End of 6×1: Increased cost should change hiring, says researcher

The proposal to end the 6×1 scale, which provides for a reduction in working hours from 44 to 40 hours per week without salary reduction, could generate negative consequences for the Brazilian labor market. This is what Fernando de Holanda Barbosa Filho, researcher at FGV Ibre (Brazilian Institute of Economics of the Getulio Vargas Foundation) assesses.

According to the opinion of deputy Léo Prates, the change would be implemented within 14 months after the promulgation of the proposal, with a gradual reduction in working hours.

Before moving forward, the text received a review request from deputy Maurício Marcon. In practice, the measure would represent an increase of around 10% in the value of hours worked.

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According to Fernando de Holanda Barbosa Filho, reducing working hours, without a counterpart in productivity gains, tends to increase company costs.

"Given the low productivity growth, this will reduce the productivity of Brazilian workers and increase the costs of companies", stated the researcher.

He highlighted that, when this type of change is imposed by law in a uniform manner, without negotiation, the immediate effect is usually an increase in turnover: "The company will exchange that expensive worker for the cheapest."

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The researcher also warned of the risk of a drop in monthly wages, even with an increase in hourly wages. "The hourly wage rises and the monthly wage falls. How can we explain this? Precisely because companies increase turnover", he explained.

For workers who receive commission, the trend would be even more worrying, as the salary floor would be maintained, but commissions would tend to fall with the reduction in hours worked.

Risk of informality and pressure on prices
Another point raised by Fernando de Holanda Barbosa Filho is the risk of increased informality.

In a country with a high level of informal work, workers whose costs approach the limit of their productivity may lose their formal employment and migrate to informality. "It runs the risk of becoming more expensive, losing its formal link and also ending up entering the informal sector," said the researcher.

In addition, the increase in production costs tends to be passed on to the final prices of goods and services, generating inflationary pressure.

"When the firm faces this cost increase, it will pass it on to the price. And at the end of the day, this price increase will mean more expensive goods and services for this worker who is supposedly having this increase", he stated.

Productivity: the central node of the debate
Fernando de Holanda Barbosa Filho highlighted that the low productivity of Brazilian workers is not the sole responsibility of the worker, but results from a set of structural factors, such as excessive bureaucracy, regulatory problems, low level of capital available per worker and insufficient professional qualifications.

According to data from the ILO (International Labor Organization) mentioned by the expert, productivity per hour worked in Brazil is approximately US$21.17, while in the United States this value exceeds US$80 per hour.

For the researcher, the causal relationship between working hours and productivity is often misinterpreted.

"Countries are not rich because the working day is shorter. The working day is shorter because the most productive workers started to earn more and demand a type of good, which is leisure", he explained.

He concluded that, in an economy with a history of low productivity growth, reducing working hours via legislative change "generates some risks that we will have to evaluate the result of later on".

Study: end of the 6×1 scale can reduce GDP, income, jobs and companies

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Source: CNN