Workweek reform can have mixed results for companies

According to the president of the Employment and Labor Relations Council of the Federation of Commerce of São Paulo (FecomercioSP), José Pastore, commerce would be one of the sectors most affected by the reduction in working hours for two reasons. On the one hand, it is labor-intensive. On the other hand, many establishments operate seven days a week, or even 24 hours a day, such as pharmacies and supermarkets. “The increase in working hours hits the retail sector hard. That’s why we can’t just look at the average. The Brazilian reality is very diverse, and the impacts are very different,” said Pastore.

For him, the new, shorter working hours schedule would require adaptation on the part of companies, which would have four possible adjustments to make. The first would be to pass on the increased payroll cost to the prices of goods and services sold, which may be inevitable, given that many companies operate with narrow profit margins. The second mechanism would be to lay off employees with higher salaries and fill the vacancies with lower-paid workers, as a way to mitigate the increase in labor costs—which would increase turnover, a problem that typically causes training problems.

The third type of adjustment would be to invest in automation, replacing some employees with machinery. The result for the economy as a whole would be a reduction in job openings. Finally, given the increase in personnel costs, a fourth option would be to review the investment plan, which could lead to a contraction of businesses, slowing down economic activity and, in the worst case, leading to a recession. “There are four possible mechanisms. And the company might implement all four together. All of them are bad for the worker, especially the most vulnerable,” said Pastore.

Paulo Solmucci, president of the Brazilian Association of Bars and Restaurants (Abrasel), cited an estimated 20% increase in labor costs for companies in the sector, due to the introduction of two days off per week and the reduction in the weekly work schedule to 40 hours. This cost increase could not be offset by greater use of technology. The higher costs would then be passed on to the final prices for customers.

“The consumer wants the restaurant open for six days, just as they want the health center, the urban cleaning service. This means increasing the payroll by 20% to maintain service to the consumer, which results in 7% to 8% increases in price,” said Solmucci. “The consumer should ask: Does it fit their budget? Are you aware that you will pay more to have the same thing?”

A study by the National Confederation of Trade in Goods, Services and Tourism (CNC), released in February, estimates that reducing the work week to 40 hours could generate an extra cost of more than R$350 billion per year for commerce and service companies. According to the calculations, passing on part of this impact to consumers would lead to an average price increase of 13%. According to another study, published by the Institute for Applied Economic Research (IPEA), reducing the work week to 40 hours would increase labor costs by an average of 7.84% for companies. For IPEA researchers, an increase of this size is absorbable, as it is similar to that recorded in years of strong minimum wage adjustments, such as 2001, 2006, 2012, and 2024.

In the view of Congressman Reginaldo Lopes (Workers’ Party), author of one of the proposed amendments to the Constitution on the subject that are being discussed in the Chamber of Deputies, the impacts may be different depending on the sector, but if there is a four-year transition to the proposed reduction in weekly working schedule, the impact can be absorbed: “[It] is possible for medium and large companies. I recognize that, for a very small company, with two or three employees, the new 5×2 schedule may have a greater impact.”