Labor reform: businessmen and unions comment

On Wednesday (1), the Senate dropped the proposal for a new labor reform. Entities linked to industry and commerce criticized the rejection of the project, while workers unions and civil society associations celebrated.

The original interim measure, issued by (non-party) President Jair Bolsonaro in April, merely recreated the emergency job-keeping program. With it, workers who had reduced working hours or suspended employment contracts during the pandemic received the BEm (Emergency Benefit), paid by the government.

However, during the proceedings in the Chamber, rapporteur Christino Áureo (PP-RJ) inserted new employment programs supported by ministers Paulo Guedes (Economics) and Onyx Lorenzoni (Employment), as well as changes in the CLT (Consolidation of Labor Laws) and in the benefit of free justice.

This passed the House, but it still depended on the Senate. As the text was rejected in the Senate, the entire reform fell apart — including the emergency employment and income program that was in the original MP.

Senate ‘did the bath water together with the child’, says Fecomercio-SP

José Pastore, president of the Employment and Labor Relations Council at Fecomercio-SP, says that the Senate should have approved at least the emergency job preservation program.

The text approved in the Chamber allowed the government to extend the program. As the Senate overthrew the MP, this now depends on the processing and approval of a new law (the program ended on August 25).

The reduction of working hours and suspension of work is seen by specialists as the best measure taken by the federal government to preserve the labor market during the pandemic.

There have been more than 23 million agreements signed since 2020, involving almost 13 million employees with a formal contract who received the Good.

Pastore says that the Senate was consistent in rejecting strange changes to the original text of the MP, something that the Supreme Court has already declared to be unconstitutional.

But he says there will be a huge loss if the emergency job preservation program is not renewed, as the pandemic continues to affect the economy. “The Senate threw the bath water along with the child,” he said.

Bars and Fiesp criticize Senate decision

The Brazilian Association of Bars and Restaurants (Abrasel) stated that the Senate’s decision shows a disconnection with society, especially with the millions of small businesses.

It also considers that the senators were insensitive to the “unfair and disproportionate impact generated by the restrictions on functioning during the pandemic”.

“Thousands of companies were disappointed and were harmed, many will close their doors permanently. And, with that, thousands of Brazilians will join the already disastrous contingent of unemployed,” said the president of Abrasel, Paulo Solmucci.

The Fiesp (Federation of Industries of the State of SP) declared that “there was a mistake, because the MP would help companies and workers at this very serious moment with so many unemployed.”

Would reform bring jobs?

The chief strategist of the digital bank Modalmais, Felipe Sichel, already estimates a recovery in the labor market due to the natural recovery of the economy itself, with the reopening of activities.

“This measure could even stimulate this movement, but it is difficult to estimate how much. In any case, since it was a measure that should benefit the labor market, its non-approval ends up having a negative impact,” stated Sichel.

Renan Pieri, economist at the São Paulo School of Business Administration (FGV/EAESP), says that the project’s impact on the economy in the short term would not be that important.

“In general, these measures tend to have little impact on hiring in the short term. These are changes that take some time to influence the labor market because entrepreneurs need to understand the legislation and whether or not there are legal risks,” he said.

Unions see victory over precariousness

The union centrals had been fighting for the fall of the new labor reform. They claim that the government was trying to approve precarious employment models that would harm the worker.

“The rejection by the Senate of this absurd measure is the result and victory of the institutional work very well done and well organized by the union movement within the National Congress”, said Sérgio Nobre, president of the CUT (Central Única dos Trabalhadores).

According to Nobre, the MP was unconstitutional and harmed the country’s development. “Only quality jobs guarantee the development of a nation.”

In a note signed on Thursday (2), the presidents of ten union centrals said that the government is trying to benefit from the economic crisis to approve measures against workers.

We defend the maintenance and increase of emergency measures for workers, employers and the most vulnerable population during the coronavirus pandemic. We accuse, however, the federal government of taking advantage of the needs of a crisis that has led thousands of Brazilians to premature death, to try to approve, without due social debate, unpopular provisions, which would further harm the people, who already suffer from unemployment, famine and the virus.
Union Centrals

Judges and labor attorneys were against the reform

Anamatra (National Association of Labor Justice Magistrates) stated that the removal of workers’ rights is not an efficient way to generate jobs, and celebrated the fall of the new reform.

“The decision is a great victory for Justice, labor law, workers, and finally burying a measure that insisted on an already proven ineffective path of associating the reduction of labor rights with a reduction in unemployment and economic growth”, said the president of Anamatra, Luiz Colussi.

The National Association of Labor Attorneys has also been defending the illegality and ineffectiveness of employment regimes with fewer labor rights. The Attorney General for Labor, José de Lima Ramos Pereira, said that the Senate was right to overturn the reform.

The IBDP (Brazilian Institute of Social Security Law) celebrated the decision of the Senate and said that the text was a step backwards. “There were numerous meetings with parliamentarians throughout this period, in an intense work to alert about the content of the text and the flagrant unconstitutionality of its content.”

Negative sign for financial market

According to professionals in the financial market, labor issues took a back seat, because of another issue – the change in the Income Tax, approved by the Chamber. But analysts pointed out that the signal sent to the market is not positive.

According to the investment advisor at Messem Investimentos, Fabio Figueiredo, the tax reform was in the focus of investors because “this is a theme that directly impacts investors”.

“In any case, the decision on the labor reform shows the Senate president’s distancing from the Bolsonaro government. And this will have bad repercussions in the direction of other issues for the executive,” he said.

For Felipe Sichel, from Modalmais, the vote in the Senate was worse for the message it sends to the market than for the decision itself. “The signs were quite negative because it indicates the Senate’s independence from the government, with strong speeches during the vote,” he declared.