Luiz Inácio Lula da Silva, current president of Brazil, issued a request for a postponement in the Direct Action of Unconstitutionality (ADI) that discusses the correction of the FGTS (Guarantee Fund for Length of Service) values. Initially, the ADI was scheduled to be analyzed on Wednesday (8th), however, Lula requested that the STF (Supreme Federal Court) grant a period of 30 days to seek a consensual solution with the unions.
The Minister of AGU (Attorney General of the Union), Jorge Messias, reinforced this Monday (6) that the goal of this request is to formulate a solution that is beneficial to workers, respecting the needs of the Housing Financial System. The government has sought a viable balance, which ensures the maintenance of the purchasing power of FGTS values (correction for inflation) and satisfies the demands of the housing financial system.
What is the function of the FGTS and what are the economic consequences of a change in its correction?
The Service Time Guarantee Fund (FGTS) performs a hybrid function. It simultaneously acts as insurance for workers in situations of unemployment or retirement and as a source of resources for financing housing, basic sanitation and urban infrastructure. Any change to the FGTS will have direct and indirect impacts on the economy
Likewise, Messias confirmed that internal studies have been conducted to clarify to STF ministers the possible economic consequences that a decision such as the one proposed by STF minister, Luiz Roberto Barroso, could cause. The minister voted to update FGTS deposits as the savings index.
What are the implications of Barroso’s proposal?
“This simulation is quite worrying, as it would impact public coffers by approximately R$31 billion over 15 years. Furthermore, it would cause a deficit in housing contracts, especially for those belonging to range 1 of the ‘Minha Casa, Minha Vida’ program, in the order of 1 million housing units”, highlighted Messias.
“We are talking about a measure that will directly affect the entire society. It is crucial to remember that society participates in the FGTS not only as a beneficiary, but also as a demander of loans granted from the fund for housing financing. Therefore, it is essential to seek a solution that harmonizes these interests”, he added.
What does the government plan for the FGTS?
As reported by Folha de São Paulo, the government intends to reach an agreement that guarantees the correction of FGTS values for inflation every year. This plan includes the distribution of the fund’s profits for all years, guaranteeing workers a return greater than inflation.
According to Minister Messias, not much information was released about the ongoing negotiations. However, he reinforced that, from the government’s point of view, the distribution of the fund’s profits to workers has been sufficient to preserve the real purchasing power of FGTS deposits.