Nov 16, 2015

Labor Unrest in Brazil Calms Down at Least for Now

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The protest by independent truck drivers in Brazil that started last Monday, November 9th, has faded quickly. By the end of last week, there were only a few partially blocked highways remaining in far southern Brazil and the strike was essentially over. None of the major trucking organizations in Brazil supported the strike because of the political nature of the protest. In addition to demanding lower fuel costs and higher freight rates, the drivers also demanded the impeachment of President Rousseff, which is the primary reason why other organizations did not support the strike.

The protest was advertised in advance and it appears that the federal government was well prepared to handle this protest. The government apparently learned a valuable lesson from the previous strike by truck drivers back in March, which ended when the strikers were issued fines for blocking the highways.

On the second day of this protest, the federal government declared that blocking the highways was a criminal act and that any organization that promoted the activity would be treated as a criminal organization and face very heavy fines. In fact, the fines for both individuals and organizations were tripled this time compared to last March with some fines as high as approximately US$ 5,000 per day. There were even threats of assessing the fines per hour of blockage.

Additionally, individual drivers who are fined for blocking the highways could lose their driver license for one year be barred for ten years from receiving any financial assistance from the government to purchase new trucks in the form of low interest loans.

The government also issued guidelines that stated that trucks that were intentionally blocking traffic could be towed and confiscated and that drivers would be required to pay the fines and towing costs before they could retrieve their trucks. The government also authorized the use of an elite police force called the National Force for Public Safety to remove any blockades. The bottom line is that the government took a very hard line against the protesters and it seems to have worked.

The entire concept of this strike was very ill conceived from the beginning. Government officials stated that they could not conduct negotiations with the independent drivers because there is no central organization to negotiate with. Additionally, administration officials said that the demand for the impeachment of the President Rousseff was a non-starter and that they would not negotiate the removal of their boss!

The other labor issue in Brazil is a threatened strike by federal agricultural inspectors. They started a new round of negotiations with the Minister of Agriculture last Tuesday and the Minister convened a "working group" of government officials and labor leaders to work on resolving issues concerning salaries and working conditions.

The agricultural inspectors went on strike in September, but the strike was suspended on October 2nd in order to allow for further negotiations. The union has said that they will keep the suspension in force until the working group comes fourth with their recommendations. Once the results of the working group are released, the union's general assembly will vote to either accept the recommendations or resume their strike.

I do not think there will be a resumption of the strike while the working group is negotiating. So, for now at least, the labor unrest in Brazil has calmed down.