Textile industry foresees layoffs and price increases if exemption is not sanctioned – News

Failure to extend the payroll tax exemption could result in the dismissal of up to 35 thousand people who work in the textile and clothing industry in Brazil. The sector claims that it is already facing bottlenecks in its growth due to unfavorable conditions of competition with the international market and projects that, without the continuation of the measure, the final price paid by the consumer will increase, making the economic scenario of the area even more difficult.

“We estimate that, if this extension does not occur, there is a potential loss of 30 to 35 thousand jobs,” he told the R7 the president emeritus of the Brazilian Association of the Textile and Clothing Industry (Abit), Fernando Pimentel. The closure of jobs, according to him, will occur due to the increase in the cost of work. “When it comes to clothing, which is the biggest employer link, 30% to 60% [do custo] It’s labor. They’re people. If this cost increases by 10%, 15%, you are generating a total impact of 3% to 10%. If this translates into loss of market, difficulty for the consumer in purchasing the product or ease of competition from the imported product, unemployment will be generated.”

Pimentel recognizes that the main driver of hiring is the growth of the economy, but emphasizes that this factor goes hand in hand with a good business environment. “We understand that it is critical and fundamental to maintain the model until we have a broader solution — which has been discussed, but not effectively implemented — to find a way to reduce the cost of work.”

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The textile industry is one of the 17 sectors that are currently supported by payroll relief. The area generates more than 9.2 million direct formal jobs, in addition to millions of other jobs in production networks — a survey carried out by employers based on data from the General Register of Employed and Unemployed Persons (Caged).

The President of the Republic, Luiz Inácio Lula da Silva (PT), has until November 23 to sanction or veto the project. Both companies and trade unions are pushing for the sanction and estimate that, without the continuation of the concession, almost 1 million jobs will be lost.

“This is a crucial initiative aimed at preserving jobs and a timely solution until linear relief for all sectors is approved, which could occur in a future stage of the tax reform. Meanwhile, the government cannot allow this model to be abandoned and that we have disastrous effects on unemployment and even an increase in inflation and interest rates, which ends up harming the population in general”, says the letter sent by employers to the president.

Pressure is also exerted by workers. “Today there are 9 million jobs in the 17 sectors that employ the most in the country. Tomorrow, this number could be reduced to just over 8 million”, analyzes the joint manifesto of the unions addressed to Lula. “We ask that you maintain this commitment to the working class by sanctioning the project”, say the signatories, who represent 40 million workers.

Author of the proposal, senator Efraim Filho (União Brasil-PB) has also been negotiating with the federal government since the beginning of discussions in Congress and continues conversations with the aim of guaranteeing sanction. “It is necessary to have targeted public policies to stimulate these sectors that employ a lot of people. They are fathers and mothers who are on the unemployment line, young people who are looking for their first opportunity”, he states.

Understand what payroll relief is

Under the project, the employer’s social security contribution on the payroll will be replaced by a contribution levied on the employer’s gross revenue. The employer contribution is paid by employers to finance social security.

So, instead of the entrepreneur paying 20% ​​on the employee’s payroll, the tax can be calculated by applying a percentage to the company’s gross revenue, which varies from 1% to 4.5%, depending on the sector.

The contribution does not cease to be made, it simply adapts to the real level of the enterprise’s productive activity. In other words, companies that earn more contribute more. This means it is possible to hire more employees without generating a tax increase.

What sectors benefit?

• Clothing and clothing;
• Footwear;
• Construction;
• Call center;
• Communication;
• Construction and infrastructure works;
• Leather;
• Manufacture of vehicles and bodies;
• Machines and equipment;
• Animal protein;
• Textile;
• Information technology (IT);
• Information and communication technology (ICT);
• Design of integrated circuits;
• Metro rail passenger transport;
• Public road transport;
• Road freight transport;
• Jobs and salaries.

Together, these segments generate more than 9 million formal jobs. According to data from the Association of Information and Communication Technology and Digital Technologies Companies (Brasscom), the initiative guaranteed, in 2022, a 19.5% increase in the remuneration of workers in the benefited sectors. If the payroll had not been exempted, the average salary in these segments would be R$2,033. With the exemption, the average salary of these workers rose to R$2,430.