Camelô - Street hawkers in Rio de Janeiro >>> add-on to the Brazilian economy

Brazil’s official unemployment rate in 2006 was 9.6%. But the statistic only records that part of the working population that had a formal occupation with employee’s record book (carteira de trabalho) before losing their jobs. Only an employment relationship with employee’s record book legitimates to draw unemployment benefits. These are barely 42% of Brazil’s more than 96 million employable persons; while 58%, thus 55 millions, work in the informal sector and by that way do not enter the statistics. However, the informal sector’s proportions of total labour force overall earnings amounts only one third.

Of three Brazilian enterprises, two work informal. There included are the more than 10 million small enterprises (microempresas), which employ almost 14 million labourers. They represent 98% of all urban small enterprises. 88% of these enterprises are self-employed persons. Of the whole urban labour force 28% work self-employed. The informal labourers do not posses any social security, but often earn better as they would do it in the formal sector (two third earns more than 2000 Real [660 Euros] per month).

This giant informal sector grew enormously in the 90ties in particular when the Brazilian economy lost more than 1 million jobs in the industrial and more than 4 million in the agricultural sector because of privatization and reorganization measures. The redundant made labour force was mainly absorbed by the services sector. The number of employees there has grown from less than the half of the total labour force in 1985 up to 59% in 1996 and up to more than two thirds of all workers in 2003. With a proportion of 25%, the services have after the construction sector the second lowest participation of formal labourers with employee’s record book and by that without any social protection.

Article from the biggest Brazilian daily newspaper "O Globo" from March 27th, 2007, short time before the presidential elections

"The Brazil which uses his dodge - Growth of informality concerns experts and gets electoral topic "

The photo shows the famous samba singer Dicro selling his latest CD-release informally in the streets of Rio de Janeiro

Within the informal economy, trade takes the major share. More than 23% of all labourers work there and are responsible for more than 6.3% of the national GDP. 21% of all workers in the trade sector are street hawkers, a group which has been between 1985 and 1996 responsible for one quarter of all newly created jobs.

As formally it was assumed that the street trading serves as income source just for less qualified labour force, today this only applies to some extent. The number of workers with higher school graduation increases continuously (18% of the men and even 28% of the women have secondary education). For economy professor Dr. Hildete Pereira de Melo from the Federal University of the Rio de Janeiro State it is certain that the global growth of informality and of street trading is no temporary phenomenon, which will disappear in predictable time.

The significance of the informal sector is in many economic analyses still underestimated. Often this has to do with the fact that the value added of informal activities is observed separately and not in relation to the complex overlapping of formal trade and industry revenues generated by the informal sector (see >>> illegality > Interaction of formal and informal trade and informality in the industrial sector)

References:

The article refers to the most actual survey of the Brazilian Federal Statistic Office (IBGE) in 2003 about the urban informal sector (Economia Urbana Informal 2003) and the empiric enquiries from professor Dr. Hildete Pereira de Melo and Dr. Jorge Luiz Teles concerning especially the issue of street trade published in a report for the economic research institute IPEA in 2000 (Texto para discussão No. 773 - Serviços e informalidade: O comércio ambulante no Rio de Janeiro).