Naercio Menezes Filho talks about the effectiveness of initiatives carried out by the Brazilian government to help the most vulnerable population and addresses the acceleration of inequality in the country, among other aspects.
Following the joint efforts of the entire Insper Community to mitigate the impact of COVID-19, we are publishing a series of interviews with professors, managers, deans, and directors to address actions taken by our school, as well as tips and guidelines in the most diverse fields to help overcome the challenges of this period.
In the interview that follows, Naercio Menezes Filho, professor at Insper, coordinator of the Ruth Cardoso Chair and researcher at the Center for Public Policy and Administration (CGPP, for its acronym in Portuguese), addresses aspects such as the effectiveness of measures taken to mitigate the impact of the crisis on the most vulnerable, what must be done to serve the informal sector, and the importance of programs such as Saúde da Família (Family Health).
1) Can this crisis accelerate the increase in poverty and inequality in the country?
This crisis certainly will increase poverty and inequality in Brazil in several dimensions. In economic terms, the poorest predominate among people who work without a formal agreement and on their account in commerce and services, who will be the most affected by social distancing measures. Besides, most of the poorest cannot work from home due to the type of occupation they have and also because they do not have computers with fast internet access. Therefore, they will be much more affected than the wealthier, who count on a formal labor contract agreement and can work from home.
Also, the poorest do not have private health insurance and thus depend on public service. There are far more ICU beds in private hospitals than in public hospitals in the country. Thus, the poor population who is contaminated is less likely to be successfully treated than the wealthier.
Moreover, with the interruption of face-to-face classes, the richest, who study in private schools, can continue studying and taking remote class sessions. It does not occur among the poorest, who study in public schools that often do not have the structure to offer online education and often do not have computers with internet access.
2) How do you assess the effectiveness of measures such as Emergency Universal Income payment to mitigate the impact of the crisis on the most vulnerable people?
This measure will have much impact on reducing the suffering of the poorest, as it will bring financial relief to those who lose their jobs during the crisis. Besides, program enrollment through a mobile application avoids contagion. However, the implementation of measures is taking too long.
The increase in the sum of transfers for those enrolled in the Bolsa Família (Family Allowance) program and for those enrolled in the Cadastro Único (Single Registry) should have been done already. These families should have received these funds already. Also, loans to help companies survive the crisis have not reached micro and small businesses yet. Finally, loans to states and municipalities are taking too long. In short, the programs are well-designed, but their implementation is taking too long.
3) What measures would be effective to mitigate unemployment during and after this period of crisis?
The measure the government had proposed to allow cuts in working hours with wage cuts, or even the suspension of the labor contract agreement with payment of unemployment insurance, goes in the right direction of trying to preserve the employment bond in the formal sector while relieving companies from wage spending during the crisis. It may cause unemployment to increase slightly less in this period. It is worth noting that salaries cannot fall below the minimum wage, according to this measure. As the vast majority of the registered workforce receives between one and two minimum wages, their purchasing power would be preserved with this measure. However, the Supreme Court is wrong in asking for unions’ permission to implement the measures, as this will further delay their implementation and cause more layoffs now.
Regarding companies in the informal sector, which do not have a CNPJ (Brazilian Corporate Tax Number) nor a bank account, the government is unable to do almost anything, as it has no ties to them, which are invisible to public authorities. Thus, much of the increase in unemployment will come from the informal sector.
4) What actions are needed to serve the informal sector at the moment?
We would have to transfer income through the Emergency Universal Income and make loans that enable small informal businesses to survive during the crisis. During this crisis, we had found out there are a large number of Brazilians invisible to the Central State. They do not have a CNPJ, do not have a formal labor contract agreement, nor do they contribute to Social Security. We now have the opportunity to place these people into the welfare system, bankroll them, and think about policies to help them in difficult times like today.
5) In your view, can this crisis further evidence the importance of programs such as Saúde da Família (Family Health), developed by the SUS (Brazilian Unified Health Systems)?
Absolutely. In fact, this crisis shows the success of the health and social welfare structure created and developed in Brazil in the last 30 years. Nowadays, we have a public health system (the SUS) that serves the vast majority of the population free of charge, carrying out exams, transplants, and hospitalizations, besides providing medicines. We will have to rely on this system to treat patients who have the new coronavirus. Also, the Saúde da Família strategy is in almost every municipality in Brazil. It has agents who visit low-income families even in the most distant regions of the country. This system can convey basic information on the prevention of diseases such as COVID-19 to this public and assist patients with mild symptoms at the Primary Health Units.
On the social assistance side, we have the Cadastro Único with 28 million families registered; the Bolsa Família program, the Benefício de Prestação Continuada (Continuing Benefit Conveyance Program), and the unemployment insurance. All of them are programs that did not exist 30 years ago.
With this structure and the Emergency Universal Income program, we can serve the most vulnerable population in times of crisis like the current one. Besides, we have NGOs that work directly in communities, assisting those most in need.
Naercio Menezes Filho is the coordinator of the Ruth Cardoso Chair and a researcher at Insper’s Center for Public Policy and Administration (CGPP). He holds a Ph.D. in Economics from the University of London, with a master’s degree and a bachelor’s degree, also in Economics, from the University of São Paulo (USP). Prof. Menezes develops research projects in the field of Economics, with an emphasis on Human Capital and Industrial Organization, and works on the following topics mainly: Education, job market, income distribution, productivity, technology, and unemployment.
He is also a member of the Science Center for Childhood (NCPI, for its acronym in Portuguese), which focuses on the development of early childhood. Besides, Prof. Menezes is at the forefront of Victimization surveys in the city of São Paulo that analyze crime data from the São Paulo capital since 2003. In 2014, Prof. Menezes was elected to the Brazilian Academy of Sciences as a Full Member in Social Sciences.