June 6, 2017 / 9:52 PM / in 4 months

Brazil's labor reform bill advances in Senate

Brazil's President Michel Temer attends the Brazil Investment Forum 2017, in Sao Paulo, Brazil May 30, 2017. REUTERS/Paulo Whitaker

BRASILIA (Reuters) - Brazilian President Michel Temer’s proposal to modernize the labor market was approved by the Senate’s economic affairs committee on Tuesday, clearing an important hurdle despite a political crisis that has jeopardized the government’s reforms agenda.

The committee passed the bill 14-11. The proposal still needs the approval of two other Senate committees before it reaches the floor.

Temer is facing calls to resign due to allegations he took bribes from meatpacker JBS SA. The scandal is threatening to derail his reform agenda that includes an overhaul of the costly pension system.

The labor reform bill has already been approved by the lower house, but faces fierce opposition from labor unions that will lose power over workplaces. The bill allows more temporary work contracts and outsourcing, eliminating mandatory union dues.

The proposal to modernize Brazil’s labor laws, some of which date back to the 1940s, is eagerly awaited by Brazilian businesses so they can lower labor costs that undercut their ability to compete in foreign markets.

The senator sponsoring the bill, Ricardo Ferraço, has said he expects the final vote in late June.

Reporting by Alonso Soto; Editing by Anthony Boadle and Lisa Shumaker

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