Measure was incorporated by the Chamber to facilitate the entry of people into the formal job market, but at lower costs for companies
The Chamber of Deputies approved on Tuesday (November 23, 2023) a bill that resumes the central measures of the “Yellow Green Contract”, a program designed by former Economy Minister Paulo Guedes during the government of Jair Bolsonaro (PL). The text goes to the Senate.
The economist tried to advance the agenda through a provisional measure (No. 905 of 2019), which was revoked in April 2020 shortly before the deadline for it to expire, that is, lose its validity for sanction by the National Congress. Bolsonaro had expectations of launching the program again if he won the 2022 elections.
Since the beginning of his mandate as head of the Economy, Guedes argued that excessive taxation was harmful to the creation of jobs, as he stated in an interview with Power360 in January 2020. In his assessment, labor charges in Brazil create 1 job and take away another, to the extent that “cost expensive” for companies.
The government of Luiz Inácio Lula da Silva (PT) is against the measure. It alleges suppression of labor rights, in addition to disagreements with the previous management.
The leader of Psol in the Chamber, deputy Guilherme Boulos (SP), said that the act would bring a “precariousness of work”. He has the support of President Lula in the race for Mayor of São Paulo in the 2024 municipal elections.
In response on voting day, the rapporteur Adriana Ventura (Novo-SP) declared that “precarious is not having work”.
The Minister of Labor and Employment, Luiz Marinho, did not speak about the subject on Wednesday (Nov 22). But that same day, he revoked a November 13 decree in which he had limited work on holidays to authorization by labor conventions. Congress approved the urgency to vote on a draft legislative decree to veto the government ordinance that institutes restrictions on traders.
The central point of Adriana Ventura’s project is to offer a differentiated temporary contract for young people aged 18 to 29 and, therefore, increase the number of people formally employed in the country. Companies that adopt this category will have some tax benefits.
The 3rd quarter of 2023 ended with the unemployment rate at 16% for people aged 18 to 24, the lowest since 2014. The data are from IBGE (Brazilian Institute of Geography and Statistics).
The biggest difference between Guedes’ MP is that the project approved in the Chamber expands bureaucracy for people over 50 who have been unemployed for more than 12 months.
The proposed temporary contracts last up to 24 months, with 8 hours of work per day for young people who have never had a job. Students may have shorter hours.
There is an expectation of a reduction to 10% of the employer’s social security contribution for companies that adopt the regime. This point came as a way to encourage hiring through the measure.
Other tax benefits involve the payment of the FGTS (Service Time Guarantee Fund). The deposit rate will decrease from 8% to:
- 2%, when you are an individual micro-entrepreneur or micro-company:
- 4%, for small companies, non-profit entities, philanthropic entities, associations or unions;
- 6% for other companies.
The fine for contract termination is reduced by half: from 40% to 20%.
There are some employees who cannot be hired under the new rule: domestic workers, rural workers, public servants and workers in management and advisory activities in parties.
The limit for hiring people in their first job according to the proposals in the text is 20% of employees.
The text was initially written by the former senator Gin Argelo (PTB-DF) in 2013. The objective, at that time, was to offer different standards for young people aged 16 to 24. With the incorporation of Guedes’ ideas, the interval was modified.
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