WAGES AND PRODUCTIVITY: AN OVERVIEW

The key empirical evidence for the “social compact for growth” hypothesis is that real wages grew in tandem with productivity during the crucial years of recovery and expansion of European and Japanese economies after 1945–1947.⁶

By taking part in a productivity drive at the firm level and limiting their wage demands to the growth of productivity, labor obtained steady increases in real wages and welfare, which formed the basis for a corporatist accommodation between labor and management. Indeed, manufacturing wages and productivity in the advanced industrial countries grew by 3 percent per annum between the mid-1950s and mid-1960s. Fast growth, full employment, high productivity, and rising wages were thus key features of the post–Second World War settlement in European and Japanese economies—until inflation struck in the early 1970s and wages surged past productivity.⁷

Wages and productivity evolved differently in postwar Brazil. Data on these variables are limited and somewhat tenuous. I have attempted to construct wage and labor productivity series by using interpolated and backward-extrapolated estimates from available statistics.⁸

A summary of the methodological procedures is presented in the Appendix. In order to make clear the limitation of the series, data obtained by interpolation and backward extrapolation appear in brackets.

Overall trends are clear even before we take a closer look at the data. Thus Figure 1 shows that, for most of the 1945–1962 period, labor productivity exceeded real wages in Brazil's manufacturing industry. Tests of structural stability, using a regression model with dummy variables, show that there was a change in the level and the slope of Brazil's labor productivity series, indicating the existence of a structural break in 1954—an outcome not replicated by wages.⁹

Such a result is revealing because the 1950s were a period of high economic growth in Brazil, with an average Gross Domestic Product growth of 7.4 percent per year.¹⁰ Besides, “developmentalist” or “populist” economic policies are usually assumed to have had a redistributive impact in postwar Latin America.¹¹ It is hard to avoid the conclusion that, because of the jump in productivity and the relatively slow growth of wages, firms were experiencing an increase in their profits at the expense of workers' wages after 1954 (Figure 1).

The trend is similar in São Paulo. Real wages in São Paulo lagged behind labor productivity from 1956, as can be seen in Figure 2. As in Brazil as a whole, a regression model with both intercept and slope dummy variables shows that São Paulo's labor productivity series is not stable across time, indicating the presence of a structural break in 1954 (see the Appendix). It seems that, even at the heart of the industrial transformation in Brazil, workers were not able to keep pace with rationalization and improvements in production organization by firms, which led to significant increases in labor productivity during the second half of the 1950s and early 1960s.

The behavior of wages and productivity could conceivably reflect the initial phase of the Kuznets curve, as inequality increased during the first stages of economic development. However, it seems more likely that specific, institutionally determined factors—such as inflationary macroeconomic policies, minimum-wage policies, strategies by firms, and workers' bargaining power—were the main causes shaping the distribution of wages and profits in Brazil, not only in the 1950s but also in the 1960s.¹²

This is a hypothesis that still remains to be investigated empirically and is beyond the scope of the present article. My concern here is a different issue, one related to labor politics, wages, and productivity—namely, why did Brazil's political economy fail to give birth to a social compact that could help design proper economic and social policies in order to promote growth along with increasing welfare? In particular, the focus will be on the relations between employers and workers that may have prevented industrial wages from catching up with productivity in a favorable economic situation that was marked by high economic growth and employment.

BRAZIL'S POLITICAL ECONOMY IN THE POSTWAR YEARS

Brazil's political economy from the 1940s to the early 1960s was deeply affected by two major developments in earlier decades. First, the demands of the growing industrial working class for economic benefits, social rights, and political participation called into question the traditional relations between state and society in Brazil. The existence of this working-class challenge was an important aspect of the political events in the 1930s, which started with the seizure of power by a coalition of forces led by Getúlio Vargas—the Revolution of 1930. At first, the new government was responsive to working-class demands and made an attempt to acknowledge the rights of emerging social forces. Between 1932 and 1937, new social legislation enacted by the government addressed many of the issues labor organizations had been fighting for since at least the 1910s.¹³

Despite government action in the area of social rights, the limitations of the reformist zeal of the political forces that took power in the Revolution of 1930 were made clear within a few years. As trade unions and political groups independent from the government pushed forward their campaign for extended economic and social benefits, the newly founded institutional order, established by the Constitution of 1934, began to crumble. In January 1935 the government decreed a National Security Law, which heralded a period of harsh repression of labor organizations. In November 1937 Vargas and his supporters shut down Congress and consolidated their authoritarian rule, giving birth to the Estado Novo (New State) regime, which would last until October 1945. A new era of relations between the state and the workforce was then initiated, in which the “labor problem” became a matter of national security.¹⁴

Second, the 1930s also saw the establishment of the framework that would regulate industrial relations over the next decades. By 1939 successive government decrees had laid down a state-corporatist structure in which both employer and labor representations were defined as consultative organs attached to the state. In the end, the new legislation enforced a three-tier hierarchy in which trade unions (in cities), federations (in states), and confederations (at the national level) would represent the interest of employers and employees in a given trade. The Ministry of Labor, Industry, and Commerce (set up in 1931) held the power of authorizing, supervising, and controlling the official unions, which in turn were forbidden to declare or publicize political and religious ideas. At the same time, in 1932 the government began to set up a labor court system to mediate in the legal disputes between labor and management.¹⁵

During the Estado Novo, the state-corporatist structure of industrial relations was further strengthened by complementary legislation. In addition to Decree 1,403 of 1939, which consolidated the intervention in trade union issues initiated in 1931, in July 1940 a mandatory union tax (imposto sindical) on all employees provided official trade unions, federations, and confederations with stable funding for their regular work as appendages of the state. In May 1939 a new Labor Justice system was set up with a three-level structure comprising local councils (Juntas de Conciliação e Julgamento), regional tribunals (Tribunais Regionais do Trabalho), and a top federal body responsible for last-instance decisions (Tribunal Superior do Trabalho). Finally, in November 1943, the Consolidated Labor Laws (Consolidação das Leis do Trabalho or CLT) brought together and expanded the social legislation enacted during the previous years. The Consolidated Labor Laws were the final step in the establishment of an authoritarian corporatist system that would regulate labor-management conflicts in the following decades in Brazil, notwithstanding the end of the Estado Novo regime in late 1945.¹⁶

This authoritarian corporatist system of industrial relations was a response to the social conflicts that marked the industrialization process in Brazil, particularly from the 1910s onwards. During the early 1930s, independent left-wing activists resisted attempts by the Ministry of Labor to co-opt the whole labor movement into the state agencies. Even when militants decided to join the official trade unions (as occurred in 1933/34), they sought to preserve their independence in the face of the government's position.¹⁷

It was only with the crackdown on the labor movement from 1935 that the government and industrialists could regain the initiative in the sphere of industrial relations in São Paulo and other industrial centers in Brazil. For their part, industrialists in São Paulo welcomed the approach to labor and the speeches on social harmony between classes formulated by the Estado Novo ideologues. As illustration, in 1943 the Federation of Industries of the State of São Paulo urged its affiliated firms to provide transport for their workforce to take part in the official commemoration of the Labor Day, because it “promis[ed] to be an expressive demonstration of the spirit of social harmony which, fortunately, govern[ed] the relations between labor and management.”¹⁸ Such an optimistic assessment would suddenly change in early 1945, when a strike wave hit industrial centers in Brazil, as will be shown.

With regard to the economy, the overthrow of Vargas and the end of Estado Novo in October 1945 did not affect the optimism that followed the end of the Second World War. There was hope that the world economy's return to normality would ensure acknowledgement of Brazil's participation in the war and material achievements, so that the country would no longer be relegated to a marginal position in international economic and political affairs. At the same time, a smooth transition from wartime was expected, owing to the substantial trade surplus with European partners during the war.¹⁹

The story of how such an optimistic economic outlook was frustrated in the immediate postwar years has been told by economic historians.²⁰

As early as 1946 the liberal exchange policy that had been implemented by the newly-elected Eurico Gaspar Dutra government (January 1946–January 1951) was hit by capital flight and soaring imports, with neither compensatory investments from nor exports to the dollar area. As happened to countries in Latin America and other regions, the reserves amassed during the war were shown to be worthless in the face of the dollar shortage. In 1947 the worsening exchange crisis forced the government to do a U-turn on its economic policy, with a rapid escalation of exchange restrictions and import controls, coupled with strict application of expenditure-reducing policies (the latter until mid-1949). Besides, Latin America was not included in the large-scale U.S. aid for postwar recovery, the Marshall Plan—despite lobbying by its governments and elites. This was more than a transitory setback, and it helped make controlling imports a fixture in Brazil's (and Latin America's) economic policy during the following decades.²¹

Such a context of crisis, restrictive practices, and lack of foreign resources strengthened the position of those who resisted arguments in favor of markets and who favored a strategy of industrial diversification led by the state.²²

In a society still largely dependent upon primary production and exports, the aim of economic modernization through rapid industrial growth attracted strong support among business groups, the middle class, workers, and the state bureaucracy. In fact, the social basis for such a development had already been established in previous decades. The industrialist leadership, for example, had become an influential voice in all debates and decisions regarding economic and social policy already in the early twentieth century.²³ By 1945 the Federation of Industries of the State of São Paulo was the most powerful employer interest group in Brazil, with a history of close collaboration with the Estado Novo regime and access to the spheres of policy making. The working class, in turn, had expanded in an impressive way, with large concentrations in the main industrial cities, so that its interests could no longer be ruled out—as was shown by the corporatist initiatives by governments in the 1930s mentioned before.²⁴ The middle classes were also captured and influenced by the thrust of industrial growth, with the expansion of new professions, services, and urban centers. To a large extent, therefore, economic policy aimed at rapid industrialization seems to have been a response to powerful interests that had been in gestation during the previous decades. The strong appeal of industrial growth was ultimately conveyed by the developmentalist theses of the Economic Commission for Latin America (ECLA), set up in 1948 and highly influential among Brazilian industrialists throughout the 1950s—although such an influence was not always significant among other business elites in Latin America, such as the Argentinean.²⁵

Following a world-wide trend in the postwar years, the achievement of rapid industrial growth in Brazil was closely associated with planning, state intervention, and protectionism.²⁶

Apart from direct investments in basic industries (such as oil and steel), and in line with other historical experiences of late industrialization, the Brazilian state also mobilized financial resources, ensured protection against foreign competition, set up a range of incentives, and established the sectors intended by industrial policy. The automotive industry is an illustrative example of state intervention in postwar Brazil. The second Vargas government (January 1951–August 1954) established the initial policy framework for building up the motor vehicle and parts manufacturing industry in Brazil. After a brief pause, caused by Vargas's suicide in August 1954 and a transition period, the program was reauthorized and extended by the Kubitscheck government (January 1956–January 1961), as part of its comprehensive “Targets Plan” (Plano de Metas). On both occasions, features that seem to have characterized successful economic intervention by the state in late-industrializing societies were also at work in Brazil: an active technical bureaucracy, a close relationship with business, and clear, long-term goals.²⁷ The result was that both the second half of the 1950s and the automotive industry became symbols of the developmentalism in Brazil—an economic ideology aimed at promoting fast industrial growth led by the state, with foreign and domestic private capital as active partners.²⁸

A noticeable outcome of the developmentalist era in Brazil were the high rates of output growth and economic diversification, which made the country one of the main newly industrializing economies at the time.²⁹

Growth in Gross Domestic Product reached 7.5 percent per year between 1945 and 1960, whereas average industrial output achieved 9.5 percent per year growth in the same period.³⁰ Apparently, economic growth could have set a solid basis for accommodation between the industrial working classes and employers, under the auspices of an interventionist state. However, evidence on wages and productivity shows a rather different picture: the gap between industrial wages and profits increased in the heyday of developmentalism and, as we shall see, a confrontational pattern of labor relations continued to develop in Brazil.

LABOR POLITICS IN THE EARLY POSTWAR YEARS

By early 1945 Brazil was experiencing all the uncertainties and social tensions of a world that had gone through years of war, material destruction, genocide, and social disruption. Although the country had not been a location of combat during the Second World War, public opinion closely followed the events, mobilized to take part in the conflict, and helped force a government sympathetic to the Axis to send the army to Europe to join the Allies. The institutional and political situation, therefore, was awkward. On the one hand, the defeat of fascist regimes in Europe fueled the expectations of a new era of democracy, popular participation, social justice, and economic development. On the other hand, the country was still under the rule of the Estado Novo dictatorship. Vargas's resignation and the end of Estado Novo in October 1945 did not solve the impasse, because a coalition of conservative groups led by Dutra, a former Ministry of War during the Estado Novo regime, ended up winning the presidential elections in December 1945. Thus, the restoration of institutional legality headed by conservative groups closely linked to the early dictatorship only reasserted the uncertainties and social tensions in Brazilian society. In particular, this situation raised serious doubts about the ability of new political and social groups to replace the authoritarian elites that traditionally held power in Brazil. As regards the outcomes, there was skepticism whether the benefits of economic development could be extended beyond the powerful landed and entrepreneurial classes.³¹

The particular political and social alignments established in the immediate postwar years, characterized by continuity with the authoritarian past, deeply marked labor relations in Brazil in the decades to come. Labor issues, as we know, continued to be regulated by the highly centralized and interventionist system of industrial relations inherited from the Estado Novo regime, which prevented trade unions from being autonomous and independent from the state. Nonetheless, labor politics in postwar Brazil shows a complex history of working-class organization and conflicts, which went far beyond the corporatist system of industrial relations. A major example were the workers' initiatives and organization on the shop floor, which, in contrast to the standard stories in Brazilian labor history, paralleled the trade unions and even clashed with them at times.³²

Relations between industrialists, workers, and governments were thus characterized by conflict, instability, and repression, as the history of the governments' and the industrialists' dealings with workers clearly shows.

A repressive stance by governments and industrialists was already clear in the first months of the new Dutra government, elected in December 1945. Early in the year, there had been strikes in hundreds of factories in São Paulo which were led by workers apparently without links with the official trade unions. This first wave of strikes was followed by new demonstrations and industrial actions in the following months. It seems that the strikes and the assertive stance by the rank-and-file caused a deep impression upon the new government and the industrialists. By the end of 1945 São Paulo industrialists were already denouncing what they saw as the importation of exotic redistributive ideologies, which were being put into practice by social democratic parties in Europe (particularly in the United Kingdom, according to the industrialists) in the wake of wartime destruction. In Brazil, the Federation of Industries of the State of São Paulo pointed out that it seemed that “the workers want[ed] … to replace management, and divide what appears to them superfluous. This is the social justice preached by their attitudes. The madness is so great that it causes dismay to comment.”³³

Alarmed by labor demands, in early 1946 the industrialists hailed a strike law passed by the Dutra government, which in practice imposed a ban on industrial action. According to the Federation of Industries of the State of São Paulo, labor attitudes at the time were a call for the “violent dissolution of our traditional political and social institutions, which make up our secular style of political organization.”³⁴

From the outset the Dutra government was committed to the industrialists and soon showed its willingness to curb the emerging labor movement. In addition to the strike law of March 1946, the government decreed a ban on political meetings and demonstrations in cities (including São Paulo) affected by strikes in February 1946, held back long-overdue trade union elections, imprisoned trade unionists accused of being leftists, and stormed newly founded organizations backed by the communists (such as the United Movement of Workers or MUT).³⁵

The final crackdown, however, was still being prepared. In September 1946, Federation of Industries of the State of São Paulo's director, Morvan Dias Figueiredo, was appointed to the Ministry of Labor, Industry, and Commerce and signaled that he was only waiting for the state elections to act.³⁶ Meanwhile, there were informed reports that the inner circles of the Dutra government had long been preparing to outlaw the Communist Party.³⁷

Eighteen months of hesitation came to an end on 7 May 1947, when the Federal Supreme Court did outlaw the Communist Party. This decision was likely to have been influenced by the Cold War confrontation, sparked off by President Truman's speech in the U.S. Congress in March 1947. A British diplomat even pointed out that the new Truman Doctrine had been seen in Brazil as a “green light to anti-communist measures.”³⁸

The Cold War also reasserted a deep-rooted mistrust among industrialists and other conservative sectors (such as the military and the Catholic church) of open labor politics in Brazil. Along with the ban on the Communist Party, an additional decree set out intervention in all trade union organizations allegedly under the influence of the communists. As the British Labor Attaché noted at the time, “[o]pen intervention on this scale … seems quite unprecedented even under the Dictatorship.”³⁹ The catch-all repression affected all labor groups that had not been closely linked with the Estado Novo and the Ministry of Labor. In fact, the attack against the newly reorganized labor in Brazil was part of an overall trend in most Latin American countries at the time.⁴⁰

Repression also reached the workplace. The changing political situation apparently encouraged firms that resisted negotiating wage increases directly with workers to embark on a series of repressive measures on the shop floor. For example, the largest metalworking companies in the state of São Paulo confronted walkouts after February 1946 and took advantage of the strike law decreed by Dutra to fire workers on strike. As early as the end of March, in two industrial cities of Greater São Paulo, Santo André and São Bernardo do Campo, about 1,400 workers were dismissed by metalworking companies. Firms also blacklisted workers who had taken the lead in the walkouts and been fired so that they would not be able to find other jobs.⁴¹

At the same time, the industrial companies sought to assert authority in the workplace by bringing in the police. In certain cases, management infiltrated policemen to identify and help to dismiss strike leaders. In others, the police was called in to quell meetings and to dissuade workers from taking their demands to management.⁴²

By August 1947 well-informed sources reported that more than 170 trade unions all over Brazil had fallen under the government's new law, with their officials being replaced by appointees of the Ministry of Labor.⁴³

In São Paulo, trade unions involved in labor demands during the previous months had their officials ousted, leftist affiliates expelled, and their operations closely watched by the Ministry of Labor and the political police (Department for Political and Social Order or DOPS). At the same time, unofficial organizations set up after 1945 were persecuted and declared illegal. The most noticeable case was the Confederation of Brazilian Workers (Confederação dos Trabalhadores do Brasil or CTB), established by over 1,500 delegates at a national congress in Rio de Janeiro in September 1946. The Confederation of Brazilian Workers was endorsed by about 800 trade unions and arose as the most representative nation-wide labor organization during the immediate post–Second World War period.⁴⁴ Even so, the May 1947 Decree explicitly mentioned the Confederation of Brazilian Workers as provoking “interference with output, order and discipline” and decreed that all trade unions affiliated or contributing to it would be subject to intervention.⁴⁵

The Confederation of Brazilian Workers was also important because its creation represented a fundamental schism in the trade union movement, which would characterize labor politics in Brazil throughout the 1950s. Indeed, the national congress that set up the Confederation of Brazilian Workers had originally been a result of a compromise between left-wing and independent trade unionists, on the one hand, and those directly sponsored by the Ministry of Labor, on the other. During the congress, however, the group close to the government walked out when confronted by an overwhelming majority of independent and left-wing delegates.⁴⁶

As a response to the Confederation of Brazilian Workers, the Ministry of Labor first announced the creation of a new organization, the National Confederation of Labor (or CNT). Confronted with legal difficulties and negative reactions in Congress, however, the Dutra government decided to recognize a national confederation already established by the Consolidated Labor Laws. Thus, on 28 October 1946 President Dutra signed Decree Law 21,798 creating the National Confederation of Industrial Workers (Confederação Nacional dos Trabalhadores da Indústria or CNTI).⁴⁷ During its short existence, the Confederation of Brazilian Workers became by far the most influential organization among trade unions in São Paulo and Brazil as a whole. The National Confederation of Industrial Workers was officially established by the Ministry of Labor only in June 1947, just after the ban on the Confederation of Brazilian Workers.⁴⁸

The major reason for the split in the labor movement was that the Confederation of Brazilian Workers retained the allegiance of independents and left-wingers, who had progressively taken the lead in the major trade unions since 1945. While there is no firm evidence as to the extent of communist influence, one source estimated that nine out of the 15 officials of the provisional executive committee chosen in the Confederation of Brazilian Workers congress were linked to the Communist Party.⁴⁹

The first elected general secretary of the Confederation of Brazilian Workers, for instance, was Roberto Morena, the most important communist trade unionist in Brazil during the postwar period. The split in Brazil's organized labor movement in fact anticipated the similar 1949 schism in the World Federation of Trade Unions (WFTU), which would lead to the formation of the International Confederation of Free Trade Unions (ICFTU) and of two opposed, antagonistic international labor organizations during the Cold War. In contrast to the European experience, however, the split did not provoke a division of the left or the isolation of the communists in the Brazilian labor movement, a difference whose implications would only become clear in the future.⁵⁰

One of the chief aims of the Dutra government's labor policy was to establish a new cadre of trusted officials in labor unions who could speak to the government and to industrialists. The key figure in this policy was Figueiredo, the Federation of Industries of the State of São Paulo's representative in charge of the Ministry of Labor. When repression hit all active trade unions in beginning 1947, Figueiredo sought to replace suspected union officials with unionists (ministerialistas) affiliated with the Estado Novo apparatus. In fact, the aim of finding loyal labor leaders had been under way for some time. For example, during the strikes of 1946 the Federation of Industries of the State of São Paulo would only negotiate with workers affiliated with the Estado Novo structure. The evidence suggests, however, that industrialists and the government were not successful in consolidating a politically reliable labor leadership. Early in 1948, Figueiredo had already recognized that appointed trade unionists enjoyed little support among the rank and file and that they were not a viable alternative to the left or to independent unionists.⁵¹

The only alternative at the time, Figueiredo implied, was to suspend all free elections for trade unions and stick to a hard-line policy on labor.

Still, the history of labor relations in Brazil between 1945 and 1950 was not only a story of repression.⁵²

Other things were going on, as Tables 1 and 2 make clear. The tables show the evolution of average real wages, labor productivity, and the unit labor costs W/LP, that is, the wage costs per unit of output, which gives the wage share of workers in output. Initially, average real wages in Brazil and the state of São Paulo's manufacturing industry fell sharply in 1947: –11.0 and –11.4 percent, respectively. It seems therefore that Dutra's economic and wage policy caused a major adjustment in labor markets from the end of 1946, with a significant impact on real wages. Dutra's policies had lasting effects, as real wages in Brazil and São Paulo's manufacturing industry only regained their 1946 level in 1949 (Tables 1 and 2, column 1).

On the other hand, existing data show that there was a significant increase in industrial wages during the remaining years of the Dutra government: real wages grew at an annual compound rate of 10.0 percent in Brazil and 11.3 percent in São Paulo, between 1947 and 1950 (as calculated from Tables 1 and 2, column 1).⁵³

Such an outcome suggests that alongside the hard-line labor policy of both government and companies, there were wage increases above the current levels of inflation between 1947 and 1950. This result is particularly relevant given that there was no modification in minimum-wage levels during these years. A possible reason for such increasing wages is the existence of a “social subsistence wage,” as argued by John Wells. Another possibility is that specific labor policies implemented by firms and growing pressures by shop-floor organizations, fueled by expanding industrial output from 1948, pushed up real wages despite widespread repression at trade union level. Both hypotheses, however, still have to be tested.⁵⁴

The indexes in Tables 1 and 2 suggest that real wage growth was higher than labor productivity growth between 1945 and 1946, which may help explain industrialist opposition to workers' demands in such years and the use of repression in an attempt to discipline labor markets. Anyhow, there was a recovery of labor productivity in the following years. In Brazil, the unit labor costs fell from 0.98 in 1946 to 0.76 in 1947 and 1948, though it was followed by an increase to 0.86 and 0.90 in 1949 and 1950, respectively. As for São Paulo, the same index dropped from 1.23 in 1946 to 0.90 and 0.89 in 1947 and 1948, followed by an increase to 1.02 and 1.07 in 1949 and 1950, respectively. The likely implication in both cases is that firms took advantage of Dutra's labor policies to rationalize their production processes and to drive their workers to higher levels of effort. Such policies appear to have even allowed firms to partially accommodate workers' demands in the form of higher real wages, whereas in São Paulo real wages even overcame productivity in the end of the period. Partial accommodation of labor's claims, however, took place amidst a political and institutional situation that was harmful for workers' organization. Confrontation already characterized labor relations in Brazil by the end of the 1940s.

THE RECOVERY OF TRADE UNIONS

Trade unions experienced a slow recovery from the setbacks during the Dutra government. Although Vargas had been elected in the end of 1950 in the wake of a broad appeal to labor, during the first year his government took a careful line regarding the trade unions under intervention. On 1 May 1951 the Minister of Labor, Danton Coelho, officially announced his intention of holding free elections for trade union offices during the following months. In particular, Coelho promised to abolish the “ideology certificate” (certificado de ideologia), a personal document issued by the political police and aimed to identify left-wing candidates and prevent them from running for trade union office. Despite the announced liberalizing measures, the ideology certificate was officially revoked only in September 1952; in the meantime, the convocation of trade union elections went ahead slowly throughout 1951 and 1952.⁵⁵

Together with a cautious approach to organized labor, the Ministry of Labor launched an affiliation campaign for new members of trade unions in order to strengthen the position of progovernment trade unionists in the labor movement. The aim was clearly to confront the expected growth in the number of leftists and independents in the forthcoming trade union elections.⁵⁶

The replacement of Danton Coelho by Segadas Viana at the Ministry of Labor in September 1951 reinforced the government's ambiguous attitude towards organized labor—an attitude that combined speeches on syndical freedom and frequent interventions in trade union issues.⁵⁷

It was only with the appointment of João Goulart to the Ministry of Labor in June 1953 that an aggressive labor policy was implemented by the Vargas government. The new Minister led a large section of trade unionists from the Brazilian Labor Party (Partido Trabalhista Brasileiro or PTB), and he sought to establish his group as a powerful force in the Brazilian labor movement. Goulart's strategy was to build up a working relationship with the communists and other left-wingers while at the same time presenting himself as an alternative to the left.⁵⁸ Although Goulart would be removed from the Ministry of Labor during a serious political crisis in February 1954, he retained a strong influence over the Brazilian Labor Party's labor leaders and also over the government bureaucracy during the remainder of the Vargas administration and beyond. Goulart's influence over labor was a major asset in his successful bid for the Vice Presidency between 1956 and 1961.⁵⁹

The result of the gradual slackening of the government's grip on trade unions, more clearly after late 1951, was a resurgence of organized labor in the Brazilian political scene. In São Paulo, the main expression of this was the setting up of the Inter-Syndical Unity Pact (Pacto de Unidade Inter-Sindical or PUI) by the largest and more militant trade unions in the state. The Inter-Syndical Unity Pact was a result of a huge industrial action, which brought Greater São Paulo to a standstill during March and April 1953. In the following years, the Inter-Syndical Unity Pact turned out to be the most representative and influential labor organization in São Paulo, despite the fact that it was never granted official recognition by successive governments. As with the Confederation of Brazilian Workers in 1946/47, the Inter-Syndical Unity Pact formed a broad coalition of independents and left-wing activists who held key positions in São Paulo's trade unions.⁶⁰

Still, the realization of trade union elections, and the creation of strong parallel organizations such as the Inter-Syndical Unity Pact, did not put an end to the threats looming over the newly reorganized labor movement. In particular, following Vargas's suicide in 1954, the short Café Filho government (August 1954–November 1955) took an uncompromising attitude towards organized labor by interfering in trade union issues. The Minister of Labor, Napoleão Guimarães, barred elected trade unionists accused of being leftists from taking office (for example, at the São Paulo Trade Union of Textile Workers); acted to quell industrial actions (for example, in the tramway industry in Rio de Janeiro); and enacted a decree banning all inter-union committees (including the Inter-Syndical Unity Pact) set up by organized labor in the previous months in Brazil.⁶¹

Only with the end of the Café Filho tenure, and the appointment of Nelson Omegna as Minister of Labor, could the trade union movement work again without systematic intervention by the government.

Under the Kubitscheck government, trade unions became more active and influential. Overall, the Ministry of Labor refrained from exercising a tight control over trade union issues, and sought to bolster the moderate and Brazilian Labor Party wing of the labor movement—against the leftists and independents who were at the head of the most powerful official trade unions and parallel organizations. In São Paulo, this policy allowed for a substantial expansion of the Inter-Syndical Unity Pact, which by mid-1957 claimed to have about 104 affiliated trade union organizations—including the largest ones in the state of São Paulo.⁶²

In addition to dealing with traditional labor issues, the Inter-Syndical Unity Pact and individual trade unions embarked on campaigns for the revision of minimum wage levels, social security reform, and even on macroeconomic issues such as inflation and industrial policy.⁶³ In the late 1950s the Inter-Syndical Unity Pact was replaced by the Trade Union Council (Conselho Sindical dos Trabalhadores or CST) as the major interunion organization in the state of São Paulo. Launched in September 1959, the Trade Union Council was apparently an attempt by Brazilian Labor Party unionists and followers of Jânio Quadros (Governor of São Paulo and elected President in 1960) to regain the initiative in the labor movement in São Paulo. However, the left and independents decided to participate in the venture and soon took over the major positions in the new trade union organization.⁶⁴

The years 1956–1961 also witnessed growing ideological disputes within the labor movement. On the domestic scene, the hard-line trade unionists traditionally close to government remained in control of state federations and national confederations—such as the National Confederation of Industrial Workers. The influence of this group over the rank and file and intermediate labor leaders was small, so that its major activity was restricted to high-level articulation and contacts (with government officers, the U.S. embassy, and the ICFTU) aiming to contain the growth of the left in the Brazilian labor movement.⁶⁵

On the other hand, there was fierce competition among Brazilian Labor Party's unionists, independents, left-wingers, and other groups for hegemony in the trade unions. In São Paulo, significant examples of this were, first, the formation of the Trade Union Renewal Movement (Movimento Renovador Sindical) from a split in the Communist Party in 1957; second, the growth of the Catholic militancy; and, third, the emergence of groups associated to Jânio Quadros and João Goulart.⁶⁶ Notwithstanding increasing disputes, the Communist Party remained the single most powerful political force in the labor movement in São Paulo and Brazil during the second half of the 1950s. It was made clear in regional and national trade union conferences in 1960, when the communists were able to decisively influence the sorts of issues discussed and the resolutions adopted.⁶⁷ Similarly, in 1958 the U.S. Labor Attaché judged that the communists had significant influence or control over one-third of the 250 trade unions and over six out of 15 federations in the state of São Paulo—including the largest in terms of number of workers, the São Paulo textile and metal workers' trade unions.⁶⁸ Once again, the government and the industrialists had failed to create a representative wing of labor leaders who could successfully compete with the leftists and independents.

What happened to wages and productivity during the recovery of trade unions? As we know, Vargas and his followers sought to forge a closer relationship with workers between 1951 and 1954. However, real industrial wages were unstable at the time, contrary to what one would expect when the government was seeking closer ties to labor. In Brazil's manufacturing industry, an estimated real wage increase of 8.7 percent per year between 1950 and 1952 was followed by a drop of 9.0 percent in 1953, and then by an increase of 12.1 percent in 1954 (Table 1, column 1). The record of industrial wages in São Paulo was worse than in Brazil as a whole. Wages there dropped 2.8 percent between 1950 and 1952 and increased only 1 percent in 1953. Not until 1954 was there an appreciable improvement in average wage levels (10.9 percent between 1953 and 1954) (Table 2, column 1). The struggle for real wage increases continued thereafter, although there were substantial yearly variations, especially in São Paulo. In Brazil's manufacturing industry, industrial wages grew 2.8 percent per year between 1956 and 1958, fell by 5.2 percent in 1959, and increased 3.6 percent in 1960. At the end of Kubitscheck presidency, average manufacturing wages were only 3.6 percent above their level at the beginning of the government—or 10 percent if 1962 is taken as a more reliable reference year (Table 1, column 1). São Paulo's industrial wages did worse. After an increase of 3.0 percent per year between 1956 and 1958, manufacturing wages fell by 10 percent in 1959 and then rose slightly—only 1.9 percent in 1960. Overall São Paulo's manufacturing wages fell by 3.5 percent during the Kubitscheck government, or 0.9 percent if 1962 is chosen for comparison (Table 2, column 1).

Labor productivity growth was relatively slow in the early 1950s—2.7 percent per year in Brazil and 0.8 percent per year in São Paulo between 1950 and 1953. As a result, unit labor costs oscillated without a clear trend in the period: in Brazil, labor productivity grew more slowly than wages between 1950 and 1952 but regained the lost ground in 1953; in São Paulo, labor productivity did better in 1953 but was below wage levels in 1950/51 (Tables 1 and 2, columns 2). Yet, in a clear departure from its earlier performance, labor productivity exhibited a strong upward trend in the 1954–1962 period. Tables 1 and 2 indicate that labor productivity in Brazil's manufacturing industry rose 5.2 percent per year between 1954 and 1962, whereas in São Paulo the increase was of 5.0 percent per year in the same period (columns 2). Consequently, unit labor costs (columns 3) experienced a noticeable decline between 1954 and 1959: from 0.97 to 0.76 (in Brazil) and from 1.05 to 0.74 (in São Paulo), with just a slight increase between 1960 and 1962 (to 0.79 in Brazil and 0.76 in São Paulo). This was an unprecedented outcome during the postwar years and it suggests that organized labor could not keep its share of the industrial output from diminishing at a time when labor productivity was soaring.

The odds of a corporatist accommodation between labor and management, which could turn the upsurge in productivity into an equivalent increase in real wages and welfare, were slim during the 1950s and early 1960s. Industrialists and the most influential sections of the trade union movement had very different views. As a result, there were frequent disputes between industrialists and the trade union movement over setting wages. The political divide also prevented labor organizations from participating directly or indirectly in the formulation of economic and social policy. Particularly during the second half of the 1950s, the trade union movement was increasingly concerned with more general economic issues, which might have become a basis for collaboration with the government and even industrialists. Nonetheless, industrialists showed little disposition to negotiate wages and other issues that interested organized labor. For example, São Paulo industrialists systematically rejected all attempts in the 1950s to shorten the work week, grant maternity leaves, limit night work, or provide compensation for accidents.⁶⁹

The crucial issue for Brazilian industrialists seems to have been that they were still highly suspicious of the leadership of the major trade unions and interunion organization.

TRADE UNIONS AND THE COLD WAR: THE ICFTU IN BRAZIL

The conflicts among diverging orientations in the trade union movement were aggravated by the Cold War. In particular, international labor politics started to play a part in disputes and conflicts within the trade union movement in Brazil during the second half of the 1950s. The ICFTU's inter-American section, Organización Regional Interamericana de Trabajadores (or ORIT), had been set up in January 1951 at a conference in Mexico to co-ordinate the anticommunist trade unions in the Western Hemisphere. A few years later, in April 1953, an ICFTU/ORIT office was established in Rio de Janeiro with the express aim of fighting the left-wing influence in Brazil's trade unions. The office was located at the National Confederation of Industrial Workers headquarters and employed one full-time trade unionist, who was in charge of propaganda and contacts between the ICFTU/ORIT and Brazilian labor unions. A Consultative Council was initially composed of organizations that had been in liaison with ICFTU since its foundation in 1949—the national confederations of industrial and commercial workers plus five federations.⁷⁰

Despite its ambitious beginnings, the ICFTU/ORIT office in Brazil was beset with quarrels and internal disputes, so that it was ineffective throughout the rest of the 1950s. The major obstacle to the operation of the office seems to have been the cautious support provided by the small number of organizations that made up the Consultative Council. For instance, the long-standing president of the National Confederation of Industrial Workers, Deocleciano Cavalcanti, on various occasions showed his reticence in following the strict anticommunist line prescribed by the ICFTU/ORIT, and even in being publicly associated with these international organizations.⁷¹

As a high-level observer noted in 1957, “with the exception of Pequeno [president of the National Federation of Urban Workers] and his friends, the others seem[ed] to be afraid of showing too much sympathy with ORIT and the ICFTU.”⁷²

The cautious approach that the leading unionists from the Brazilian Labor Party took to the ICFTU/ORIT seems to have resulted from the great influence that leftists and independents had in the postwar trade union movement in Brazil. In the highly competitive and radicalized contest for the key positions in the Brazilian labor movement during the 1950s, labor leaders could not risk being linked to an organization widely regarded as controlled by the U.S. government. Moreover, the ICFTU's activities were not tied to an aid program that could foster their influence among Brazilian labor, as happened in Europe during the implementation of the Marshall Plan.⁷³

In such a political and economic environment, the impact of the ICFTU/ORIT office could only be indirect and limited. Although the office could reinforce Cold War labor politics by providing an international link to the anticommunist forces operating in Brazil, it could hardly be successful in establishing the sort of solid anticommunist trade union block it had originally planned.

The ICFTU's limited impact had important consequences for labor-management relations in the context of the highly polarized politics of the Cold War. Despite strenuous efforts, the government, industrialists, and the ICFTU were not able to consolidate a cadre of “moderate” labor leaders able to hold key positions in the larger trade unions and, in particular, among the rank and file and intermediate labor leaders. Nor was there a split in the labor movement that isolated the communists and leftists. It is true that the left and independents showed great eagerness to collaborate with the government in a program that included fast industrial growth and economic development. The majority of the labor leaders also tended to support price controls, anticyclical economic policies and protection of national industry. However, in all these cases the leadership and the rank and file did not put aside the demand for better wages, workplace improvements and social rights. Instead, trade unions and the Inter-Syndical Unity Pact advanced a view that economic development should incorporate and share its benefits with the working class, by means of increasing real wages and welfare. A leftist leadership and a trade union movement that pursued economic gains, welfare, and social reforms were hardly the sort of partners that industrialists sought. A confrontational pattern of labor relations, which had first emerged in the 1940s, became a regular feature of Brazil's political economy during the 1950s and the early 1960s.