Brazil Temporarily Introduces Reduced Work Hours and Salaries

By Lisa Flueckiger, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Brazil’s President Dilma Rousseff has signed a temporary measure allowing companies to reduce working hours and employees’ salaries in order to avoid layoffs. Through the Programa de Proteção ao Emprego (Program to Protect Employment) companies in dire financial situations in designated sectors can reduce salaries by up to thirty percent.

President Rousseff signed the law on Monday, July 6th after meetings with ministers and union representatives. But even though the measure becomes law immediately, it will need analysis and approval by Congress. The temporary measure will then be in force until December 31, 2016.

Half of the salary loss suffered by employees will be compensated through the Fundo de Amparo ao Trabalhador (Workers Protection Fund) and in return participating companies will not be able to let any employees go until two months after the end of the program.

“It’s more important to use public resources to maintain employment than to fund unemployment. It’s a win-win program, clearly focused on keeping jobs in a period of crisis,” Chief Minister of the General Secretariat of the Presidency, Miguel Rossetto, stated.

In order to define, which companies and which sectors will be able to introduce the measure and be covered by the fund, an inter-ministerial group has been created. The decisions will be based on economic and financial indicators and announces within fifteen days. Companies will be allowed to introduce the measure first for six months and can then extend it for another half a year.

The unions welcome the measure. “The program is welcome, it comes at a good time. An expense with higher quality and important economic return for the country, for the workers. It encourages dialogue between workers and companies,” Rafael Marques, President of the Metalworkers, told Agencia Brasil.

The temporary has been introduced after several industries had to go through mass layoffs. Almost 37,000 people had been fired or their work temporarily suspended in Brazil’s automobile industry alone according to ANFAVEA, the national car production association.