Brazil government unveils package to create up to 4 million jobs by end-2022

BRASILIA (Reuters) - Brazil’s government on Monday announced measures and legislative proposals to create up to 4 million jobs by 2022 and inject tens of billions of reais into the economy through loans and projected savings for private and state-run firms.

The proposals are aimed at generating jobs and growth in Latin America’s largest economy, which is on track to expand at a sluggish pace of around 1% for the third year in a row and boasts a stubbornly high unemployment rate of just under 12%.

The main plank of the jobs program will create 1.8 million vacancies via a temporary decree that will exempt firms from paying payroll taxes and cut their labor costs by between 30% and 34%, according to the government’s presentation in Brasilia.

The government also unveiled a temporary decree on how employees who work on Sundays or holidays are compensated which will help create a further 500,000 jobs, another temporary decree on microcredit which could generate 450,000 places, and a bill to bring up to 1.25 million disabled and injured workers back into the workforce.

The package, launched in Brasilia by Work and Pensions Secretary Rogerio Marinho, also included steps to reform labor dispute laws to save companies money which the government says could be redirected back into the economy.

Essentially, companies will have access to funds they had set aside for labor disputes, and will face lower compensation payments in the future.

By changing the indexation method for compensation payments, state-run firms could save up to 37 billion reais ($8.9 billion) over five years, the government said.

Some 65 billion reais could be injected into the economy by replacing the deposits companies set aside for labor dispute compensation payments with guarantees or insurance, the government forecast.

Reporting by Marcela Ayres; Writing by Jamie McGeever; Editing by Lisa Shumaker