July 22, 2019 / 3:07 AM / in a month

Brazil's Bolsonaro says government may cut worker protections to boost job creation

FILE PHOTO: Brazil's President Jair Bolsonaro attends a ceremony of the hoisting the national flag in front the Alvorada Palace in Brasilia, Brazil July 16, 2019. REUTERS/Adriano Machado/File Photo

BRASILIA (Reuters) - Brazilian President Jair Bolsonaro said on Sunday that the government may look at making it less expensive for employers to fire workers, as it seeks fresh ways to stimulate a weak economy.

Employers in Brazil contribute to a fund called FGTS, which employees can draw from in certain circumstances such as buying a home, loss of employment or serious health problems.

Currently, if an employer fires a worker without just cause, they are liable to pay the individual up to 40% of the total contributions made by the company for that worker to date. Additionally, since 2001 employers must also pay a further 10% levy to the government.

“Look, the value (of the FGTS fine) is not in the Constitution,” Bolsonaro told reporters. “What I’m trying to offer the worker is this: fewer rights and jobs, or all their rights and unemployment.”

Brazil’s economy is struggling to emerge from a crippling recession and Bolsonaro’s government is focused on passing through Congress a pension overhaul that it has said will prop up public finances and kickstart growth.

Last week, Bolsonaro said the FGTS fine was designed to prevent firms from firing workers, but argued it had instead made them unwilling to hire.

On Saturday, Bolsonaro said Brazil’s federal government would need to cut its budget by 2.5 billion reais ($667 million) as weak economic growth continues to squeeze revenue.

The government is imminently due to announce details on the release of cash from the FGTS funds and a workers’ social contribution fund known as PIS/Pasep. Economy Minister Paulo Guedes said last week that 42 billion reais would be freed up from FGTS funds and 21 billion reais from the PIS/Pasep funds, newspaper Valor Economico reported last week.

Reporting by Marcela Ayres, Editing by Rosalba O'Brien

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