Brazil – The End Of Rigid Labor Laws Has The Potential To Create Between 1.5 million And 2.3 Million Jobs

Studies Estimate Labor Reform Will Add Up To 2.3 Million New Jobs In Brazil

Port Santos

Updated rules will end rigid labor laws, leading to cost savings. Brazil’s competitiveness is also expected to increase

With the end of rigid legislation and cost savings for employers, private sector studies point to the modernized labor laws having the potential to create between 1.5 million and 2.3 million jobs.

For Itaú Unibanco, a major Brazilian bank, the expectation is that Brazil will generate more wealth. The country’s GDP per capita will be positively influenced in the next four years, according to a study by the bank, at a pace of 0.8% additional increases each year.

Another consequence is the improvement of the country’s competitiveness. In an international comparison of labor market efficiency rates in which Brazil currently occupies the 117th position among 138 countries, the modernization of labor laws is expected to leapfrog the country to 86th.

“In international comparisons, Brazil stands out today for having one of the most inefficient labor markets in the world,” said the study by Itaú Unibanco. “We estimate that the labor reform can increase Brazilian GDP per capita by 3.2% in the next four years [0.8% per year] and reduce the structural unemployment rate by around 1.4 percentage points [approximately 1.5 million jobs]”, it continues.

Competitiveness

A study by another bank (Santander) also shows that the new labor laws can help create more jobs. This study, however, projects growth at a faster pace: 2.3 million jobs added in just over 12 months.

Sylvia Lorraine Texeira de Souza, executive manager of labor relations at the National Confederation of Industry (CNI), assesses that the new legislation makes Brazil more competitive. “It puts Brazil in line with other countries,” she said. Sylvia further noted that the new legislation improves legal certainty for companies and employers, which can reduce the number of lawsuits.

[Source: Government of Brazil -/- Media Relations]
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