New FGTS withdrawal can benefit 40 million workers and release more than BRL 20 billion

The new round of withdrawals from the FGTS (Fundo de Garantia do Tempo de Serviço) could benefit around 40 million workers, according to internal government estimates obtained by the sheet.

This is the potential audience for the measure and takes into account the number of shareholders who have accounts with a balance in the guarantee fund. The amount to be authorized for withdrawal is still under study, but can be between R$500 and R$1,000 per worker.

The definition of the limit still depends on analyzes of the financial availability of the fund, which needs to ensure resources to honor regular withdrawals (such as unfair dismissals or purchase of a home) and the budget for housing and urban infrastructure and sanitation financing.

According to government estimates, the measure should provide an injection of resources in excess of R$ 20 billion. But there are some simulations in which the total released can be close to R$ 30 billion.

The expectation of members of the economic team is that the new round of withdrawals will be officially announced by the government in the next 20 days. An MP (provisional measure) will be edited by President Jair Bolsonaro (PL) authorizing the rescue of resources.

The new release of the FGTS to workers comes at a time when Bolsonaro appears in second place in the polls of voting intentions for the Presidency. He is behind former president Luiz Inácio Lula da Silva (PT).

Government members deny any electoral interest in the measure. The justification is to help Brazilians who face difficulties because of the high level of indebtedness and also the weight of inflation in the pockets of workers.

If the new round is confirmed, it will be the third time that the Bolsonaro government has authorized extraordinary withdrawals of FGTS resources.

The first was in 2019, when the injection of resources helped to support economic activity. A second round came in 2020, in the context of measures to combat the effects of Covid-19.

Before, in 2017, the Michel Temer government (MDB) allowed the withdrawal of inactive accounts – when the employment contract is terminated but the balance remains in the account, as in cases of resignation by the worker.

The studies for a new round of FGTS withdrawals were announced by the Minister of Economy, Paulo Guedes, at an event promoted by the bank BTG Pactual this Tuesday (22).

“There are several initiatives that we can have until the end of the year that should help the economy to grow. We can also mobilize FGTS resources, because they are private funds”, he said.

“These are people who have resources there and who are experiencing difficulties. Sometimes the guy owes money in the bank and is a creditor in the FGTS. Why can’t he withdraw this account and settle his debt on the other side?”, he asked.

Also on Tuesday, new meetings on the topic were held among the technicians.

According to government officials, although the minister has cited the use of the FGTS to pay debts and one of the main intentions is to actually help the indebted, the tendency is for the amount to be released to all workers who have a balance available in the fund, with free use according to the beneficiary’s needs.

The measure is taken while the main Brazilian banks – such as Itaú, Bradesco and Banco do Brasil – expect the level of default to rise gradually this year. There are already signs of this increase in the individual portfolio.

In 2020, the government took a similar measure in the package of measures to alleviate the crisis generated by the Covid-19 pandemic and released an emergency withdrawal from the FGTS of up to R$1,045 per worker.

According to Caixa, 31.7 million workers (out of a potential audience of 60 million) withdrew a total of R$ 24.2 billion that year. Redemption of resources was optional, and part of the workers preferred to keep account balances.

At the time, the maximum ransom amount was the equivalent of one minimum wage. Today, the national floor is R$ 1,212. According to government sources, it is unlikely that the new value will reach R$ 1,000.

In 2021, the government continued to study new rounds of release. FGTS counselors representing businesspeople and government officials, however, took a stand against the measure at the time.

The argument was that such an action could compromise the sustainability of the fund, which, according to them, suffered from limitations.

Over the past year, the final interpretation was that the fund had to be given time to recapitalize and fulfill all of its commitments before launching a new round of extraordinary withdrawals.

The president of the CBIC (Brazilian Chamber of the Construction Industry), José Carlos Martins, spoke out against the proposal for a new round of withdrawals in 2022.

The construction sector uses FGTS resources as a cheaper source of financing to fund housing projects.

“We choose to use the FGTS as a supplement to income instead of using it to generate social welfare, employment and income”, said Martins.

The government is still studying to expand the possibility of using the FGTS as a guarantee in microcredit operations for workers, according to government officials interviewed by the sheet.

Loan amounts range from R$1,000 to R$2,000 per person in the discussions, led in this case by the Ministry of Labor and Social Security.

The FGTS, a kind of worker’s savings, can only be withdrawn in certain situations – such as unfair dismissal, cases of serious illness and purchase of property.

The government had already made the use of resources more flexible in July 2019, when it instituted the so-called birthday loot.

The measure now allows the worker to withdraw annually, in the month of his/her birthday, a part of the accumulated balance (whoever joins, however, loses the right to withdraw the resources in case of dismissal without just cause).

The 2019 measure also made it possible to use the FGTS as collateral in certain credit operations. In the government’s assessment, the measure provided a cheaper and more accessible loan and has the potential to bring structural impacts to the labor market, with an increase in productivity and the potential to reduce worker turnover.

Every Brazilian worker with a formal employment contract, governed by the CLT (Consolidation of Labor Laws), is entitled to the FGTS. Also included are domestic, rural, temporary, intermittent, independent workers, safreiros (rural workers who work only during the harvest period) and professional athletes.