{"id":93716,"date":"2025-04-11T16:13:56","date_gmt":"2025-04-11T19:13:56","guid":{"rendered":"https:\/\/murray.adv.br\/?p=93716"},"modified":"2025-04-11T16:13:58","modified_gmt":"2025-04-11T19:13:58","slug":"economist-warns-workweek-cut-could-shrink-brazils-economy-by-up-to-7","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/economist-warns-workweek-cut-could-shrink-brazils-economy-by-up-to-7\/","title":{"rendered":"Economist warns workweek cut could shrink Brazil\u2019s economy by up to 7%"},"content":{"rendered":"\n
Abrupt shift to 36 hours seen as risk to wages, jobs, and national output<\/em><\/strong><\/h6>\n\n\n\n

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04\/11\/2025 <\/p>\n\n\n\n

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A sudden reduction of Brazil\u2019s average workweek to 36 hours\u2014the central proposal in a constitutional amendment backed by Congresswoman Erika Hilton to eliminate the 6-days-on, 1-day-off work schedule\u2014could shrink the country\u2019s value added to the economy and its GDP by 3.8% to 6.9%, depending on employers\u2019 responses. The estimate comes from economist Fernando de Holanda Barbosa Filho, a researcher at the Brazilian Institute of Economics at Funda\u00e7\u00e3o Getulio Vargas (FGV Ibre).<\/p>\n\n\n\n

In 2024, Brazil\u2019s 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.<\/p>\n\n\n\n

Mr. Barbosa Filho noted that Brazil\u2019s 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\u2014with all other factors constant\u2014he estimates a 6.2% drop in total hours worked and, consequently, a proportional 6.2% decline in value added.<\/p>\n\n\n\n

\u201cThis assumes workers would be just as productive per hour as before, but would simply work fewer hours,\u201d he said.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

\u201cThe impact is obviously smaller because only labor, not capital, would be affected,\u201d Mr. Barbosa Filho said. \u201cClaiming 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\u2019t the time to introduce additional economic uncertainty.\u201d<\/p>\n\n\n\n

Mr. Barbosa Filho added that the measure could reduce per capita income and wages, lead to business closures, and result in job losses. \u201cThese are averages\u2014some people work more, others less. Lowering the limit would pull some people down, and they\u2019re usually the ones who will struggle most to adapt.\u201d<\/p>\n\n\n\n

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%.<\/p>\n\n\n\n

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\u2019 responses. \u201cIt\u2019s important to stress these are simplified partial-equilibrium exercises. In a general-equilibrium scenario, all prices in the economy would shift,\u201d he noted.<\/p>\n\n\n\n

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 \u201cmediocre\u201d growth in recent decades.<\/p>\n\n\n\n

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%\u2014comparable to Brazil\u2019s 2015\u20132016 recession.<\/p>\n\n\n\n

Since 1981, Brazil\u2019s average workweek has gradually shrunk by 0.3% per year, he noted. \u201cThis 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,\u201d he said.<\/p>\n\n\n\n

Between 1988 and 1989, Brazil\u2019s 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. \u201cPart of the 1980s economic crisis stemmed from that change. And later, we saw productivity fall\u2014not because workers got \u2018worse,\u2019 but because they were working fewer hours,\u201d he explained.<\/p>\n\n\n\n

He added that current legislation already guarantees at least one day off per week and does not prevent companies from adopting alternative work arrangements. \u201cMany companies already use different schedules from the 6 x 1 model,\u201d he said. \u201cThe demand for shorter workweeks has been unfolding gradually, and sectors are adjusting. We\u2019ll get there in time.\u201d<\/p>\n\n\n\n

*By\u00a0Ana\u00efs Fernandes\u00a0\u2014 S\u00e3o Paulo<\/strong><\/p>\n\n\n\n

Source: Valor International<\/p>\n\n\n\n

\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

Abrupt shift to 36 hours seen as risk to wages, jobs, and national output 04\/11\/2025 A sudden reduction of Brazil\u2019s average workweek to 36 hours\u2014the central proposal in a constitutional amendment backed by Congresswoman Erika Hilton to eliminate the 6-days-on, 1-day-off work schedule\u2014could shrink the country\u2019s value added to the economy and its GDP by […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[26034,26033],"class_list":["post-93716","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-could-shrink-brazils-economy","tag-workweek-cut"],"yoast_head":"\nEconomist warns workweek cut could shrink Brazil\u2019s economy by up to 7% - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/economist-warns-workweek-cut-could-shrink-brazils-economy-by-up-to-7\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Economist warns workweek cut could shrink Brazil\u2019s economy by up to 7% - 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