The Brazilian federal government is set to announce on Tuesday, October 25, the much-anticipated release of FGTS (Fundo de Garantia do Tempo de Serviço) funds for workers who were dismissed and had opted for the anniversary withdrawal option.
This move aims to address the significant issues faced by approximately 10 million workers across the country who, after being laid off, found their access to their severance funds severely limited due to their previous choices. When workers chose the anniversary withdrawal option, they could only withdraw part of their FGTS on their birthdays each year. Unfortunately, if they lost their jobs afterward, they were only entitled to the mandatory 40% termination penalty without immediate access to their complete FGTS funds. This situation left many of these individuals without the means to support themselves during difficult times, creating frustration and hardship.
Antonio Neto, president of the Union of Technology Workers of São Paulo (Sindpd-SP) and the Central of Brazilian Unions (CSB), expressed the importance of this upcoming announcement during discussions about labor rights. "The money of the worker was blocked at the moment he needed it the most. The decision is long awaited by many Brazilians who, upon enrolling for the anniversary withdrawal, did not fully understand the restrictions imposed by financial regulations," he noted.
According to reports, the announcement will be reinforced by the presence of various union leaders who have been invited to Brasília to hear the government’s decision firsthand. These unions have been advocating for the release of FGTS funds as it’s seen as correcting the issues arising from rules implemented during the administration of former President Jair Bolsonaro.
The Minister of Labor, Luiz Marinho, had previously hinted at the government's intentions to propose solutions for the distressed group of workers. He remarked, "Workers who took loans with the anticipated anniversary withdrawal do not have the funds to withdraw. This MP aims to assist them, especially those who were dismissed and could not access the severance pay. It's about restoring their rights to access the money they were entitled to." He confirmed the government's commitment to addressing the injustices faced by these workers.
Notably, the anniversary withdrawal option, which was introduced back in 2020, allows workers to access part of their FGTS accounts but limits their rights to full withdrawals if they are dismissed. Instead, after opting for this pathway, workers must wait two years to access any remaining funds following dismissal. Statistics show over 24 million workers tapped their anticipated withdrawal as collateral for bank loans, creating additional financial strain when they needed their savings the most.
While discussing the planned Provisional Measure (MP), Marinho indicated it would only be applicable to those workers who were laid off prior to the publication of the MP, meaning new dismissals post-announcement would not qualify for these funds. This crafted exclusion highlights the urgency and need for legislative intervention to alleviate the economic pressures faced by the laid-off employees. Currently, workers are left unable to remedy their financial situations due to governmental policy restrictions.
On the broader economic front, this measure is expected not only to aid individual workers but to stimulate the economy by putting much-needed resources back in circulation. Among the comments from labor leaders, Sergio Nobre, president of the Central Única dos Trabalhadores (CUT), emphasized the need for workers to access their money to cover living expenses and inject more liquidity back to the economy, stating, "It is a right of the worker, who can use this resource to pay bills, consume, and, thereby, inject more money back to the economy."
The anticipated release of FGTS funds signals significant recognition by the current administration of past policy gaps, reflecting on the need for immediate remedial actions to support the working class during tumultuous periods. Workers have expressed hope for immediate action as they await the official announcement from the government.
With Finance Minister Fernando Haddad stating, "Some individuals were misled about the anniversary withdrawal's terms, not fully grasping the long-term consequences. This situation is inherently unjust to workers," the expectation is for the new MP to not only address past oversights but to pave the way for more cohesive support for Brazilian workers going forward.