Nearshore Americas

As The Crisis Bites, Brazilian Businesses Turn to Temporary Workers

With the economy slipping into recession, Brazilian businesses are cutting down on permanent employees. As a result, demand for temporary workers is rising.

Thanks to reluctance in hiring permanent workers, the unemployment rate is hovering over 8 percent in Brazil. With inflation rising relentlessly, trade union leaders are expecting companies to further cut back on permanent staff.

Attrition and pay cuts have come under media spotlight in the country, with employees in major companies striking. Last month, workers at a Ford auto plant protested over job cuts. The US auto giant has reportedly sent pink slips to some 200 workers working at its plant in Sao Bernardo do Campo.

Even postal workers are threatening to go on strike, demanding a 10 percent increase in wages and other benefits. According to a central bank survey published early Monday, inflation is on course to rise to 9.5 percent this year as the economy continues on a course to shrink by around 2.7 percent in 2015.

Ford’s problems reflect Brazil’s economic crisis. The automaker has seen new passenger vehicle sales decline by more than 20 percent so far this year, with heavy truck sales down nearly 45 percent.

But the upcoming Christmas and New Year are likely to create a lot of temporary jobs. Brazilian law only permits the rendering of services by a temporary worker if there is an employment agency acting as an intermediary in the hiring.

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Under a new regulation, which became effective July 1, 2014, companies can retain temporary workers for up to nine months.

Temporary employees have the same rights and benefits as regular employees, apart from the minimum notice period for termination, the mandatory contribution to FGTS and any benefits related to the fixed employment agreement.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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