Brazil’s New Labor Law and the Union Contribution / by Mark Langevin

The new labor-employment law reform that passed the Brazilian Senate and is ready for enactment will eliminate the “contribuição sindical” or “imposto sindical,” a mandated fee to finance labor unions that is assessed as one day’s earnings in the month of March and passed along to the representative union, state federation, and national confederations and centrals. The reform modifies the Article 579 of the Consolidated Labor Code (known as the Consolidação das Leis do Trabalho or CLT) that was established in 1937. Each worker was obliged to contribute whether or not affiliated with a union under the old CLT provision. The adopted reform makes the contribution voluntary.

Some in the labor movement, including the Central Única dos Trabalhadores (CUT), as well as critics of the “imposto sindical,” have sought to eliminate this mandatory deduction from workers’ pay for some time. The official line of the CUT is that each worker should decide to contribute, to become a member of his or her union, and to directly participate in the decisions of the union and provide for its financial sustainability. However, it is important to note that the CUT also defends the establishment of a union representational fee as part of the collective bargaining. This representational fee would be decided by a workers/union assembly in a majority vote and assessed to all workers covered by the agreement. This would allow for a voluntary contribution, but based on a collective majority to avoid the free-rider problem.

Immediately following the Senate vote, the government’s leader in the Senate, Romero Jucá (PMDB-Roraima) negotiated several modifications to the new reform that could be enacted by executive order. One of these modifications would be a gradual phase out of the union contribution. The Labor Minister, Ronaldo Nogueira, also confirmed that an executive order could also create a mechanism for assessing a representational fee, as envisioned by the CUT, and dependent on collective bargaining. Such a provision would favor those unions with active histories of collective bargaining and leave many of Brazil’s “ghost” unions without any history of collective bargaining scrambling for financial sustainability. However, such modifications to the new law are jeopardized by Brazil’s political crisis and efforts underway in the Brazilian congress to remove President Michel Temer.

Overall, the new law injects a new challenge into the Brazilian labor movement as it navigates both the political crisis and a strong push by congressional leaders to reform the social security system. The former union contribution provided a sustainable stream of financing for the labor movement, but also discouraged some unions from actively seeking the participation of those workers it legally represented. Now, labor unions will have to work hard to obtain the voluntary contribution or organize majorities of workers within a collective bargaining process to assess a representational fee-if the new law is modified through an executive order. This reform will transform the Brazilian labor movement, placing greater emphasis on union democracy, representation and collective bargaining, but also threatening to diminish union density and hollowing out the movement’s national political weight.