Brazilian Government decides to privatize 100% of the Correios postal service

Chamber of Deputies President Arthur Lira (Progressives, PP) has scheduled a vote on the Post Office bill for next week, just before parliament goes into recess.

Editorial staff member Pedro Ravasio
Scarlett Rocha/EOL

The government wants to sell off full control of the company

Diogo Mac Cord de Faria, special secretary for Privatization, Divestment, and Markets at the Ministry of Economy, told the O Globo newspaper that the plan is to sell off full control of the company by way of a traditional auction “with the opening of tenders”. The buyer will then take control of all Correios assets and liabilities.

Chamber of Deputies President Arthur Lira (Progressives, PP) has scheduled a vote on the Post Office bill for next week, just before parliament goes into recess.

The proposal’s immediate approval is essential for the government if it wants to meet the schedule for the company’s sale which is planned for March 2022. This is the same quarter in which the government wants to privatize Eletrobrás, which has already been passed by National Congress.

Control will fall to the National Communications Agency (ANACOM)

“We will privatize Correios in combination with a concession. The Constitution says that the Union [Federal Union of Brazil] is responsible for guaranteeing the postal service, and this can be done by a concession. How do we guarantee it? By regulating it. It is much more efficient than direct provision,” Faria told O Globo.

Brazil’s 1988 Constitution says the Union must “maintain the postal service and national air mail”. Therefore, along with the sale of control of Correios, the government will draw up a concession arrangement that will see the postal service regulated by the National Communications Agency (ANACOM), which will set tariff, delivery time, and other requirements for the company’s future controllers.

Five reasons to oppose the sale of Correios

Those who support this proposal argue that the privatization of Correios is necessary and will help modernize the Brazilian postal system. But they hide the real objectives of the sale, which is all part of a Bolsonaro government offensive against state-owned companies and national assets.

Below are five reasons to oppose the Bolsonaro government’s disastrous project of Post Office privatization, and support the resistance of its 99,000 workers and their families, already demonstrated at their recent strikes and rallies.

1 – Privatization will cause a “postal blackout

Several regions of the country, especially those areas on the outskirts of the big cities, as well as smaller cities inland, may well find themselves without any postal delivery service. This is because a private company only seeks to obtain profit, and Correios now covers many regions that would not bring a sufficient “financial return” in the greedy eyes of the private sector. Those who will suffer under privatization will be the poorest parts of the population that live in the big city outskirts and the smaller towns. Along with its impressive national coverage, Correios also provides various social services, such as the delivery of textbooks, distribution of medicines, and assistance in cases of disaster – services that will be threatened by privatization.

2 – Correios does not make a loss

Even with its provision of so many vital services, Correios is still a profitable company, no matter what the government may suggest. The idea that it is an out-of-date company that only makes a loss is totally wrong. Last year, the profit made by Correios hit R$988 million (US$188.5 million). The parcel delivery sector, the area that is motivating privatization, accounts for only 44% of the state-owned company’s business. The company has not recorded a loss since 2016, and in that time has accumulated a net profit of over R$2 billion (US$381 million). Even Minister of Communications Fábio Faria himself recognizes that Correios is a “healthy” company.

3 – Correios services are essential for small business

Correios is the main method of transport for what small business across the country produces. Traders, shopkeepers, and smaller-scale producers cannot rely on private delivery services. The services of Correios strengthen their businesses. According to the National Federation of Postal and Telegraph Workers (FENTECT), a parcel that costs R$43 (US$8.30) with Correios is up to 12 times more expensive with private companies like DHL and FedEx. If Correios is privatized, the company will have much less interest in transporting the products of small business, a sector already suffering under the economic and health crisis, all while Bolsonaro and Paulo Guedes step in to save large companies.

4 – Privatization will bring with it the “uberization” of its employees

If the draft bill is approved, Correios will see precariousness and insecurity develop further for its employees, a process that has already begun with outsourcing. But beyond that, the idea is to dismiss Correios workers en masse to then rehire them at a bargain price, that is, have the same people working for even lower pay. Other workers now unemployed could also be hired.

The delivery sector is betting on an “uberized” work model, one in which employees would no longer have direct working links to the company, would be paid for each delivery, would be at the mercy of demand and competition, and would be without any kind of social security or labor rights. This model would make the lack of deliveries to the far corners of the country even worse, and reduce the social services that it provides. Most importantly, it would make the lives of Correios workers even more precarious, as they would have no guaranteed income if they suffer an accident while making deliveries, just like the situation faced by delivery app drivers and riders today.

5 – Large offshore groups are interested in privatization

There are some giant logistics companies such as like Amazon, DHL, and FedEx that already have a glint in their eye and have expressed interest in the privatization of Correios. That is because they know they can grab a good part of the services – and the profit – that now belong to the state-owned enterprise, and dispense with or deprioritize the services that do not suit them. The outcome will be that more precarious jobs will be created across the country, while the profits that today stay in Brazil will end up in the pockets of foreign companies and be taken to their headquarters abroad. These foreign interests are the real targets that the government of Bolsonaro and Paulo Guedes are aiming for with the privatization of the Post Office. In this way, the privatization of Correios is a serious threat to the nation’s sovereignty. It is part of the process of dismantling national assets that became further developed after the 2016 coup, and that still threatens the Bank of Brazil, electricity provider Eletrobrás, and state-owned energy company Petrobras.

Say no to privatization

Privatizing the Correios postal service is no solution to the issues of modernization and competition with new delivery rivals. We have already seen several examples in Brazil where privatization has, instead of improving services, only made them worse. One example is telecommunications, which now leads the field in customer complaints, while its primarily foreign owners get richer and richer. It is no accident that countries such as Argentina, which have previously privatized their postal sectors, have since renationalized them. Portugal is heading down the same path and reconsidering its previous privatization.

This privatization plan aims to directly introduce precariousness and insecurity into the national public system so as to make room for private and foreign companies. Investment is needed to modernize Correios, investment in both the organization and in better conditions for its workforce, who today earn around R$2000 (US$386) a month while the company director (a retired general) earns R$50,000 (US$9660) a month. Instead of privatization, the solution for Correios is to invest in its organization, invest in technology, put an end to the super salaries of its management bureaucrats and political interference, democratize its administration, and prioritize the working conditions and rights of its workers, who are the most experienced delivery workers in Brazil.

This article is based on English translations of “Governo decide privatizar 100% dos Correios” [], Esquerda Online (EOL), 06/07/2021, and “Cinco motivos para ser contra a venda dos Correios” [], Esquerda Online (EOL), 23/04/2021.

Translation: Bobby Sparks