Abrupt shift to 36 hours seen as risk to wages, jobs, and national output
04/11/2025
A sudden reduction of Brazil’s average workweek to 36 hours—the central proposal in a constitutional amendment backed by Congresswoman Erika Hilton to eliminate the 6-days-on, 1-day-off work schedule—could shrink the country’s value added to the economy and its GDP by 3.8% to 6.9%, depending on employers’ responses. The estimate comes from economist Fernando de Holanda Barbosa Filho, a researcher at the Brazilian Institute of Economics at Fundação Getulio Vargas (FGV Ibre).
In 2024, Brazil’s value added rose 3.1%, according to the Regis Bonelli Productivity Observatory, based on national accounts data from the statistics agency IBGE. Unlike GDP, value added excludes taxes and subsidies but remains a key measure of economic output.
Mr. Barbosa Filho noted that Brazil’s average weekly work hours are already well below the legal limit of 44 hours, standing at 38.4 in 2024. If this average were cut to 36 hours—with all other factors constant—he estimates a 6.2% drop in total hours worked and, consequently, a proportional 6.2% decline in value added.
“This assumes workers would be just as productive per hour as before, but would simply work fewer hours,” he said.
A broader analysis, however, includes not just employment and hours worked (i.e., labor productivity) but also the capital stock in use, thus accounting for the total productivity (TFP). Under this lens, the economist estimates a 3.8% decline in value added in 2024 if the measure were adopted. The productivity data used also come from the Regis Bonelli Observatory.
“The impact is obviously smaller because only labor, not capital, would be affected,” Mr. Barbosa Filho said. “Claiming GDP would fall by 6% seems far-fetched. But a decline between 2% and 3% is a real risk if such a change is made overnight. Although the proposal is moving through Congress, I think the government would weigh the electoral risk and decide this isn’t the time to introduce additional economic uncertainty.”
Mr. Barbosa Filho added that the measure could reduce per capita income and wages, lead to business closures, and result in job losses. “These are averages—some people work more, others less. Lowering the limit would pull some people down, and they’re usually the ones who will struggle most to adapt.”
His scenarios assume no immediate impact on total employment despite the real wage increase implied by a reduced workweek, which raises unit labor costs. For firms already using the national average of 38.4 hours, the 36-hour cap would increase real wages by roughly 6%. For companies operating at the current legal maximum of 44 hours, the hike would be about 18%.
That, in turn, could prompt layoffs, Mr. Barbosa Filho warned. In such cases, accounting for both labor and capital inputs, the loss to the value added could range from 4.1% to 6.9%, depending on the wage increase and employers’ responses. “It’s important to stress these are simplified partial-equilibrium exercises. In a general-equilibrium scenario, all prices in the economy would shift,” he noted.
One common argument in favor of shorter workweeks is that productivity will rise. However, labor productivity in Brazil has shown what Mr. Barbosa Filho called “mediocre” growth in recent decades.
Between 1981 and 2024, total factor productivity grew by only 0.2% annually. Since 2018, it has declined by 0.4% per year. Even under optimistic productivity assumptions, the proposed reduction would still weigh on economic output. A 2.5% TFP increase would still translate into a 1.4% fall in value added. With just 0.5% TFP growth, the decline would be 3.3%—comparable to Brazil’s 2015–2016 recession.
Since 1981, Brazil’s average workweek has gradually shrunk by 0.3% per year, he noted. “This reflects technological change, but also rising incomes. As people earn more, they tend to work fewer hours. If you compare rich and poor countries, the average workweek is usually shorter in wealthier nations,” he said.
Between 1988 and 1989, Brazil’s average workweek fell from 42.8 to 41.8 hours, a 2.2% drop that Barbosa Filho attributes largely to the 1988 Constitution, which reduced the legal cap from 48 to 44 hours. “Part of the 1980s economic crisis stemmed from that change. And later, we saw productivity fall—not because workers got ‘worse,’ but because they were working fewer hours,” he explained.
He added that current legislation already guarantees at least one day off per week and does not prevent companies from adopting alternative work arrangements. “Many companies already use different schedules from the 6 x 1 model,” he said. “The demand for shorter workweeks has been unfolding gradually, and sectors are adjusting. We’ll get there in time.”
*By Anaïs Fernandes — São Paulo
Source: Valor International