New Unemployment Law in Brazil Could Save R$15 Billion

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Determined to push through much needed fiscal adjustments to boost Brazil’s ailing economy, President Dilma Rousseff sanctioned on Wednesday (June 17th) a law which will limit unemployment benefits. With unemployment rates slowly beginning to rise, the federal government hopes to spend less on benefits with the new law.

According to calculations by Brazil’s Planning Ministry, the new law along with another bill waiting for Presidential sanction which also limits pension benefits, will help the federal government save up to R$15 billion (US$4.8 billion) per year.

According to the new law, workers will only have the right to unemployment benefits if they have worked at least twelve months out of the last eighteen months in a formal position. Previously workers needed to be employed only six months to receive the benefits. The bill passed through the Lower House and the Senate in late May and was now only waiting for Presidential sanction to be implemented. The unemployment rate in April of 2015 was at 6.5 percent.

President Rousseff, however, vetoed two items of the bill approved by Congress. The first veto was in regards to the annual salary bonuses. Congress wanted the bonus to be paid only to those who had worked at least ninety days during the calendar year. With the veto the previous rule, of thirty days worked for the benefit, is maintained.

The other veto by the President is regarding restrictions of unemployment benefits to rural workers. With the veto, rural workers continue to receive the same benefits as urban workers, meeting the same requirements.

The bill is the first of a series of measures in the federal government’s fiscal adjustment program to pass through Congress and be sanctioned by the Executive Office. With these measures, the government hopes to increase the country’s primary surplus, reduce debt and encourage economic growth.