State-Owned Companies to Dismiss Over 25,000 Employees

By Richard Mann

RIO DE JANEIRO, BRAZIL – Amidst the federal government’s orientation to reduce costs and generate results, state-owned companies should further reduce the number of employees in 2019.

A survey carried out by G1, based on information from the Ministry of Economy and companies, indicates that the number of dismissals could exceed 25,000 this year.

According to Fernando Soares, Secretary of Coordination and Governance of State Enterprises (Sest) of the Ministry of Economy, seven programs from different companies for voluntary resignation (PDVs) or encouraged retirement, have already been approved by the government this year.

The government estimates a total of 21,500 dismissals throughout the year with these seven programs alone, which could generate annual payroll savings of approximately R$2.3 billion.

This figure does not include the PDVs announced in April by Petrobras, which by law does not require government approval for its severance programs. Also, considering the expected 4,300 layoffs in the oil giant, the total expected layoffs this year in state-owned companies should reach 25,800.

Among the state-owned companies which have already announced PDVs or encouraged retirement programs are Correios, Petrobras, Infraero, Serpro, and Embrapa.

Plans are mainly aimed at older workers who are approaching retirement age or who are already retired under the INSS.

The staff downsizing by state-owned companies has been taking place continuously since 2015, in a process that began under the Dilma Rousseff government.

According to the secretariat, since 2015, the number of cuts resulting from the implementation of voluntary resignation programs has reached approximately 44,000.

Last year alone, there was a reduction of 13,434 people in state-owned companies using this system. According to official data, the main reductions were by Caixa Econômica Federal (2,728), Correios (2,648) and Banco do Brasil (2,195).

Although the market accepts state-owned companies well, they have been criticized by unions and worker federations.

The National Federation of Postal and Telegraph Workers (Fentect) classifies the termination program at the Post Office as “part of the state-owned scrapping project for outsourcing and privatization.”

Currently, there are 134 federal state-owned companies, 88 of which are subsidiaries of Petrobras, Eletrobras, Banco do Brasil, Caixa, Correios or BNDES. In 2016, there were 154 state-owned companies; since then, 20 companies have been privatized or liquidated, most of them subsidiaries of Eletrobras and Petrobras.

President Bolsonaro’s government has pledged to reduce the number of state-owned companies significantly and advocates the sale of a number of them as well as their subsidiaries.