to microenterprises that operate out of the home, and their research does not indicate whether or not there has been an increase. However, the studies cited do show that between one third and as much as two thirds of the clothing industry workers in certain countries are homeworkers.
- 48.
In Mexico City in the early 1980s, there also were a large variety of types of homework from assembling plastic flowers, packing sweets and sunflower seeds, and assembling staples, pens, and plastic bags. Because of the lack of studies on homework, except for the garment industry, at this time in São Paulo, it is not clear if the variation in homework was also present in the early 1980s. The research participants indicated that this kind of work was at least new for them and their communities. The industries indicated that the amount of subcontracting they were involved in had increased, and as indicated above, the labor union leader for the garment industry saw a huge decrease by 1998 in the number of registered workers, but not in the amount produced. The sample of homeworkers interviewed was small in the communities studied because there were not that many homeworkers in the communities at the time of the study. Some of the research participants commented that this was because of location, since they were not near the factories who engaged in outsourcing, but the study showed that since more women in those communities had been involved in homework before, it probably had more to do with the simple fact that factories of every type were also completely closing.
- 49.
Other authors who have examined women’s homework for factories in Brazil are Spindel (1983), Teixeira et al. (1981), Silva (1979), Prandi (1978), Matos (1991) in Bruschini and Ridenti (1994), Cacciamali (1983), Woortman (1984), and Ruas (1993), who does not focus on women per se. Spindel (1983) has analyzed the relationship between the external worker to the industry, as well as the effect of this type of occupation on women’s daily life. Teixeira et al. (1981) looked at how the homeworkers are marginalized by the political and union organizations. Ruas (1993) examines the shoe industry in Rio Grande do Sul and argues that the recuperation of subcontracting is because of the crisis in the Fordist system and the desire for selective and different goods; it is advantageous for the enterprise because of the level of flexibility and the lower cost in equipment and labor.
- 50.
By January 2000, “Lucilia” had to stop all of her homework because she had to take care of a sick relative. She was able to do this only because her husband still had his job.
- 51.
In Brazil “tertiarization” is used to refer not only to outsourcing of services but also to outsourcing of production.
- 52.
This wage is considered decent by some community members even though landowners were charging a monthly rent of R$150 for a room with access to a kitchen and a bathroom in the nearby squatter settlement in the outskirts of the city.
- 53.
An important distinction made by Benería (2000:9) is that although the percentage of workers in unstable work is increasing in both high-income and low-income countries, the difference lies in the “formalization” of that work. In high-income countries, a larger proportion takes place through legal channels such as temporary agencies. Although São Paulo also had such temporary employment agencies, the majority of this type of work was usually completely unregistered.
- 54.
Accurate statistics were not available to me on the number of temporary agencies operating in São Paulo.
- 55.
Folha de São Paulo, 17 October (1998), p. 3.2
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Appendices
Appendix A: IBGE and CUT/Dieese/Seade Studies, Data Sets, and Definitions on Informal Sector Workers
The data sets that include informal sector workers include data from IBGE (Brazilian Institute of Geography and Statistics), Seade (SP State Foundation for Statistical Analysis), and a study using the Seade statistics by a team of officials linked with CUT, the National Labor Confederation. The IBGE has completed two studies of the informal urban economy, with household and individual surveys in many states and metropolitan regional areas, entitled Informal Urban Economy (Economia Informal Urbana 1997 and 2003). The unit of study is the economic unit of production and not the individual. The definition used by the IBGE study combines the idea of size and organization. The IBGE defines the informal sector as consisting of those nonagricultural units that produce goods and services with the principal objective of generating employment and income for the people involved but excludes units involved only in the production and services for self-consumption. The units of the informal sector are characterized by production on a small scale and low level of organization and little or no separation between capital and labor. However, in contrast to the ILO, IBGE does not consider the absence of regulation to be a useful criterion, since there are various types of registration, but defines informality more in terms of the mode of organization and functioning of the economic unit. For statistical operations, the “informal firm” is considered to be an urban economic unit owned by self-employed workers or employers with up to five employees. The informal firm can be the primary or secondary activity of the owner. However, in the IBGE study a number of groups have been excluded, such as homeless people (because they have by definition no residence), those connected to strictly illegal activities, and domestic workers (because they are the subject of a separate study, the National Study by Sample of Households [Pesquisa Nacional por Amostra de Domicílios – PNAD]). Incorporated businesses and those that show high sales receipts in their annual declaration of income tax and employers with a high level of education and high level of organization are excluded from the informal sector category even if they have five or fewer employees. The universe used in the study is the inhabitants of the Metropolitan Region of São Paulo. The first questionnaire was directed at households in order to identify the number of inhabitants and the work situation of individuals ages 10 and older in order to then find the owners of informal economic units. Individuals who were employers of up to five employees or self-employed were then interviewed using another survey.
The definition used by the IBGE is directly taken from the recommendations of the 15th Conference of Labor Statistics. In the Resolution concerning statistics of employment in the informal sector, adopted by this conference, the informal sector is defined as:
a group of production units which . . . form part of the household sector as household enterprises or, equivalently, unincorporated enterprises owned by households . . . [that] are distinguished from corporations or quasi-corporations on the basis of the legal organization of the units and the type of accounts kept for them. Household enterprises are units engaged in the production of goods and or services which are not constituted as separate legal entities independently of the households or household members that own them, and for which no complete set of accounts are available which would permit a clear distinction of the production activities of the enterprises from the other activities of their owners and the identification of any flows of incomes and capital between the enterprises and the owners. (ILO, KLM:1999)
In 1997, the ILO clarified its 1993 definition stating that the “[T]he informal sector has to be defined in terms of characteristics of the production units [enterprises] in which the activities take place, rather than in terms of the characteristics of the persons involved or of their jobs. Accordingly, the population employed in the informal sector was defined as comprising all persons who, during a given reference period, were employed in at least one production unit of the informal sector, irrespective of their status of employment and whether it is their main or secondary job . . .. Persons exclusively employed in production units outside the informal sector are excluded, no matter how precarious their employment situation may be. Thus the concept of persons employed in the informal sector is not identical with the concept of persons employed in the informal employment relationship” (Hussmans in Cacciamali 1999). This definition then changed in 2002, but not that of IBGE.
Another study was conducted by the National Labor Confederation (Central Única dos Trabalhadores – CUT), a confederation of unions with leanings to the left of the political spectrum; the Inter-union Department of Statistics and Socio-economic Studies (Departamento Intersindical de Estatísticas e Estudos Socioeconômicos – DIEESE); and the State Foundation for Statistical Analysis (Fundação Sistema Estadual de Análise de Dados – Seade) and was funded by the AFL/CIO (American Federation of Labor) which has an office in São Paulo called the Solidarity Center. This study used statistics from Seade. The CUT study includes the following categories of workers in the informal sector: registered and unregistered salaried and wage workers in firms with up to five employees, all employers of firms up to five employees, owners of family businesses, self-employed workers, family workers, domestic workers, and unregistered wage or salaried workers in firms of more than five employees. Technicians, lawyers, doctors, and other professionals with university degrees and earning a higher salary are not placed into the general category of self-employed but are considered to be professional self-employed with a university degree, a category that is usually included under “other” in the statistical tables. However, if they are employers with five or fewer employees, they are considered part of the informal sector. This, of course, skews the income level of this group but also is questionable in terms of the other criteria of organization and legality, since these firms might indeed (although not necessarily) be paying taxes and be legally registered. The CUT study examines and uses the statistical universe consisting of the workers and inhabitants within the Municipality of São Paulo. The workers include those who live in the Metropolitan Region of São Paulo but work in the Municipality of São Paulo. This study used the data collected by the Study on Employment and Unemployment (Pesquisa de Emprego e Desemprego – PED). This is a household survey conducted since 1984 by Seade and DIEESE of 3,000 households per month and covers the 39 municipalities of the Greater Metropolitan Region of São Paulo. This study was initiated in order to capture more of the reality of the labor market in São Paulo, which is unstructured, has a high worker turnover rate, and has many workers without worker’s cards and who are self-employed. It is for this reason that it is possible to use this survey to analyze the dimension and characteristics of those we might consider part of the informal sector. With the growing numbers of workers who are not represented by the union because of their status, further threatening the work of those represented by the union, CUT decided to examine more closely the “informalization” of the labor market and to conduct a study using both available statistics and a more qualitative study with 59 interviews.
CUT held a seminar in August 1999 entitled the “Map of Informality in the City of São Paulo.” For this seminar, material was prepared by Paula Montagner at Seade, who used the Municipality of São Paulo as her unit of study and statistical universe. In addition, Seade provided me with separate data for the Metropolitan Region of São Paulo.
Appendix B: Distribution of Employed That Live and/or Work in MSP by Sector of Activity 1998
Status in employment | Total | Industry | Civil construction | Commerce | Services |
|---|---|---|---|---|---|
Salaried workers in firm of <=5 employees | 100 | 13.6 | <2> | 31.3 | 53.6 |
Registered | 100 | 12.1 | <2> | 31.2 | 55.9 |
Unregistered | 100 | 14.6 | <2> | 31.5 | 52.1 |
Salaried unregistered workers in firms >5 employees | 100 | 25.3 | 6.6 | 15.5 | 51.6 |
Self-employed | 100 | 10.5 | 1.7 | 22.7 | 64.1 |
Self-employed for a firm | 100 | 18.3 | <2> | 21.2 | 56.8 |
Total employed | 100 | 18.1 | 2.7 | 16.7 | 53.4 |
Appendix C: Distribution of Employed According to Sector of Activity and Status of Employment by Size of Firm Municipality of São Paulo 1988 (1)–1998
Status of employment | 1988 (1) | 1998 | ||||||
|---|---|---|---|---|---|---|---|---|
Size of firm | Size of firm | |||||||
Total | 5 or fewer employees | 6 or more employees | Don’t know | Total | 5 or fewer employees | 6 or more employees | Don’t know | |
Employed (2) | 100.0 | 100.0 | ||||||
Employed in industry (2) | 29.1 | 17.8 | ||||||
Salaried/private sector | 25.4 | 0.8 | 20.9 | 3.7 | 14.3 | 0.9 | 12.0 | 1.4 |
Registered | 23.1 | 0.4 | 19.4 | 3.3 | 11.6 | 0.3 | 10.3 | 1.0 |
Unregistered | 2.3 | 0.4 | 1.5 | 0.4 | 2.6 | 0.6 | 1.7 | 0.3 |
Self-employed works for a firm | 1.8 | 0.4 | 0.7 | 0.7 | 1.5 | 0.4 | 0.7 | 0.4 |
Employed in commerce (2) | 14.9 | 17.0 | ||||||
Salaried/private sector | 9.0 | 1.6 | 5.7 | 1.6 | 9.0 | 2.0 | 5.9 | 1.1 |
Registered | 7.3 | 0.9 | 5.1 | 1.3 | 6.6 | 0.8 | 5.0 | 0.8 |
Unregistered | 1.6 | 0.8 | 0.6 | –(4) | 2.4 | 1.2 | 0.9 | –(4) |
Self-employed works for a firm | 1.4 | 0.6 | 0.4 | 0.3 | 1.7 | 0.8 | 0.6 | –(4) |
Employed in services (2) (3) | 44.5 | 54.1 | ||||||
Salaried/private sector | 22.3 | 3.0 | 14.9 | 4.5 | 27.0 | 3.5 | 19.7 | 3.8 |
Registered | 18.4 | 1.4 | 13.3 | 3.7 | 20.8 | 1.5 | 16.5 | 2.8 |
Unregistered | 3.9 | 1.6 | 1.5 | 0.8 | 6.2 | 2.1 | 3.2 | 1.0 |
Self-employed works for a firm | 2.4 | 1.2 | 0.7 | 0.5 | 4.6 | 2.7 | 1.4 | 0.5 |
Employed in producer services (2) | 21.4 | 29.6 | ||||||
Salaried/private sector | 13.0 | 2.0 | 8.1 | 3.0 | 16.8 | 2.4 | 11.7 | 2.7 |
Registered | 10.5 | 0.9 | 7.1 | 2.4 | 12.6 | 1.0 | 9.6 | 2.0 |
Unregistered | 2.5 | 1.0 | 0.9 | 0.5 | 4.1 | 1.4 | 2.1 | 0.7 |
Self-employed works for a firm | 1.7 | 0.9 | 0.4 | 0.4 | 3.2 | 2.0 | 0.9 | 0.3 |
Employed in consumer services (2) | 5.4 | 7.2 | ||||||
Salaried/private sector | 2.5 | 0.6 | 1.4 | 0.5 | 3.4 | 0.8 | 2.2 | 0.4 |
Registered | 1.7 | 0.3 | 1.0 | 0.4 | 2.1 | –(4) | 1.6 | –(4) |
Unregistered | 0.8 | 0.3 | 0.4 | –(4) | 1.3 | 0.6 | 0.6 | –(4) |
Self-employed works for a firm | 0.3 | –(4) | –(4) | –(4) | 0.6 | 0.4 | –(4) | –(4) |
Employed in social services (2) | 6.4 | 8.5 | ||||||
Salaried/private sector | 2.9 | 0.3 | 2.1 | 0.5 | 3.8 | 0.3 | 3.0 | 0.5 |
Registered | 2.5 | –(4) | 1.9 | 0.5 | 3.2 | –(4) | 2.6 | 0.4 |
Unregistered | 0.4 | –(4) | –(4) | –(4) | 0.6 | –(4) | 0.4 | –(4) |
Self-employed works for a firm | 0.4 | –(4) | –(4) | –(4) | 0.7 | 0.3 | –(4) | –(4) |
Appendix D: Distribution of Employed by Sector of Activity and According to Status of Employment and Size of Enterprise Municipality of São Paulo 1988 (1)–1998
Status of employment | Percentages | |||||||
|---|---|---|---|---|---|---|---|---|
1988 (1) | 1998 | |||||||
Size of firm | Size of firm | |||||||
Total | 5 or fewer employees | 6 or more employees | Don’t know | Total | 5 or fewer employees | 6 or more employees | Don’t know | |
Employed in industry (2) | 100.0 | 100.0 | ||||||
Salaried/private sector | 87.2 | 2.8 | 71.7 | 12.7 | 79.9 | 5.1 | 67.2 | 7.6 |
Registered | 79.2 | 1.4 | 66.7 | 11.2 | 65.2 | 1.8 | 57.6 | 5.8 |
Unregistered | 8.0 | 1.4 | 5.0 | 1.5 | 14.8 | 3.4 | 9.6 | 1.8 |
Self-employed works for a firm | 6.1 | 1.5 | 2.3 | 2.3 | 8.2 | 2.4 | 3.8 | 2.0 |
Employed in commerce (2) | 100.0 | 100.0 | ||||||
Salaried/private sector | 60.1 | 11.0 | 38.3 | 10.7 | 53.2 | 11.9 | 35.0 | 6.4 |
Registered | 49.1 | 5.9 | 34.4 | 8.8 | 39.0 | 4.8 | 29.6 | 4.6 |
Unregistered | 10.9 | 5.2 | 3.9 | –(4) | 14.3 | 7.0 | 5.4 | –(4) |
Self-employed works for a firm | 9.3 | 4.3 | 2.8 | 2.3 | 10.0 | 4.6 | 3.7 | –(4) |
Employed in services (2) (3) | 100.0 | 100.0 | ||||||
Salaried/private sector | 50.1 | 6.7 | 33.4 | 10.1 | 49.9 | 6.6 | 36.4 | 7.0 |
Registered | 41.4 | 3.1 | 30.0 | 8.3 | 38.5 | 2.7 | 30.5 | 5.3 |
Unregistered | 8.7 | 3.6 | 3.4 | 1.7 | 11.4 | 3.8 | 5.9 | 1.8 |
Self-employed works for a firm | 5.5 | 2.8 | 1.5 | 1.2 | 8.4 | 5.0 | 2.5 | 0.9 |
Employed in producer services (2) | 100.0 | 100.0 | ||||||
Salaried/private sector | 60.7 | 9.2 | 37.7 | 13.9 | 56.8 | 8.2 | 39.6 | 9.0 |
Registered | 49.0 | 4.3 | 33.4 | 11.4 | 42.8 | 3.5 | 32.6 | 6.7 |
Unregistered | 11.7 | 4.9 | 4.3 | 2.5 | 14.0 | 4.6 | 7.0 | 2.3 |
Self-employed works for a firm | 7.8 | 4.4 | 1.7 | 1.7 | 10.8 | 6.8 | 3.0 | 1.0 |
Employed in consumer services (2) | 100.0 | 100.0 | ||||||
Salaried/private sector | 46.7 | 11.7 | 25.8 | 9.3 | 47.2 | 11.0 | 30.7 | 5.4 |
Registered | 31.2 | 5.3 | 19.3 | 6.6 | 29.6 | –(4) | 22.6 | –(4) |
Unregistered | 15.5 | 6.4 | 6.5 | –(4) | 17.6 | 7.8 | 8.2 | –(4) |
Self-employed works for a firm | 5.7 | –(4) | –(4) | –(4) | 8.2 | 5.0 | –(4) | –(4) |
Employed in social services (2) | 100.0 | 100.0 | ||||||
Salaried/private sector | 45.8 | 5.4 | 32.3 | 8.2 | 45.1 | 3.9 | 35.4 | 5.8 |
Registered | 39.1 | –(4) | 29.6 | 7.2 | 38.0 | –(4) | 31.1 | 4.5 |
Unregistered | 6.7 | –(4) | –(4) | –(4) | 7.1 | –(4) | 4.3 | –(4) |
Self-employed works for a firm | 6.0 | –(4) | –(4) | –(4) | 8.2 | 3.7 | –(4) | –(4) |
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Buechler, S.J. (2014). Outsourcing Production and Commerce: A Close Examination of Unregistered Salaried Workers, Sweatshop Workers, Homeworkers, and Ambulant Vendors for Firms. In: Labor in a Globalizing City. Urban and Landscape Perspectives, vol 16. Springer, Cham. https://doi.org/10.1007/978-3-319-01661-0_5
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