In sweatshops, the ‘Brazilian dream’ goes awry

In sweatshops, the ‘Brazilian dream’ goes awry

Sun, Sep 1 2013

By Lucas Iberico-Lozada

SAO PAULO (Reuters) – When Margot Alarconciles woke up one morning last year and found her son sick with what appeared to be a cold, there was little she could do but wrap him in an extra blanket, walk down the hallway and start her workday: sewing clothes for up to 11 hours a day, six days a week. “I couldn’t leave my machine,” she said. “Without my job, we could not eat.” Her 5-year-old son’s condition deteriorated, and without proper care he soon died. Still grieving, Alarconciles now questions her decision to leave her native Bolivia for Brazil, where salaries can be many times higher but poor immigrants often must settle for work in sweatshops.“This work is not worth it,” she said on a recent Sunday as she waited to meet with an accountant who helps immigrants avoid legal problems by filing tax returns.

Despite efforts by Brazil’s government to prevent labor abuses and the tragedies that stem from them, thousands of immigrants continue to toil in illegal factories supplying clothes and other goods to some of the country’s best-known retailers, officials and immigrant advocacy groups tell Reuters.

Their stories show how one of the world’s biggest economic shifts of the past decade – the rise of large emerging markets such as Brazil – have generated new social problems that many of the countries don’t yet have the financial resources or experience to deal with properly.

As the economy boomed, the “Brazilian dream” became a magnet for workers from poorer Latin American countries such as Bolivia, Peru and even faraway Haiti. While Brazil’s per capita income is only a quarter of the United States’, it’s still double that of Bolivia – and its currency has been so strong in recent years that migrant workers have been able to support entire families back home.

In Sao Paulo, the country’s business center, the number of immigrants from other South American countries more than doubled between 2000 and 2010 to over 23,000, according to the Brazilian statistics agency IBGE. However, unofficial estimates by city officials put the number at between 200,000 and 400,000.

Alarmed by soaring reports of labor abuses as the migrants flowed in, Brazilian officials in 2009 tried to bring immigrants out of the shadows by signing a regional agreement that made it easier for many of them to receive work visas.

Rather than rely solely on police raids to uncover abuses, the government also consults regularly with immigrants’ advocacy groups to find trouble spots and has held retailers responsible for labor abuses on production lines.

However, like many other recent initiatives including greater policing of Brazil’s borders, the officials monitoring immigrants’ welfare appear to be understaffed and underfunded.

Sao Paulo’s metropolitan area has a population of 20 million. Luis Alexandre Faria is one of just two labor ministry inspectors charged with coordinating investigations into “slave labor,” the government’s term for sweatshop conditions.

Following a recent raid of three sweatshops, he said he believed he was just scratching the surface of the problem.

“I would not be particularly surprised if there were 20 or 30 of these places, all supplying clothes to the same company under the same conditions,” Faria said.

The influx of poor migrants into such jobs has continued despite a sharp slowdown in Brazil’s economy during the past two years, according to Roque Pattussi, the director of CAMI, a Brazilian immigrant advocacy organization.

“To an immigrant from Bolivia’s highlands, Brazil is still the kind of place where somebody can make good money,” he said.


Faria and his colleague, Renato Bignami, spend most of their day poring over financial statements, hunting for clues that companies rely on low-pay labor.

In a recent case involving Le Lis Blanc, a high-end Brazilian retailer, Bignami said the company’s statements showed that some of its divisions were producing thousands of product units a year without a single employee.

In June, Faria led a raid of three workshops he said were listed in Le Lis’ financial statement, shutting all of them down. On the government’s orders, Le Lis paid the workshops’ 28 workers an average of 22,000 reais ($9,400) apiece to make up for unpaid and underpaid work.

In August, the government announced that it had added a fine of 1 million reais.

Le Lis Blanc’s Brazilian parent company, Restoque Comercio e Confeccoes de Roupas SA, denied any knowledge of illegal work conditions at the workshops in a statement to Reuters, saying that two independent contractors had hired the workshops. It signed an agreement with the labor ministry to comply with the investigation and pay the workers, though it denies any wrongdoing.

In such cases, rather than deport the workers, the Brazilian government gives legal work visas to those who lack them, Pattussi said, illustrating the more tolerant approach in place since 2009.

Immigrants and advocates say the structure of sweatshops in Sao Paulo has evolved a lot over the past decade.

The factories used to be run mostly by Korean immigrants, but many were busted by the police because of their large size. The industry is now dominated by smaller, Bolivian-run operations, many of them in private homes, they say.

Angela Reveta Lauta moved to Brazil from Bolivia when she was five years old. Now, at 28, she owns a “confeccionaria” – a company that hires workshops on short contracts to produce clothing in bulk for large wholesalers and retailers.

“When I arrived here … nobody thought anything of Bolivian immigrants,” she said. “Now, however, buyers come directly to me. They recognize that our work is the best. I am proof that life for Bolivians is better.”


Yet many immigrants still live in a dark underworld where they see the government as an enemy determined to keep them from earning a good living.

Jesus, a 32-year-old Bolivian who didn’t want to give his last name for fear of being targeted by the police, started his own workshop when his Korean boss went out of business after suffering two police raids in one month.

“She told us to rent a house and buy the machines we had been working on from her. We like it here,” he said, placing a calloused hand on a metal shutter in front of the house. “It’s quiet, and we can work in peace.”

Still, setting up his own business has multiplied his risks. When he worked for the Korean woman, rent and food were deducted from his paycheck, meaning the rest was his to spend. He often sent it back to Bolivia, to his ailing father.

Now, he has to pay his part of the rent in a house he shares with a brother plus nearly $500 a month – on top of a whopping $10,000 two-year lease – for a stall measuring 4 square meters in a converted warehouse in a morning bazaar.

Jesus arrives at the bazaar in the commercial neighborhood of Bras at 5:30 a.m. to sell the cotton blouses that he, his wife and a niece produce in a small room in their house. After a quick lunch, he returns home to join the two women, working well into the evening.

“Thankfully, the Brazilian culture is one of luxury. Brazilians change their look two or three times a month,” Jesus said with a smile. “That’s good for the seller.”

For the rank-and-file workers, life can be even more of a day-to-day battle.

Miguel, a Bolivian immigrant who also did not want his last name used, was one of the workers left without a job after the labor ministry’s raid of factories producing for Le Lis Blanc.

Asked what he would do with the back wages he received, Miguel said he would stay in Brazil for at least another year. That would be enough time to bring his family over from Bolivia, rent a house and try to find another job, this time as a taxi driver.

Barring that, he would probably find work at another garment factory.

“Something is something,” he said. “Having nothing would be worse.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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