Brazil Law Allows Companies to Cut Hours and Wages

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – President Dilma Rousseff of Brazil signed into law on Thursday a program which allows companies to reduce working hours and up to thirty percent of employees’ salaries. The Programa de Proteção ao Emprego – PPE (Program to Protect Employment), according to the government, will help companies avoid layoffs.

“Brazil today faces a moment of transition, where the choices we make will determine the future, especially in terms of the recovery of the economy,” said President Rousseff.

According to the president, the PPE will allow companies to adjust their production without having to dismiss any employees. The President also said that for the government the program is beneficial since it will not have to pay unemployment benefits and will continue to obtain revenues from social contributions.

In July, President Rousseff had introduced the program through an Executive Order, but the order was temporary. At the end of October the Senate approved the final text for the bill and sent it to the Executive for sanction.

During the four months the Executive Order has been in place 33 companies implemented the program, benefitting more than 30,000 workers, stated Rousseff after signing the new law. “The sanction of this law will dissipate any legal concerns in relation to the program, and will allow more companies to implement the program,” said the President.

According to the Labor Ministry of the 75 companies which requested authorization to implement the law, 27 were from the automotive sector, seventeen from steel industry and sixteen from the textile sector. According to Rafael Marques, president of the Steel Workers Union, the reduction of wages is beneficial during a moment of crisis.

“No one likes [the reduction in wages] but in all meetings we conducted the PPE has been approved unanimously,” Marques was quoted by Agencia Brasil as saying. “At moments like this, there is unity, because workers understand the threat of layoffs,” he added.