Brazil’s Te­mer un­veils plans to pre­serve jobs

Kuwait Times - - BUSINESS -

Pres­i­dent Michel Te­mer vowed to slash credit card in­ter­est rates, of­fer sub­si­dies to com­pa­nies that re­tain em­ploy­ees and ease the hir­ing of work­ers on tem­po­rary con­tracts in his lat­est bid to lift Brazil out of a pro­longed re­ces­sion. Te­mer also said the govern­ment will al­low some work­ers to draw on sev­er­ance fund ac­counts, known as FGTS, a step which could in­ject up to 30 bil­lion reais ($8.98 bil­lion) into the economy.

The pres­i­dent last week an­nounced other moves to boost credit, as Brazil tries to com­bat a two-year-old re­ces­sion and 11.8 per­cent un­em­ploy­ment. Te­mer’s seven-month-old govern­ment, which has been buf­feted by cor­rup­tion scan­dals, has seen its un­pop­u­lar­ity in­crease.

“They are clearly try­ing to fight the neg­a­tive agenda,” said Alessan­dra Ribeiro, an econ­o­mist with TendÍn­cias Con­sul­to­ria. “But the ef­fect for his pop­u­lar­ity could be marginal be­cause the im­pact of the mea­sures will not ap­pear in the short term.” In lay­ing out the lat­est eco­nomic mea­sures, Eliseu Padilha, Te­mer’s chief of staff, said sub­si­dies to com­pa­nies that re­duce work­ing hours in­stead of fir­ing em­ploy­ees could pre­serve 200,000 jobs over the next four years.

The govern­ment also said it would send a bill to Congress to ease the hir­ing of work­ers on a tem­po­rary ba­sis. Roberto Se­tubal, chief ex­ec­u­tive of­fi­cer of Ita˙ Uni­banco Hold­ing SA, the largest Brazil­ian pri­vate bank, said the changes to the la­bor law will “cer­tainly gen­er­ate jobs, al­low­ing ne­go­ti­a­tion of work­ing con­di­tions ac­cord­ing to the eco­nomic sec­tor.”

Te­mer said in­ter­est rates on re­volv­ing credit cards of up to 30 days would be cut by more than half. For longer pe­ri­ods, banks would al­low con­sumers to pay their debt in in­stall­ments with re­duced rates com­pared with to­day.

Brazil­ian in­ter­est rates are among the world’s high­est, with credit cards charg­ing more than 400 per­cent a year. Credit card in­dus­try as­so­ci­a­tion Abecs said it ex­pected a drop in de­fault rates fol­low­ing the changes. Re­gard­ing the sev­er­ance funds, work­ers will be al­lowed to with­draw all the money from their FGTS ac­counts if they are in­ac­tive for more than three years. Un­der cur­rent law, FGTS money can only be ac­cessed if a worker is fired, re­tires or ac­quires prop­erty. — Reuters

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