High interest rates are more of a concern than high tariffs, says Luiz Marinho
Labor Minister commented on lower job creation in July.
Wellton Máximo - Reporter for Agência Brasil
The basic interest rate, currently at 15% per year, represents a more serious problem for the national economy than the tariff hike imposed by the United States on Brazil, said the Minister of Labor and Employment, Luiz Marinho, on Wednesday (27). The statement was made while evaluating the results of the National Register of Employed and Unemployed Workers (Caged), which recorded the lowest creation of formal jobs in July since 2020.
According to the minister, raising interest rates has a direct effect on economic activity and the labor market. The level of the rate is defined by the Central Bank at meetings of the Monetary Policy Committee (Copom).
"I ask the saint of interest rates to lower them. This is the main problem, bigger than the tariff hike. We urgently need interest rate reductions to keep business going," Marinho declared.
Impact of the tariff hike
According to Marinho, In the worst-case scenario, the country could lose 320 jobs due to tariffs imposed by Donald Trump's government. The minister, however, highlighted that, with the support measures announced by the federal government, this consequence must be avoided.
Among the actions is The offer of R$ 40 billion in credit from the National Bank for Economic and Social Development (BNDES) for affected exporting companies..
“I believe we will get through this, and I am sure that Brazilian foreign trade will come out stronger,” said Marinho.
The minister emphasized that access to financing for affected companies will be conditional on maintaining jobs.
Pejotization
During the press conference about Caged, Marinho also criticized the possibility of the Federal Supreme Court (STF) recognizing the legality of service provision contracts by legal entities, a practice known as pejotizaçãoHe classified the measure as “a crime against the economic order.”
According to the minister, replacing formal employment contracts with contracts through legal entities (PJ) would pose serious risks to Social Security, the Severance Indemnity Fund, and even the role of the BNDES (Brazilian Development Bank).
"Moving toward pejotização is a disaster. This is labor fraud," he said.
The matter is being processed by the STF, through an extraordinary appeal with an appeal, with recognized general repercussions. The rapporteur, Minister Gilmar Mendes, signaled this Wednesday (27) that he is in favor of the legality of the practice and stated that the trial could take place this year.
The Court will analyze three main points: the validity of hiring workers as legal entities, the jurisdiction of the Labor Court to judge alleged fraud, and the responsibility for presenting evidence in such cases. Gilmar emphasized that the discussion has a significant economic and social impact, considering trends toward more flexible labor relations in several countries.
