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Brazil: Formalisation of Domestic Work has a Positive Impact on the Economy and Poverty Reduction

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by IDWFED published Apr 02, 2013 12:00 AM
Entitled Impact of Welfare Changes in the Brazilian Market Home Services, the study anticipates this very debate and in so doing seeks to evaluate the direct effects of formalization of domestic work as well as the impacts triggered elsewhere in the economy. The research stimulates results from the consumption of households that rely on domestic work: an increase of approximately R 19 billion (USD 9.5 billion) in 2011 prices in the Brazilian GDP. Moreover, the generation of approximately 630,000 indirect jobs may be attributed to the increased income of domestic workers, mainly in the production of household appliances and related to health services.

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Read the original article in full: Formalisation of Domestic Work has a Positive Impact on the Economy and Poverty Reduction | IPC-IG

UN Women, the International Policy Centre for Inclusive Growth (IPC-IG) and the Federal University of Minas Gerais (UFMG) launch a study on the impacts of the adoption of the Proposed Amendment to the Constitution (PEC) for Domestic Houseworkers.

The Proposed Amendment to the Constitution (PEC) for Domestic Houseworkers intends to equalize the rights of employees to those of other domestic workers in Brazil. Although the PEC passed into the second round by the Brazilian senate in the past week and has been enacted today, the PEC still produces abundant controversy. In particular, one of the recurring issues of concern related to the formalization of domestic work is the increase in the cost of hiring domestic services. This cost increase may be problematic as it could lead to a reduction in demand, possibly resulting in massive layoffs and more informal work. On the other hand, the study supports the assertion that the PEC and the formalization of domestic work may correct a historical debt to millions of Brazilian women and generate economic growth for the country.

Entitled Impact of Welfare Changes in the Brazilian Market Home Services, the study anticipates this very debate and in so doing seeks to evaluate the direct effects of formalization of domestic work as well as the impacts triggered elsewhere in the economy. The research stimulates results from the consumption of households that rely on domestic work: an increase of approximately R 19 billion (USD 9.5 billion) in 2011 prices in the Brazilian GDP. Moreover, the generation of approximately 630,000 indirect jobs may be attributed to the increased income of domestic workers, mainly in the production of household appliances and related to health services.

The study was developed by Professor Edson Paulo Domingues and researcher Kenya Barreiro de Souza of the Center for Regional Planning and Development of Minas Gerais (Cedeplar) Federal University of Minas Gerais. The study is funded by UN Women under the Interagency Program for the Promotion of Gender Equality, Race, and Ethnicity with additional funding from the Fund for the Achievement of Millennium Development Goals (MDG-F) of the Spanish government and developed in partnership with the International Policy Centre for Inclusive Growth (IPC-IG), the United Nations Development Programme (UNDP). Completed in 2012, the study is being published on April 1, 2013 by UN Women and the IPC-IG/UNDP.

Between 2005-2011 the demand for domestic labor remained stable in Brazil, according to the official employment statistics monthly, while the average salary for the category during this period increased by approximately 10% per year. The study shows that the gains in income at the bottom of the social pyramid generate benefits for the welfare of society as a whole and that the demand for domestic services remains stable even when there are increased costs of this type of work.

Read the summary of the survey and download the complete survey.

History and Methodology

Since late 2010, UN Women has harbored interest in conducting a study on the costs and benefits of formalization of domestic work in Brazil, mainly because one of the most cited arguments against the formalization of domestic work is that this could lead to more unemployment and increase economic stress.

The partnership with the International Policy Centre for Inclusive Growth (IPC-IG) was instrumental in the research of concern. The IPC-IG in Brazil is a global forum for the UNDP South-South cooperation, whose objective is to produce and disseminate studies and policy recommendations for inclusive growth from innovative experiences in developing countries.

During the preparatory discussions for the research, the idea of using a dynamic general equilibrium model was suggested as a useful economic tool. This suggestion may be due to the fact that this model may allow for the construction of simulations and may also help conduct an analysis of the macroeconomic multiplier effects changes in the costs of domestic labor.

Thus, in an innovative manner, the research uses a general equilibrium model that is adapted to social and economic computational simulations. Several countries currently use this model; however its use is concentrated mainly in studies of international trade and transportation. The model was only recently introduced into studies related to social analysis.
“The survey also provides an economic justification for the ratification of the Convention on Decent Work for domestic workers and workers of the International Labour Organization (ILO) Convention 189. This adds to the efforts of UN Women to promote the importance of decent work agenda based on values of social justice. UN Women has been working closely with the ILO, especially by supporting organizations of domestic workers in their demands for labor rights,” says Rebecca Tavares, representative of UN Women in Brazil.

UN Women walks with civil society and governments to build societies that seek to establish gender equality and women’s empowerment in all of its spheres. We hope that this research is relevant to the discussion on the formalization of domestic work in the country and that it will also help to foster ideas and solutions that promote the social inclusion of all members of Brazilian society.

Source: UN Women, IPC-IG & UFMG

Story Type: News

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