the controversies of the Minister of Labor

It is not new that the Minister of Labor, Luiz Marinho, likes to get involved in a controversy. On March 28, he criticized the Central Bank’s Monetary Policy Committee (Copom). The reason involves the strategy used by the monetary authority. The minister considers that increasing interest rates, as was done between March 2021 and August 2022, is a “dumb” way to control inflation.

Marinho and President Luiz Inácio Lula da Silva (PT) have a strong connection. Both began their political careers in trade unionism. Marinho, like Lula, presided over the ABC Metalworkers Union. He was also president of the Central Única dos Trabalhadores (CUT) between 2003 and 2005. He then held ministerial positions in Lula’s governments: he was minister of Labor between 2005 and 2007 and of Social Security between 2007 and 2008. Furthermore, he was mayor of São Bernardo do Campo from 2009 to 2017.

Other controversial statements by the Minister of Labor involve criticism of the application segment and the defense of the end of the anniversary withdrawal from the Service Time Guarantee Fund (FGTS). He also claimed the role of unions and suggested the implementation of a four-day week.

Read below the main controversies in which Marinho was involved as Minister of Labor:

Copom: interest rate increase is a “dumb” way to contain inflation

By announcing the creation of 306.1 thousand formal jobs in February, the minister accompanied the president of the PT, Gleisi Hoffmann, in criticizing the Central Bank (BC) for its conduct of monetary policy.

Marinho stated that the BC needs to improve its economic knowledge. He highlighted that raising interest rates is a “dumb way” of controlling inflation. “I’m not criticizing the Central Bank. I am warning that they need to study the fundamentals of the economy more,” he said.

For Marinho, there are two tools to control inflation. The first, which he considers “dumb”, involves restrictions, increasing interest rates and cutting credit. The second, which he sees as smarter, is on the supply side. “If consumer demand grows, companies should not expect a shortage of merchandise in the supermarket. They must anticipate production line speed by hiring more people and offering more products,” he explained.

Marinho’s statements contrast with the BC’s profile. The monetary authority, considered one of the most qualified among the Brazilian public service, was chosen as the central bank of the year in 2024 by Central Banking. The American publisher justified the award by stating that the Brazilian BC “has been making efforts to control inflation while modernizing the country’s financial system”.

Applications: work compared to slavery

Another frequent target of the Minister of Labor involves the transportation app industry which, in 2022, according to the IBGE, involved 778 thousand people. A project to regulate the sector was sent to Congress by the president in March.

The project establishes guidelines for the transport of four-wheeled vehicles, such as minimum payment per hour worked and mandatory social security contributions. This will be deducted at source and collected by companies. It also proposes the creation of workers’ and employers’ unions in the category.

During the negotiations, Marinho harshly criticized the segment. He compared the situation of app drivers to “slave labor”. One specific target was Uber. He stated that he is not worried about the company’s possible departure from Brazil.

In February 2023, Marinho suggested that, if necessary, Correios could create a similar application for transporting passengers. In October, during a hearing in the Chamber of Deputies, he reiterated his position: he said that if Uber left the country, other companies would occupy the space left by it.

Outsourcing: first cousin of slavery

The expansion of outsourcing rules, established in the 2017 labor reform, during the government of former president Michel Temer (MDB), is also a frequent target of Marinho’s criticism. In July 2023, he classified outsourcing as a “first cousin of slave labor”. He expressed concern about the huge growth in outsourcing.

In October, during a meeting at the Central dos Sindicatos Brasileiros, Marinho stated that outsourcing led to a “brutal process of precariousness”. He highlighted: “But no one was whipped. That’s all it’s missing.”

In December, at an event in Porto Alegre, Marinho highlighted that the federal government has dedicated itself to “reconstructing public policies”. The objective is to combat changes implemented by the labor reform under the Temer government. Marinho stated: “Workers are being massacred to accept a salary under the logic of poverty.”

FGTS anniversary withdrawal: “we need to change this law”

Since the beginning of Lula’s mandate, Marinho has been fighting for the end of the FGTS anniversary looting. The option, established in 2020, allows workers to annually withdraw a portion of their account balance in the month of their birthday. Membership is optional, but upon accepting it, the worker loses the right to withdraw the full amount from the account in the event of unfair dismissal, and can only withdraw the termination fine.

Marinho stated that the government is working on a bill to end the modality. The proposal should have been presented last month. But the threats have been coming since last year.

On March 15, the minister highlighted: “If we do not end the birthday withdrawal, we will not solve the problem of these workers who need this resource. The law created by the previous government prevents them from receiving it. We need to change this law.”

With difficulties in Congress to implement the end of the anniversary withdrawal, Marinho has already defended the FGTS Board of Trustees the end of the advance withdrawal, which works like a bank loan.

This measure would put an end to one of the cheapest types of credit that exist. The interest ceiling is 1.8% per month. In comparison, the overdraft cost 7.05% per month in January; credit card revolving, 14.64%; and that recorded in the payroll for private sector workers, 2.75%.

Members of the Ministry of Finance and banks are looking for an intermediate solution. According to the portal Examthe idea is to maintain the modality, but making adjustments.

Two proposals are on the table: reducing the quarantine from two years to six months for those who opted for the birthday withdrawal to be able to withdraw the account balance in the event of dismissal; and limit the payment period to between three and five years for those who made an early birthday withdrawal. Currently, there are no restrictions for this type of operation.

Strengthening the role of unions

Marinho’s vehement defense is for the return of union contributions to strengthen the role of workers’ unions. He argued in January that workers should not have the right to reject mandatory union dues. Currently, if a worker does not wish to receive payroll deduction, they can send a letter to the union informing them of their decision.

For Marinho, the decision on union contributions must be taken at workers’ assemblies. He questions whether a worker who refuses to contribute would forego the benefits of the collective agreement, such as pay increases and job protections.

The Minister of Labor also defended the creation of a negotiation contribution to replace the old “union tax”. According to him, this contribution would not be mandatory and would only be valid if approved in a meeting by the workers.

The 2017 labor reform resulted in the end of the union tax, which affected the finances of these entities. Marinho recognizes the need to rebuild union finances and sees the creation of a compulsory contribution during collective negotiations as a solution.

Four-day-a-week working hours: Brazil could support change

The Minister of Labor also defends the discussion on reducing the working day to four days a week. According to him, several companies have already tried this work model. The statements were made in October, during a hearing at the Senate’s Human Rights and Participatory Legislation Committee.

Marinho believes that it is time to discuss new working hours regulations. Although this is his personal opinion, and not the government’s official position, he is confident that President Lula would not prevent a debate on reducing working hours without decreasing wages. Marinho believes that the Brazilian economy could support this change.