Brazil’s New Labor Reform Targets Young Workers
August 19, 2021
Brazilian lawmakers introduced two new labor proposals last week in an attempt to reduce the alarmingly high unemployment rate affecting younger workers in the country, and to provide employers with more hiring options.
The proposals contain two programs aimed at young people: the First Opportunity and Reintegration into Employment Program (Priore) and a special regime for work, qualification, and productive inclusion (Requip).
- Priore is restricted to workers ages 18 to 29 with no previous formal work experience. The monthly salary for these employees would not be more than two times the federal minimum wage - USD$255.00 per month.
- Special contracts under Priore cannot last more than two years. After two years, employers should use a regular employee contract and comply with related regulations.
- Employers and employees can negotiate a payment period for less than a month, and payments can include a prorated amount of vacation and bonus which must be paid entirely under other employment arrangements.
- The two parties can also negotiate up to two hours of overtime per day in the employment contract with an overtime payment.
- Under the scheme, only 2% of the employee’s salary needs to be contributed to the Unemployment Compensation Fund ("FGTS"), as opposed to 8% for regular employees, and the severance pay will be only 20% of the FGTS account, which is only half of the regular rate.
- Requip is aimed at young people who have been unemployed for two years. The program provides an extra bonus for employees who work up to 22 hours per week and a scholarship for taking training courses.
According to IBGE, a Brazilian statistics agency, over 27% of people ages 18 to 24 are unemployed and another 14% work very few hours. Brazil hopes to use the new labor reform to encourage employers to increase hiring young workers and promote economic investment for a heathier workforce structure.