Globalization Affects Collective Bargaining in Brazil

 
Sixty thousand automobile and auto parts workers from two national labor confederations have been on strike for a week in the state of São Paulo, Brazil. Among other issues is their ability to participate in the exceptional profits that the automakers have achieved since the workers' last contract. At the same time, however, globalization is reducing the amount of cars that are actually "made in Brazil," leading to arguments on local content that will become part of union negotiations in the future.

The strike is extraordinary for two reasons: never before has this sector been able to negotiate for a real wage increase and not just keep up with inflation, and it is the first time that the two national labor centers (CUT and Força Sindical, usually archrivals) have cooperated in such a massive work stoppage. The workers are asking for a 10% wage increase, compared to the automakers' offer of 6.5%. Auto parts makers offered 8%, which was also rejected. The government could intervene legally, propose a solution and order a return to work on November 16, but the problem of who earns the profits will remain. In fact, it is possible that the workers will ignore court orders to return to work. The unions have raised questions about the growing denationalization of the cars that their members are making. Since 1995, according to figures from the National Association of Auto Parts Makers, national parts content in new Brazilian cars fell from 42.6% to 32.3%. The workers claim that these are surprising numbers considering that the automakers had been trumpeting the increased national content of their cars. (This was part of campaigns by several transnationals seeking state and municipal subsidies to open new plants in Brazil). The problem will continue to grow as older "Brazilian" models are replaced by the new "world cars" of the major manufacturers. These can be expected to have a greater percentage of parts produced elsewhere. (One fact not mentioned in the report is that parts produced in Brazil could in turn be used to make cars in other countries).

The strike adds a new dimension to the continued friction between Argentina and Brazil in the MERCOSUR automobile sector debate. The agreement on cars and car parts continues to be one of the stumbling blocks for the improvement of relations among the Southern Cone partners. According to the Brazilian Metalworkers Confederation, Argentine cars have an even higher percentage of foreign parts than do Brazilian cars. Argentina imports these parts from countries besides Brazil, the workers claim, and they are therefore demanding more participation in trade negotiations, especially those that involve Argentina. They fear that even if trade increases, the issue of local content will cost them jobs. Most important, they fear that Brazil will be left with low-end, low-skill work. These worries are borne out by a complaint by the Brazilian parts manufacturers that local carmakers include painting the cars as part of the value added of local parts content. The workers of course dispute this cost as applicable to the national part content.

Trade issues are inherently complicated, but when they are directly involved in the process of collective bargaining they are even more difficult to assess. Although the question of local content has not been brought up directly in the current negotiations, it is sure to loom ever larger for the unions and will begin to have an impact beyond the union leadership directly on the rank and file. Perhaps we will see workers striking to defend the "nationality" of the cars that they produce!