Union centrals criticize Lula for his veto; entity plans to increase bus fares

Three of the largest Brazilian unions criticized the decision of President Luiz Inácio Lula da Silva (PT) to fully veto the bill that would extend the payroll exemption for 17 sectors of the economy until the end of 2027. The veto was announced on the night on Thursday (23) and published in the Official Gazette of the Union (DOU) in the early hours of this Friday (24).

Lula’s decision led congressmen to mobilize and talk to entities in the productive sector to press for the veto to be overturned in the next session of Congress. One of them already estimates an increase in public transport bus tickets if the exemption is not extended.

According to the central Força Sindical, União Geral dos Trabalhadores (UGT) and Central dos Sindicatos Brasileiros (CSB), the veto to the extension of the exemption puts “millions of jobs” at risk and “stimulates the precariousness of the labor market”.

“And it will lead to the end of the cycle, led by the Ministry of Labor, of reducing unemployment. The result will be loss of revenue, insecurity and lower quality jobs”, said the three centers in a note (see in full). The entities are historical supporters of Lula.

Also according to the centers, the government’s economic team “makes a mistake by placing the fiscal adjustment on the productive sector and formal employment, as the bill will be absorbed by workers whether through unemployment or informality”. “We hope that the National Congress will quickly reestablish the policy for an environment of job creation for Brazilian workers at the end of the year”, complete the centers.

On the other hand, the country’s main union entity, the Central Única dos Trabalhadores (CUT), has not yet commented on Lula’s veto at the time of writing this report. At the end of last month, the organization published that the Inter-Union Department of Statistics and Socioeconomic Studies (Dieese) had not proven the increase in the number of jobs since the exemption was implemented in 2011.

Although it did not take a clear position on the effectiveness of the exemption, the CUT stated that “what is under discussion now is that parliamentarians have no way of proving the justification”, and that “due to the lack of consistent studies, there is no consensus on this impact ”.

Bus fare may go up

In addition to the trade unions, several entities in the productive sector criticized Lula’s veto on the extension of the payroll tax exemption. Among them, the National Association of Urban Transport Companies (NTU) already calculates that, if maintained, the decision will generate an increase of 6.78% in the total costs of the service, which could lead to an average readjustment of tariffs for the passenger of up to R$0.31.

“Currently, the average value of the national tariff is around R$4.60 and, therefore, may exceed R$4.91 due to the veto”, said the entity in a note to People’s Gazette.

According to NTU, the re-encumbrance should also affect the maintenance of the 328 thousand direct jobs generated by the segment. The entity states that the sector is still recovering from the impacts caused by the Covid-19 pandemic, which caused an 80% drop in the number of passengers transported and accumulated losses of R$36 billion, which resulted in the closure of 77,900 jobs in the last three years.

Industries criticize Lula for the veto

Rafael Cervone, president of the Center for Industries of the State of São Paulo (CIESP), warned that President Lula’s veto is harmful to companies, the economy and workers, as it represents a risk for numerous jobs and investments.

According to him, companies “were waiting for Lula’s decision to complete their planning for the new year, including hiring, which will now become more difficult with the increase in labor costs”, said Cervone.

“The attitude of the President of the Republic was contrary to the PT’s historical position in favor of employment and workers”, stated the leader.

The Brazilian Association of the Textile and Clothing Industry (Abit) “deeply” regretted the complete veto of the proposal and stated that the decision goes against “the country’s industrialization agenda and the best social program that exists, which is the creation of formal jobs of work.” The sector accounts for 1.5 million formal jobs.