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A significant change in the structure of employment in Brazil in the period 1988-95 took place. Industrial employment fell, especially in the most traditional sectors such as clothing, textiles and footwear. There has been a shift of workers from the industrial sector to the services sector and an increase in the share of self-employed workers and informal wage earners. The quality of jobs being created in the services sector are not of the same 'quality' as those in the industrial sector, leading to a deterioration of employment conditions and of the labour market performance. Hence the rate of unemployment is not a very good measure of labour market conditions during adjustment. The creation of jobs in general might therefore not be an explicit target under adjustment. Rather the objective should be trying to change labour market institutions in order to improve the quality of the jobs and the quality of the labour relations.

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This paper analyses the structure of the Brazilian Labour Code (CLT), the changes introduced since its approval in 1943, emphasizing the new Federal Constitution of 1988, the costs of labour and of dismissals for employers, the structure of union organizations, the regulation of collective bargaining and capital labour conflicts, and the process of wages determination. We also analyze the evolution of strike activity, and the evolution of wage differentials and functional distribution of income between profits and wages in industry in the last 15 years.

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