TELEBRAS

The Brazilian Privatization Case of the Telecommunications Giant

 

For twelve years, Vera Lucia de Jesus Nogueira's family carried her, in a wheelchair, through the pot-holed, dusty road of her neighborhood to the public school's front door. There, they had to abandon the chair due to the small width of the school's door, and carry her inside. Dirt roads were only one of many obstacles that Vera faced as a physically disabled person in the capital city of Jo„o Pessoa in the northeast of Brazil. "I've fought all my life to challenge the deep prejudice against handicapped people here," she states, "My physical disability has nothing to do with my mental capacity." Defying dismal high school completion rates, she not only finished high school but earned a college degree in psychology. Upon graduation, Vera searched in vain for a job in her field. She then started applying for service positions, but the Brazilian preference for young, attractive, lighter-skinned attendants barred her entry. "Most banks and stores wouldn't even let me fill out an application after seeing my crutches," she laments. In 1996, after three years of unemployment she finally got a break when the state-run telephone company, TELPA, contracted the ParaÌba Association of the Physically Handicapped (ASPADEF) to provide telephone operators.

On June 10, 1999, Vera and 139 other physically handicapped telephone operators will lose their jobs when the newly privatized network of Telemar, which includes TELPA, fails to renew their contracts. Despite glowing performance records during the past three years, Vera and her colleagues will join another 228 former TELPA employees (22% of the work force) who lost their jobs in the post-privatization re-structuring. ParaÌba is not an isolated case. According to Executive Vice-President Oct·vio Marques de Azevedo, Telemar will reduce its work force of 32,000 full-time and 18,000 temporary employees by 25% in the short-term.1 In total, 12,500 workers will hit the unemployment lines in a country where official unemployment rates have soared to nearly 21%.2 In the industrial capital of S„o Paulo alone, over one million people are out of work.

The sale of nearly 20 percent of the equity of the Brazilian network of telecommunications (Telebr·s) in July of 1998 was the second-largest worldwide privatization auction.3 More than 400 government lawyers successfully fought off a slew of legal challenges while thousands protested outside the doors of the Rio Stock Exchange. The sale of the entire Telebr·s system raked in approximately $21.69 billion, representing more than 60% over the minimum asking price. The profits from the auction did not linger long in the Brazilian government coffers. In compliance with the law, they were immediately swallowed up by the galloping external debt while social investments including drought relief for the 9.5 million victims of Brazilís worst famine of this century were ignored.

In the six months leading up to the sale, the government repeatedly promised that the telecommunications privatization would create jobs along with improved services and access. In Vera's sector alone, then Communications Minister Sergio Motta stressed in talks with the telecommunications union (FITTEL) that 100,000 new jobs would be created.4 With a $40 million propaganda purse, Motta mounted an international road show to attract international buyers. In Brazil, propaganda flooded the media highlighting the benefits of privatization. Now deceased Motta admitted that the process brought the possibility of a reduced work force but he argued that competition would increase the demand for qualified workers.5

State enterprises are constantly criticized for having too many employees. According to Motta, pre-privatized Telebras was not over-staffed. The number of employees per telephone line was in the same range as the best international private telecommunications systems. In ParaÌba, the stellar performance evaluations of mostly university-educated operators raises the question of why qualified employees are being laid-off. According to ParaÌba Telemar Human Resources Manager, Marcus Antonio Guerra, all of the telephone operator positions will be centralized in four states: Bahia, Cear·, Minais Gerais, and Pernambuco. "In our restructuring plan to increase efficiency, these states were chosen solely on geographical and technical factors , " states Guerra. "We are a private industry that needs to make a living or our doors will close." But politics appear to be behind the selections. According to Hamurabi Duarte, President of the local telecommunications operators union(Sinttel), "It is more than coincidental that three of the four states chosen are homes of strong political allies of President Fernando Cardoso: Bahian Antonio Carlos Magalh„es, President of the Senate and considered one of the most powerful men in the country; Pernambucan Marcos Maciel, Cardoso's vice-president; and Cearense Governor Tarso Jereissati, brother of the president of Telemar and member of Cardoso's party."

The impact of the privatization of Telebr·s on access to phone lines and quality of service is not as clear yet. At the time of the sale, 15 million Brazilians were on waiting lists for residential phones with another five million queued up for cellular service. In Brazil, the ninth largest economy in the world, only half of the businesses had telephone access. To avoid years on waiting lists, many Brazilian were paying between $1,000 and $7,000 for immediate telephone installation on the black market.6 Nearly 8 months after the privatization, this reporter unsuccessfully solicited a R$62 ($36) phone in ParaÌba which has a current waiting list of 120,000 people. According to Telemar Director Bernadino Bandeira Filho, 27,000 phones were installed in 1998 with 30,000 planned for 1999.7 At this pace, Telemar will undoubtedly break its promise to be able to install all phone requests within 30 days by the end of 2000.

Phone accessibility is also a concern at the municipality level. Brazil has close to 5.5 million municipalities, of which only 500 generate telecommunications profits (mostly the large metropolitan areas). For example, in Piaui, one of the poorest states in the country, only twelve of the 23 municipalities are in the black. The umbrella union, CUT, questions whether a for-profit enterprise will continue to offer services in the poorest regions of the country. In ParaÌba, there have been reports of the closing of Telephone posts in small rural towns such as Mogeiro and the bus station of Jo„o Pessoa. Yet Telemar Manager Guerra firmly states, "There is no plan for the systematic closing of telephone posts in the rural municipalities."

It is still too early to judge the effect of privatization on the quality of service. In 1999, Telemar plans to invest R$2 Billion ($1.18B) in improved services. By the end of this year, the telephone company is expecting to answer 95% of all client repair requests within 24 hours in all 16 states. Subscribers will enjoy previously unknown services such as call waiting, call forwarding, and expanded 800 toll free numbers while the number of fixed lines will double to 33 million by 2001.8 Just in ParaÌba, $15 million will be dedicated to technical advances such as fiber optic cables which will improve speed and quality. Telebr·s' pre-privatization record for service and efficiency was weak in the eyes of many Brazilians, but massive lay-offs, at least in the transition stage, have greatly affected organizational and operational capacity in some states. Most notably the situation in Rio do Janeiro, always chaotic, is now even more precarious -- the number of telephone user complaints with Procom, the Brazilian version of the Better Business Bureau, has skyrocketed. Another factor that may have diminished the quality of service in Rio is the network-wide trend toward temporary labor, where training and experience are often minimal. In Rio, all direct contact with the client, from customer service to directory assistance to repair teams, has been contracted out.

Meanwhile, Vera and her fellow operators have mounted a campaign to pressure Telemar along with the private and public sectors to secure other job opportunities by the early June deadline. Hearings held in the city and state chambers highlighted not only the Telemar situation but also the general discrimination faced by the physically handicapped, nearly 10% of the Brazilian population. Brazil has a plethora of laws guaranteeing the social, educational, and employment rights of the disabled.9 In practice, however, compliance is rare. "We don't need more laws," testified Jailson da Silva, a campaign organizer at a recent city hearing. "We need the government to make the words a reality."

The campaign's first victory was gaining a 70-day extension of the contract. In response to public pressure, Telemar has offered to form franchising partnerships with the soon-to-be unemployed operators where they would run telephone posts on commission. Unfortunately, the capital start-up costs will be prohibitive for many of the disabled operators who are earning only twice the minimum wage. The telephone company has also guaranteed that the laid-off operators will be priority hires for short-term interest polls that Telemar conducts on a semi-annual basis. For Vera, who supports an extended family of eleven on her monthly salary of $153, these solutions are not viable. With almost 40% of the economically active population of ParaÌba unemployed, securing a comparable job will be a difficult task indeed.10

By Kathleen Bond, a Maryknoll Lay Missioner, who works with women and human rights in Jo„o Pessoa, ParaÌba, Brazil