Government insists on mini-labor reform and wants Congressional leadership

The government plans to insist on voting on a bill that makes labor legislation more flexible with the justification of improving conditions for the informal.

Unlike the two previous times, in which the Executive was the main advocate of the changes, the Ministry of Labor and Social Security now wants Congress’ leadership in the discussion.

The executive secretary of the folder, Bruno Dalcolmo, told the sheet that the time is for effort to reduce the nearly 14 million unemployed. “We need to rethink the Brazilian labor system,” he said.

He stated that, despite the formal market having managed to limit losses during the pandemic —benefited by emergency measures, such as the job maintenance program—, there is still a lot to be done, especially when considering the level of informality.

Now, the plan is to leave the leadership to the congressmen themselves. “The correct thing is to give this role to Parliament. We are in dialogue with both Houses,” he said.

“We understand that it makes no sense to send it by MP [novamente] and it doesn’t make sense to present this new text without there being an awareness of both Houses in relation to the drama. I understand that there is a growing awareness and awareness to offer an attack to improve the job market,” he said.

One of the arguments used is that congressmen from some states would be taking a stand without knowing the reality of informal work in their own regions.

Despite recognizing as difficult a final approval in both the Chamber and the Senate this year, Dalcolmo said he trusts that the issue will at least be re-addressed in some of the Houses.

“More than hope, I am confident that this issue can be taken up by Congress. The electoral process is always very harmful, but this is a supra-party issue. It is a matter for the State, not for the government,” stated Dalcolmo.

Dalcolmo’s strategy, however, is likely to face resistance in Congress. Allied base leaders heard by sheet they said either they didn’t know about the initiative or that it would be unlikely that any mini-labour reform would be approved before the elections.

Economist Daniel Duque, from FGV Ibre (Brazilian Institute of Economics of the Getulio Vargas Foundation), stated that measures like this tend to work more in the long term and that, given the current scenario of activity, it would work only marginally.

“Ideas like this have already been tried and have been tried in recent years, and they even tend to work in the medium and long term, when the economy converges to its natural level of activity. However, at a time like this, with a lot of idleness in the labor market, this type of measure tends to be less effective,” said Duque.

“What the job market really needs is an acceleration of the economy and of the vaccination rate in order to increase the level of jobs. Without this greater demand, these flexibilizations [trabalhistas] help more marginally,” said the economist.

In any case, the calendar threatens to put the proposal back on the level of ideas. As time goes by and Congress dedicates itself to other themes, such as the PEC (proposed amendment to the Constitution) of the Precatório, the window for reforms is closing as the electoral calendar approaches.

The labor package that was in the MP rejected by the Senate caused controversy by proposing the alteration of several points of the CLT (Consolidation of Labor Laws). Government officials believe that this strategy was wrong.

For government articulators, the proposal should have focused only on the possibility of creating new types of employment contracts.

The Ministry of Labor and Social Security is already working on the new version of the labor package. The tendency is that no changes are proposed in the CLT, as in previous versions.

The idea, therefore, is to seek space to try to implement measures with the potential to boost the hiring of young and informal people, without mixing up the debate with changes in the CLT rules.

A revamping of labor programs that have already been voted on in Congress is under consideration, particularly in relation to funding expenditures.

In the MP, one of the ways to finance the reduction in the cost of hiring employees was a cut in transfers to the S System. The lobby of businessmen, especially in the industry sector, increased pressure in the Senate, which has already barred two labor packages since the beginning of the Jair Bolsonaro government.

In April of last year, the House overthrew the MP that created the Green and Yellow Card, a promise made by Minister Paulo Guedes (Economy) presented in Bolsonaro’s campaign to the Planalto Palace.

This program provided for a reduction in charges, such as social security contributions, to companies that hired young people aged 18 to 29 for their first job. It also allowed a temporary cut in the collection for the FGTS, that is, less money for the worker.

In 2021, the plan to create a new labor program returned. Guedes announced, in April, that he would propose a measure to stimulate employment for young and informal people — part of the economic recovery agenda after the pandemic has cooled down.

Three new modalities were presented to Congress. One of them was the Requip (professional qualification regime). The measure was aimed at young people, unemployed and needy people.

The plan provided for the creation of bonuses (scholarships) of up to R$550 per month paid to workers in training. The contract would be linked to a professional qualification course. After one year, the worker would be entitled to a 30-day paid break. But there is no forecast for the 13th payment of the scholarship or FGTS.

Another type of planned contract was requested by Minister Onyx Lorenzoni (Labor and Welfare), called the National Program for the Provision of Voluntary Social Service. He would allow municipalities to hire temporarily.

Of the three programs in the approved project, the only one that provided for an employment relationship was the Priore (First Opportunity and Reintegration into Employment Program). Holidays and 13th would be guaranteed.

However, in this type of program, there would be a reduction in the payment of employees’ FGTS — an idea similar to Carteira Verde and Amarela.

Employment situation in Brazil, according to IBGE

For the quarter ended August 2021

13.7 million

are unemployed

13,2%

is the unemployment rate

53.1 million

work in a formal way

37.1 million

work informally

Main points of the government project approved by the Chamber, but overturned by the Senate

1 – Requip (Professional Qualification Regime)

• Aimed at young people, informal people and beneficiaries of social programs
• Journey limited to 22 hours a week; linked to qualification course
• Worker receives a maximum bonus of R$550 per month. Does not generate employment relationship
• Worker needs to contribute as a self-employed person to Social Security and there is no FGTS
• Contracts can be for 2 years, with 30 days of vacation after the first year

2- Priore (First Opportunity and Reintegration into Employment Program)

• Focused on young people looking for their first job and people aged 55 and over who are unemployed
• Reduction in employee FGTS payments
• You can receive a government-paid qualification program bonus of up to R$275

3- National Voluntary Social Service Provision Program

• Target audience: young people from 18 to 29 years old and people over 50 years old
• Municipalities can temporarily hire people for services and, in exchange, pay a remuneration that cannot be less than the minimum hourly wage (about R$5)