In the context of an increasingly globalized and interconnected world, labor inequality remains a significant challenge in many societies. To effectively address this challenge, the Brazilian Minister of Labor and Employment (Ministério do Trabalho e Emprego/MTE) and ministers from South Africa and Spain have emphasized the need to move beyond traditional models and responses that favor deregulation. These approaches have proven ineffective in addressing the problem, and there is a growing recognition of the need to pursue more egalitarian and fair ways of overcoming this challenge. For further details, please refer to the jointly signed statement by the three ministers, available exclusively on the G20 Brasil website.
by Luiz Marinho, Nomakhosazana Meth, and Yolanda Díaz *
In an increasingly globalized and interconnected world, where overlapping crises are common, and a sense of disorientation is pervasive, labor inequality remains a significant challenge in many societies.
The only viable way to address this challenge is to move away from traditional models and responses - such as those prioritizing deregulation and market-based solutions, which have proven ineffective - and embrace the need for a broad, consensual, and collective social response.
As a demonstration of enhanced cooperation across three continents, Brasil's Minister of Labor and the Ministers of Labor from South Africa and Spain aim to advance a fairer global distribution of labor rewards by adopting a unified approach. This initiative underscores our shared commitment to expanding labor rights worldwide.
A decline in the share of labor income in the economy has been observed in many of the world's economies, particularly since the wave of neoconservatism in the 1980s. The term "labor share" refers to the proportion of national income allocated to workers in the form of labor compensation, as opposed to that going to capital owners. A decline in the labor share indicates that a smaller share of economic income is reaching workers, with most of it being distributed as a return of capital (ROC).
Brasil's economic recovery following the COVID-19 pandemic was marked by notable achievements, including a robust Gross Domestic Product (GDP) growth and significant improvements in labor and income indicators. In 2023, the country's GDP grew by 2.9% compared to the previous year, with the number of permanent jobs reaching 45.53 million. Additionally, formal employment ended the year with the creation of 1.5 million jobs, and the unemployment rate fell to 7.4%. (Source: Continuous National Household Sample Survey, the Brazilian Institute of Geography and Statistics (Pesquisa Nacional por Amostra de Domicílios Contínua, Instituto Brasileiro de Geografia e Estatística) /PNAD-C/IBGE).
Despite the aforementioned favorable outcomes, the Brazilian labor market continues to present persistent challenges. According to the International Labor Organization (ILO), Brasil experienced minimal productivity growth between 2015 and 2023 (an annual average of 0.1%) and a decline in average labor income between 2020 and 2022. In 2023, average income saw a 7% recovery. The prevalence of informal employment, low wages, and unacceptable labor practices, including child and forced labor, presents significant challenges. In response, the Brazilian government is promoting the Fundamental Principles and Rights at Work (FPRW) and is revising the National Action Plans for the Prevention and Elimination of Child Labor and Forced Labor. Additionally, the country is presenting its candidacy to pioneer the Alliance 8.7 and implement a National Pact for Decent Work in the Field (Pacto Nacional pelo Trabalho Decente no Campo/PACT).
The South African labor market provides an excellent case study for examining the phenomenon of a declining labor share. Real wages have demonstrated considerable volatility, failing to align with the sustained growth in productivity. This has resulted in a scenario where workers are not deriving proportionate benefits from the wealth they help to create. The volatility of real wage growth in comparison to productivity highlights the disparity, which has been further intensified by external factors such as the impact of the COVID-19 pandemic on economic development, employment stability, productivity, and wage levels. This has led to declining living standards and economic inequality for many South African citizens.
Consequently, South African workers face greater economic insecurity and a reduced share of the country's wealth. This underscores the urgent need for a new approach that prioritizes fairer wealth distribution and strengthens workers' rights globally.
In Spain, productivity growth over the past decades has been slow, with some notable exceptions, such as the recovery observed in 2022. However, wages have increased at a considerably lower rate than corporate profits. Between 1995 and 2022, labor productivity rose by 15.3%, while real wages increased by only 1.2%. The conclusion is clear: the fruits of labor are unfairly distributed.
Spain reversed this trend by prioritizing workers' rights through the first labor reform in four decades of democratic governance. This policy addressed the issue of temporary contracts, provided alternatives to layoffs during crises, and reinforced collective bargaining. Additionally, feminist policies led to a record 10.1 million women entering the workforce for the first time in Spain. As a result, wages increased, with the minimum wage rising by 54% over a five-year period.
This reform and its outcomes disproved the tenets of neoliberalism, proving that it is feasible to alter the growth model by restructuring the world of work. However, there is still much to be done. Our countries must address at least four fundamental challenges to expand labor rights.
First and foremost, we must continue to raise wages. There is a significant discrepancy between real wage growth and productivity growth. As evidenced by our previous actions, transitioning away from neoliberal policies and implementing measures that enhance labor compensation - particularly by increasing the legal minimum wage - effectively ensures that productivity gains are distributed among workers, reduces inequality, and narrows the gender pay gap. We are committed to implementing proven strategies.
Secondly, while notable progress has been made in promoting equality and diversity in the workplace, significant challenges remain to ensure that all individuals, regardless of gender, race, sexual orientation, or gender identity, have equal opportunities, fair treatment, and decent working conditions. We are all aware, for example, of the recent and unacceptable cases of racial discrimination in professional sports. This represents just a small part of the long road ahead.
Thirdly, the digital transition must be conducted equitably, ensuring the protection of individual and collective worker rights. Digitalization must support the cause of decent work rather than overshadow it. Technology must be designed to reduce the burden of human labor. As Daron Acemoglu noted, technological innovation alone does not drive prosperity; "democratic control over the direction of technology" is essential. Technological advancements must align with social justice.
Fourth and finally, we must collaborate to reinforce collective bargaining and put an end to the persistent decline in its coverage rate worldwide. In this regard, we rely on social dialogue as a powerful tool for mutual understanding and collaboration, which will enable us to achieve enhanced living and working conditions.
In light of the traditional and outdated North-South divide, the Ministries of Labor of Brasil, South Africa, and Spain have agreed to establish a permanent and strengthened framework for collaboration and exchange on social and labor issues among our countries. This framework will guide our policies to increase labor participation and ensure that workers receive a fair share of the national wealth.
We will advocate for fair wages, greater workplace equality and diversity, and stronger social dialogue and collective bargaining across the globe. Our goal is to drive transformations in the world of work with social justice at its core. As Alain Supiot asserts, it is more necessary than ever to move toward a new Declaration of Philadelphia, paving the way for economic democracy and a 21st-century world of work.
In conclusion, Brasil, Spain, and South Africa will move forward together to establish a new international labor movement. This global alliance recognizes that the most pressing challenges, including climate change, economic inequality, and the decline of democratic institutions, can only be addressed through the expansion of labor rights, not their reduction.
(*) Luiz Marinho is Brasil's Minister of Labor and Employment, Nomakhosazana Meth is South Africa's Minister of Employment and Labor, and Yolanda Díaz is Spain's Second Deputy Prime Minister and Minister of Labor and Social Economy
