An IMF Report Shows Brazil's 2017 Labor Reforms Boost Productivity
Recent research by IMF has found that Brazil's 2017 labor reforms by then President Michael Temer that reduced litigation and increased employment flexibility, leading to remarkable productivity gains.
Highlights of the report:
According to the report, the reforms have driven a 5% aggregate productivity increase across the economy.
Labor-intensive firms experienced a 15% surge in total factor productivity.
Trade-intensive sectors also benefited, underlining the broad influence of reduced litigation costs.
The number of labor litigation cases dropped by 20% in 2018 and continued to decline until 2021.
Employers have benefited from reduced litigation costs:
Employers in high litigation regions saw notable reductions in legal fees, leading to more investment in business operations.
Easier management of employment contracts and wage settings has allowed for greater flexibility and efficiency in workforce management.
Wenchao Dong
Senior Director and Leader, HR Policy Global, HR Policy Association
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