Brazilian President Jair Bolsonaro (at the front), and the President of Correios, General Floriano Peixoto, in the background.
Brazilian President Jair Bolsonaro (at the front), and the President of Correios, General Floriano Peixoto, in the background. Photo: Antonio Cruz/Agencia Brasil.
Economy

A target of government privatization plans, Brazil's postal service may face a national strike amid the COVID-19 pandemic

The current administration of the state-owned company wants to review wage negotiations and cut benefits. A preliminary injunction by the Supreme Court in favor of the company opens space for this to occur from August 1st

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The Brazilian Postal Service, known as Correios, is the first large state-owned company in the country to enter a wage negotiation phase this year. In November of last year, the Minister of the Supreme Federal Court (STF) Dias Toffoli decided, preliminarily, for the suspension of the current normative sentence (which happens when the judiciary has to decide on a collective agreement negotiation) that governs the relationship between the company and its workers. As a result, the category’s labor rules, which should remain in force until 2021, are at risk of being suspended next Saturday, August 1st.

With the economic pressure of the current crisis and the mission of reducing expenses, the current administration of the state-owned company wants to cut a series of benefits of over 99,000 workers. The category has a new meeting scheduled for August 17 and may vote for a national strike, amid the pandemic of the new coronavirus, if the company’s presidency does not retreat.

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The company says that the savings generated by the revision of benefits would reach BRL 600 million per year. But the workers recall that the preliminary suspension of the normative sentence last year has already resulted in estimated annual savings of BRL 1.2 billion for Correios, which took advantage of the decision to reform the employees’ health plan. They also stress that the background of the negotiation goes far beyond the review of benefits and reaches possible privatization of the company next year.

Correios has been an official target of the privatization agenda of Jair Bolsonaro‘s administration since August last year, when a list of state-owned companies was included in the government’s Investment Partnership Program (PPI, in the acronym in Portuguese).

Six of these companies, including Correios, were included in the program under the condition of evaluation, that is, they would undergo studies conducted by the National Bank for Economic and Social Development (BNDES) so that the best divestment model could be found, which could result not only in privatization, but concessions and partnerships with private entities.

Any company applying for privatization needs to be attractive in the eyes of investors. Founded in the early 1970s, the company was worth BRL 1.4 billion in early 2019, according to some financial institutions, more than twice as much as in 2017, when the company interrupted two years in losses and made more than BRL 660 million in revenue.

The current President of Correios, General Floriano Peixoto, took office in June last year with the mission of “adopting a more profitable business model” and expanding “the network of customers and channels through partners, obtaining lower costs”, according to what he stated in his inaugural speech.

Part of this mission is to reduce the costs of the state-owned company. The 13th Bulletin of Federal State Companies, released at the beginning of July by the Ministry of Economy, shows that the staff of Brazilian state-owned companies as a whole was reduced by 3.7% in 2019.

In the case of Correios, the cut in staff reached 5,900 employees. If in 2017 the company had 108,000 employees, apart from temporary workers, at the end of 2019 there were 99,467.

Correios is among the 46 Brazilian government companies under its direct control and not dependent on the National Treasury, that is, with its own and sufficient revenue. At the end of 2019, the company had a balance of BRL 537 million.

In early 2020, Correios had a loss-making subsidiary – CorreiosPAR, created in 2014 to form and manage strategic corporate partnerships – liquidated. The dissolution of the company generated around BRL 25 million in revenue for the state-owned company.

To LABS, Fentect’s communications secretary, Emerson Marinho, said that the list of benefits has been emerging over time as a way to compensate employees for, for example, wage freezes. Of the 79 clauses in the collective agreement in force today, the company wants to cut 70, says Marinho. At the same time, in terms of wages, workers asked for a 5% increase, while the state-owned company suggested zero.

Marinho told LABS that among the clauses that may cease to be mandatory, is the daycare allowance and the extended maternity leave, of 180 days. “The 30% risk surcharge is also a concern of the category. Depending on the position, the end of this surcharge can mean the loss of 40% to 45% of the worker’s income”, emphasizes the Fentect communication secretary.

In response to LABS, Correios positioned itself by means of a note. The state-owned company said that “the current context” obliges the company to “redesign the financial strategy, prioritizing long-term sustainability and, especially, maintaining everyone’s jobs.”

The company stressed that it does not intend to “suppress rights”, but “to adjust the list of benefits granted to the category, as is done regularly”. “Defending the contrary only promotes confusion between rights and benefits, a resource that has already been used by representative entities on previous occasions,” said the state company.

READ ALSO: 59% of online consumers in Brazil increased e-commerce purchases amid the pandemic, says AMI

A strike in the middle of the pandemic

Correios is now responsible for delivering almost half of the orders made through e-commerce in the country. With the pandemic, this demand increased by about 20%, according to the state-owned company, compared to last year.

To Valor, the company informed that each strike day can cost BRL 5 million – the amount is based on the 2017 stoppage, which affected 30% of employees in the operational area and extended for 13 days.

To LABS, the federation representing the unions in the category stressed that workers do not want to go on strike, but that they will do so if the state company does not go back. In addition to the Correios’ willingness to negotiate, the STF’s assessment of the merits of the matter, which may happen on the 14th, may also influence the category’s decision.

In a note, the Correios told LABS that among the measures adopted to protect the workforce during the pandemic, the company redirected part of its 99,000 employees, classified as a risk group, to remote work. “In order to meet the increased demand, several measures were taken, including more than 2,500 hiring of outsourced employees, considering only São Paulo and Rio de Janeiro. In addition, additional cargo transportation lines were leased and special treatment was adopted. for orders originating from electronic transactions. “

Marinho, on the other hand, says that the company failed to assist workers who remained active during this period and that basic measures, such as the supply of masks and hand sanitizers, were only fulfilled in many cases via legal requests from Fentect.

Possible privatization of the postal service will only be defined in 2021

In January of this year, the council responsible for the PPI authorized the beginning of BNDES studies on Correios’ possible privatization. But between the start of studies and the effective privatization of the state-owned company, there is a long way.

Recently, the Minister of Economy, Paulo Guedes, said that he expects Correios to enter the dance of privatization in the first half of 2021. But in August last year, when the company was confirmed in the PPI list, this deadline was 2020. So, everything can still change.

In Brazil, Correios has a monopoly on the postal service and national airmail (military postal service) ensured by the Constitution. As a result, its eventual privatization, partial or total, must pass through Congress, through a Constitutional Amendment (PEC, in the acronym in Portuguese) – a process that can take two to three years.