Brazil's Senate Approves 40-Hour Workweek Amid Lula's Runoff Campaign

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Brazil's Senate passed a constitutional amendment to cut the workweek from 44 to 40 hours without wage reductions, a move expected to boost the fear and greed index among investors. The reform, backed by President Lula, will take effect in 14 months and benefits 37 million workers. Flávio Bolsonaro now supports the change, shifting from earlier opposition. With Lula’s runoff campaign in full swing, the reform strengthens his position ahead of October 25. Traders are advised to keep an eye on altcoins to watch as market sentiment shifts.

Brazil's Senate approved a constitutional amendment Wednesday to reduce the country's maximum workweek from 44 to 40 hours without reducing pay. The measure passed with an overwhelming majority in two votes. President Luiz Inácio Lula da Silva is expected to sign the shorter workweek into law next week. Many lawmakers in Bolsonaro's opposition stopped blocking the initiative after months and voted with Lula's allies.

The amendment establishes a 40-hour weekly limit and two rest days without reducing pay. The government says more than 37 million workers could benefit from the new rules. People working in the shadow economy, including freelancers and delivery drivers, will not be affected. The amendment gives businesses 14 months to adopt the shorter workweek, a key sticking point in negotiations. Many business leaders and lawmakers wanted the changes introduced gradually over 10 years.

Lula backs the measure and hopes the shorter workweek will boost Lula's standing against Flávio Bolsonaro in the Oct. 25 presidential runoff. Senate President Davi Alcolumbre scheduled the votes between the election's first and second rounds. Recent polls indicated widespread support for the measure, despite opposition from many business owners. Bolsonaro defeated Lula by 2.2 million votes in the first round. Bolsonaro declared support for the shorter workweek Tuesday, reversing Bolsonaro's long-standing opposition. Bolsonaro previously advocated a more flexible payment-by-the-hour system and individual negotiations between employees and employers. Bolsonaro repeatedly called the legislation election-motivated.

Lula said Tuesday that societal pressure and street protests appeared to have led Bolsonaro's Liberal Party to support ending the six-days-on, one-day-off schedule. O Globo reported that Bolsonaro told business owners hours after announcing support that the new Congress could review the measure. O Globo reported that Bolsonaro's party could reach a simple majority with allied parties in the new Congress come February.

Mayra Goulart, a political scientist at the Federal University of Rio de Janeiro, said most voters had already chosen a candidate. Goulart said any shift in approval could therefore determine the election. Carla Beni, an economist at the Getulio Vargas Foundation, said any change made in an election year could be considered an electoral measure.

Lula's government has worked on the workweek proposal since last year. Lula has introduced new fuel tax cuts in recent days to strengthen support before the runoff. Lula has also extended existing subsidies. Lula has pledged to pardon debts that more than 3.6 million small businesses owe the federal government. Lula has decided to block cell phone signals around prisons. Lula has also increased payments under a welfare program for university students. The workweek change is regarded as the most significant of those initiatives.

The reform reflects a growing trend across Latin America. Chile and Colombia recently enacted legislation shortening their respective workweeks to 40 and 42 hours, encouraging Brazil's labor groups to seek similar changes. Mexico's lawmakers approved President Claudia Sheinbaum's proposal in February to shorten the 48-hour workweek. Mexico's working hours will fall gradually to a 40-hour workweek by 2030. Chile passed the 40-Hour Law in 2023, reducing the workweek to 40 hours as of last year. Chile's law applies to all workers under Chile's Labor Code without reducing pay. However, Argentina has moved against the regional trend under President Javier Milei and may extend the country's 48-hour workweek.

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