Labor reform reduced litigation in court and created jobs

The labor reform approved in 2017 dropped the number of labor lawsuits in court, which reduced company costs and allowed for an increase in hiring. Despite this, the legislation is criticized by the government of Luiz Inácio Lula da Silva (PT), who plans to change it from the second half of the year.

In 2016, the number of new actions in the labor courts was 2.72 million, according to the Superior Labor Court (TST). In 2021, four years after the reform, 1.53 million lawsuits were filed with the Labor Court – 44% less.

According to researchers from USP and Insper, the rule that forced workers to pay the costs of labor lawsuits in the event of defeat lowered the unemployment rate by 1.7 percentage points and generated 1.7 million jobs by 2022, thanks to reduced expenses of employers.

Experts heard by People’s Gazette they also say that the more flexible rules introduced by the reform helped to contain the damage of the Covid-19 pandemic on the labor market. “It can be said with certainty that, without the 2017 reform, the consequences of the pandemic for the labor market would be worse”, says economist Alexandre Chaia, professor at Insper and manager of Carmel Capital.