Brazil job measures to save estimated $6.7b a year

Brazil will save an estimated 18 billion reais ($6.7 billion) a year by reducing some pension and unemployment benefits, according to Nelson Barbosa, who will serve as planning and budget minister next year. The steps include increasing the amount of time an employee must work to receive unemployment insurance, government Chief-of-Staff Aloizio Mercadante said, speaking alongside Barbosa at a press conference in Brasilia today.

The government also will reduce pensions to family members of deceased workers to 50 percent of their salary, plus 10 percent for each dependent, he said. The government is scheduled to publish the measures in the Official Gazette tomorrow.

"The rights of workers are maintained and will be sustained, but there are some issues that need to be corrected," Mercadante said.

President Dilma Rousseff vows to rein in spending and cut back on subsidized credit in her second term after Brazil's credit rating this year suffered a downgrade for the first time in more than a decade. Her inauguration is Jan. 1.

Swap rates on the contract due in July 2015 rose two basis points, or 0.02 percentage point, to 12.63 percent at today's close. Five-year credit default swaps, which protect bondholders against non-payment, increased four basis points to 188 basis points. A trained economist, Rousseff said last week the country needs "drastic" economic measures and more control over certain spending.

The budget gap for the central government, states and municipalities in November widened more than analysts forecast to 41.6 billion reais from 17.8 billion reais a month earlier.

Designated Finance Minister Joaquim Levy said in November that he will seek a budget surplus before interest payments of 1.2 percent of gross domestic product next year and at least 2 percent of GDP in 2016 and 2017.

The so-called primary budget balance turned to a deficit of 0.18 percent of GDP in the 12 months through November, the first such shortfall on record.