End of 6×1: Lack of deadline for transition is a problem, says economist

The absence of an adequate deadline for the transition from the end of the 6×1 scale is highlighted as the main problem with the proposal under discussion in Brazil. In an interview with CNN Prime Time, economist Sergio Vale analyzed the impacts of the PEC (Proposed Amendment to the Constitution) which provides for the reduction of working hours from 44 to 40 hours per week.

According to Sergio Vale, the central issue is not the reduction of the journey itself, but the design of the project. "The problem with the PEC 6×1 is not in itself that you reduce the working day from 44 to 40 hours. We have a world moving towards this in several countries", he stated.

For him, the critical point is the absence of a transition period long enough for companies and workers to adapt to the new reality.

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If the change is implemented immediately, with no room for negotiation, Sergio Vale estimates an increase in labor costs of between 6% and 8%. Furthermore, the economist projects a specific but relevant inflationary impact.

"We are talking about inflation that, obviously, is just once, but it can reach a percentage point, even a little more than that", he said. In the current context of the Brazilian economy, marked by inflationary pressures related to fuel and food, this increase would represent an additional challenge for the conduct of monetary policy.

Example from Portugal
To support his analysis, Sergio Vale cited the experience of Portugal, which carried out a similar transition, reducing the working day from 44 to 40 hours. In cases where there was time for collective bargaining between companies and workers, the results were positive: zero job cuts, minimally increased labor costs and even increased productivity.

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On the other hand, where the change was imposed abruptly, there was a 2% drop in production, a 4% reduction in employment and an average increase in salary costs of around 6%. "There's not much of a sign here that you'll have a lot of room for negotiation", warned the economist.

Informality in the labor market
When asked about the possibility of the discussion of the 6×1 scale being used to address the historical problem of informality in the Brazilian labor market, Sergio Vale was direct: this problem can be resolved in other ways.

According to him, the 2017 labor reform has already addressed part of the issue, but the path to expanding formalization involves reducing labor charges, which currently make the cost of formal employment too high for many companies and workers.

"The issue of working hours is another discussion, which in this case will only have a cost implication and, eventually, could also result in you having a contingent that ends up being informal due to this change", he concluded.

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Source: CNN