Brazil Celebrates 70th Anniversary of Labor Law (CLT) Amid Debate
The celebration of the 70th anniversary of Brazil’s Consolidation of Labor Laws (CLT) on May 3rd was dampened by ongoing debate. The labor law, enacted in 1943, has long been regarded as “the world’s most advanced labor legislation,” according to author John D. French.
The Consolidation of Labor Laws’ original intent was to protect the rights of on-the-books workers, including limitations on working hours and the implementation of a monthly minimum wage. However, since its inception, the original text has been amended nearly 500 times, and is subject to attempts at modernization or replacement altogether by a new Labor Code.
Employers in Brazil have an interest in modernizing the CLT, and advocate flexibility of its rules that currently impose costly sanctions on employers who run afoul of the many workers’ rights set out in the 900 articles. Brazilian business owners regularly protest that the burdensome labor law, coupled with increasing payroll taxes, reduces incentives to hire employees and instead drive them to pay their staff under the table.
One of the reasons employers are so in favor of modifications to the CLT is likely the propensity of workers to file suit against employers for a host of grievances. An Economist article notes that in the year 2009, more than two million workers sued their employers. The labor courts seldom find in favor of employers.
On the other end of the spectrum, unions and workers strenuously resist changes to the CLT, fearing it will result in a loss of rights granted to workers. Concerns voiced by Senator Armando Monteiro (PTB-PE) emphasize that the legislation is necessary to protect the country’s weakest members: its employees.
The Consolidation of Labor Laws has endured sweeping changes that transformed a primarily agricultural farming country in 1943 into a predominately metropolitan and industrialized nation. According to the Brazilian Senate’s website, which outlines the debate, many say that the CLT is now outdated and no longer satisfies the needs of the country. Senator Monteiro thinks the labor law is in serious need of updating. He believes the paternalistic position of the state to the worker that marks the CLT is no longer warranted.
A controversial new bill, PL 1.463/2011 seeks to establish the Labor Code and replace the CLT. The bill’s creator, deputy Silvio Costa (PTB-PE), asserts that the “exaggerated protection” of the CLT hinders the potential vitality of the labor market. He states, “These texts represent regression. I am not against a specific change of state articles, but we should not accept loss of rights.”
Many of the new jobs created in Brazil are formal, on-the-books jobs. Senator Jose Pimental (PT-EC) emphasized the creation of 19 million formal jobs since 2003. However, according to an article in the Economist, the fact that many of the new jobs are formal is despite, rather than because of, the CLT.
In any case, employers and workers should be aware of the rights afforded to them, the rules they are subject to, as well as the potential pitfalls they may encounter as the CLT continues to be subject to reform.