ABSTRACT
This chapter explores the extent to which Brazilian firms use performance pay to reduce compensation cost and the extent to which it is used to enhance labor productivity. It addresses the connection between performance pay and Brazilian unions. Brazil is one of the few countries not to have signed Convention 87 of the International Labor Organization. In Brazil, the structure of representation is a matter of law and constitution, and workers do not have the freedom to organize unions of their own. Brazilian labor law created within the Labor Department many tripartite structures, with some positions reserved for labor union officers. Costs of payroll taxes and legal pay complements create a strong incentive for firms and workers to disguise earnings as profit and gain sharing. Brazilian firms must negotiate with representatives of the workers over the design of the program.
