Bolsonaro Authorizes Companies To Cut Up to 70% Of Wages

Brazil's President Jair Bolsonaro on Wednesday signed a decree allowing companies to suspend contracts, cut wages, and reduce working hours.

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This decree allows up to 70 percent of wages to be reduced for four months if there is an agreement between employees and employers. In theory, the negotiation between the parties is expected to occur in a "free" manner and the government will only impose fines if the employer fires a worker during the implementation of the plan.

During those 120 days, the Federal Government will grant workers USD250 to supplement their salary. This form of subsidy to companies will be financed with a budget of USD1.8 billion and will cover some five million formal employees.

The decree also establishes that companies will be able to stop contributing to indemnity insurance. The Bolsonaro administration vows that its proposals seek to guarantee the continuity of business activities, maintain workers' income, and reduce the effects of the mobility restriction.

In 2020, the Federal government already implemented this program and extended it twice. This time, however, Bolsonaro's proposals are taking place amid open unemployment affecting 14 percent of the economically active population. In Brazil, moreover, some 50 million people are currently working in informal activities and without any social protection.

In response to the magnitude of the epidemiological crisis that has gone unchecked by Bolsonaro, a Senate committee agreed on Thursday that next week it will take statements from Health Minister Marcelo Queiroga and his three predecessors in office.

Among the former officials due to testify is physician Luiz Henrique Mandetta, who was health minister from January 2019 to April 2020. He was dismissed because he publicly expressed his support for the application of quarantines and other social distancing measures that Bolsonaro still rejects.