The informal economy turns South Africa into Brazil – News



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Brazil today has the equivalent of the South African economy turning to informality . From the pack of bullets sold to the transit lighthouse to the unpaid consultant – activities that became the lifeline of millions of unemployed earners to earn an income -, this parallel economy handled $ 1.17 trillion in 12 (IES), calculated by the Brazilian Institute of Economics (Ibre) of the Getúlio Vargas Foundation (FGV) and the Brazilian Institute of Economics (IBRE).

Computerization and self-employment record in Brazil

in partnership with the Brazilian Institute of Competitive Ethics (Etco). Since the country sank into recession in the second quarter of 2014, the share of informality in relation to the sum of all the wealth generated in the country, the gross domestic product (GDP), has continued to grow [19659005] Informality equals 16.9% of GDP, nearly one point more than in 2014 – the year in which Brazil emerged from a period of strong growth and where the informal economy was at its lowest level (16.1% of GDP)

In four years, the underground economy has increased its relative weight in GDP by 55 billion rubles, according to the economist Fernando de Holanda Barbosa Filho, researcher at Ibre / FGV and head of the indicator. He explains that in the beginning, the crisis was so severe that it upset both the formal and informal economy. But because the informal economy was more flexible, it responded more quickly. "Last year, when we started the recovery, the first to resume was informal employment because it is the most flexible part, which explains the increase of the underground economy. "

According to the criterion used by FGV, the underground economy. includes the production of goods and services not declared to the government to avoid taxes and contributions in order to reduce costs. The index is calculated from two groups of indicators. The first is the cash demand of the population, which generally increases with informality, as it is a way around the tax authorities.

"There is an increase in the participation of the informal sector in the labor market, both in terms of vacancies and incomes, which coincides with the development of the underground economy", says Cosmo Donato, economist at LCA Consultores. Based on the National Survey by IBGE (Pnad) continuous survey, he notes that in October 2015, there were 33.2 million Brazilians in the informal sector. Today, they are 36 million, 2.8 million more. During the same period, the number of formal sector workers decreased by 1.8 million.

"The brutal economic crisis has upset the formalization of the market," said Etco CEO Edson Vismona. But he thinks that, at the same time, there is another factor that stimulates informality: the complexity of the tax system and the excess of bureaucracy. "It is very difficult to follow the tax changes underway in the country." However, he admits that today the economic climate is the factor that has contributed most to the progress of informality.

Trend

For Barbosa Filho, once the economy has regained its normal functioning with the approval of reforms, is the trend that the formalization of activities is gradually resumed. "From there, we will see again the fall of the underground economy that we have had over time." In 2003, when the calculation of the IES started, informality accounted for 21% of GDP and fell to its lowest level in 2014.

From the point of view of the I & # 39; job, last variable to react to the recovery, Donato believes that formal hiring should grow but will not be as relevant.

Former firefighter and former hairdresser

Less than 20 meters away, 25 de Março street, in the center of the capital São Paulo, two

The former civilian firefighter Vinícius Silva Pereira, 23 years old has been in the informal sector by choice for five years. "I resigned and returned to informality because it is better."

As a civilian firefighter, he earned $ 2,800 a month and worked day after day, not day. As a street vendor, he now works six days a week and, depending on the month, he earns between R $ 3,000 and R $ 4,500 with the sale of the merchandise of the time. For example, last week she sold a pen drive.

Already, M.S, 35, traveling, had gone to informality for lack of choice. Dressing table, she had a rented location, where she catered to the customers. "But everything has become very expensive, the rent, the products and the movement have fallen a lot." So she says she decided to close the show and work at home, but she did not make a financial return. The exit for the former hairdresser was to follow the path of the husband turned street vendor after losing his job as a mason.

In the beginning, Mr. S. was selling water. But as it's a heavy product for her, in case she needed to conduct the inspection, she ended up selling lighter items. "What I have here is a mini Pagé," she says, referring to the Pagé Gallery, which brings together electronics stores, also on the 25th March street.

Working as street vendors, she and her husband fetch between R $ 5,000. and R $ 7,000 net per month. When she was a hairdresser and paid taxes and her husband had a formal contract, the couple's income, which had two children, was a little lower. "I would go back to formality and create my own business," says the former hairdresser. According to the economist Fernando de Holanda Barbosa Filho, a researcher at FGV / Ibre, the former firefighter and former hairdresser shows the two factors that fuel the informal economy.

Pereira became itinerant because the formal economy is highly regulated, which increases the number of people hired for people who employ and allows significant cuts on the payroll. As a result, the informal net income is higher, so Pereira does not give up the new business.

Already the old hairdresser had been pushed to informality because of the crisis. With the recovery, she should return to the formality predicted by the economist.

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