Brazilian Government Easing Restictive Laws on Outsourcing

If signed into law, the legislative bill will dispel confusion over labor outsourcing, easing pressure on the country’s large companies struggling to remain competitive in the volatile political and economic climate.

Brazil

Brazil’s new government is set to reform the country’s labor laws in order to remove restrictions on outsourcing. Labor Minister Ronaldo Nogueira has recently confirmed that his department is drafting the legislative bill.

Outsourcing is not illegal in Brazil, but there is a confusion as to what function can be outsourced and what cannot, with labor courts having a history of putting on hold several outsourcing activities in response to complaints from labor unions.

For decades, many corporate leaders have been criticizing the existing labor laws, calling it highly bureaucratic and outdated. The existing law permits outsourcing “non-essential” jobs, but the legal document only vaguely defines the term “essential jobs”.

If signed into law, the legislative bill will dispel all confusion hanging over outsourcing of labor, easing pressure on the country’s large companies struggling to remain competitive in the volatile political and economic climate.

More than anything else, it will allow businesses to outsource any function they find necessary. In other words, companies could externally contract their entire labor force, core and non-core jobs alike.

Supporters of the law say the legislation will spur job creation, helping businesses remain agile and productive.

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In Brazil, outsourced labors are called temporary workers, who number about 13 million. Some analysts say the new legislation may even make temporary workers eligible to the same benefits as regular employees.

But labor unions are opposing the bill, with their members in several cities calling for a strike in protest.

Vágner Freitas, president of Central Workers Union, has expressed concern at the new legislation, saying it will create a kind of insecurity in the labor market, freeing firms to force their employees to accept only half the benefits they are eligible for.

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