Brazil business leaders eye ways to avoid job cuts

Wed Jan 14, 2009 2:53pm EST
SAO PAULO, Jan 14 (Reuters) - Brazilian business leaders on Wednesday called for a reduction in working days and salaries and urged the central bank to cut interest rates to counter thinning consumer demand caused by a global credit crisis.
"It is indisputable that we are in a very grave crisis," said Paulo Skaf, president of the influential Sao Paulo industry federation, or Fiesp. "All alternatives must be exhausted before unemployment."
The comments came one day after business leaders met with union officials and factory workers in Sao Paulo to discuss measures such as reducing the working day and salaries and collective recesses as alternatives to lay-offs.
Some industries, like automakers and steel companies, have already begun to cut jobs in the face of an economic slowdown that is reducing consumer demand.
Data released on Tuesday showed employment in Brazil's industrial sector fell at its fastest rate in five years in November.
Brazil's President Luiz Inacio Lula da Silva said on Monday the government would announce economic measures this month to help combat the fallout from the global financial crisis after several industries have started to lay off workers.
The government last year granted tax breaks to banks, auto makers, construction firms and airlines and the central bank reduced banks' reserve requirements to free funds for lending.
But Labor Minister Carlos Lupi urged the government on Tuesday to link future moves to free up liquidity for struggling companies to their safeguarding or creating jobs.
Brazil's central bank is widely expected to cut interest rates by 50 basis points next week. With basic lending rates at 13.75 percent, the bank still has some monetary leeway to help stimulate economic growth and it will come under increasing pressure do so as inflation shows signs of subsiding.
(Reporting by Tais Fuoco; Writing by Ana Nicolaci da Costa; Editing by Kenneth Barry)