In March 2017 the IT industry panicked over a provisional measure. In 2026 we can look back and answer three questions: did the measure pass? Did the predicted unemployment happen? And what actually changed in the technology job market since then?
What happened to MP 774
Provisional Measure No. 774, of 30 March 2017 ended payroll tax relief for dozens of industries, including software and IT services. The reaction was immediate, and the government backed down: on 9 August 2017, MP 794 repealed 774 in Article 1º, along with two other measures from the same package. Tax relief continued.
But the issue did not go away — it only changed pace. In 2018, Law 13.670 reduced the program from 56 to 17 industries. The outcome came on 16 September 2024, with Law 14.973, which did what MP 774 had tried to do all at once: end tax relief — this time gradually and through negotiation. Article 9º-A establishes the transition:
| Year | Contribution on gross revenue | Payroll contribution |
|---|---|---|
| 2025 | 80% of the rate | 25% of the rate |
| 2026 | 60% | 50% |
| 2027 | 40% | 75% |
| 2028 | — | 100% (end of tax relief) |
In other words: now, in 2026, we are exactly halfway up these steps. IT companies' payroll already pays half the full rate, rising to 75% in 2027. The public-policy lesson is clear — what was attempted by decree in 2017 ultimately happened seven years later, with a deadline and a transition.
And the 83 thousand jobs?
The projection of 83 thousand layoffs was a bargaining argument, not an audited forecast — and since the measure was repealed in August of the same year, the scenario was never tested. What followed was the opposite: the technology industry spent the following years complaining about a shortage of people, not a surplus. Brasscom even pointed to demand on the order of hundreds of thousands of professionals whom the country was not training at the required pace.
Keep that contrast as a reading method: a catastrophe forecast from an interested party in the middle of negotiations deserves the same skepticism, whichever side it comes from.
What really changed in the IT job market
The risk to technology jobs between 2017 and 2026 did not come from labor legislation. It came from three other directions:
The pandemic and remote work. From 2020 onward, hiring stopped being a geographical problem. This opened international positions to people in Brazil — and, to the same extent, made Brazilian professionals compete with people worldwide for the same remote position.
The 2022–2024 layoff cycle. After pandemic overhiring, major technology companies made mass cuts. These mainly hit support roles, internal recruiting, and management layers — not core engineering.
Generative AI. This is the factor changing the nature of work, not just its volume. The visible effect so far is not replacing developers: it is shrinking the value of repetitive tasks — CRUD, boilerplate, mechanical translation between formats, first-draft tests. What has become more valuable is what the tool cannot do alone: understand the problem, decide the architecture, critically review what the machine produced, and take responsibility for the result.
What this means in practice
- Thin-layer roles face greater risk. Anyone who only translates ready-made requirements into predictable code is on ground the tool covers better with each version.
- Infrastructure has become more valuable, not less. Someone needs to keep Linux, the network, database, and cluster running — including the AI itself. That is the subject of much of this blog.
- Knowing how to use the tool has become a requirement. It is not about asking for code: it is about reviewing the output, knowing when it is wrong, and taking responsibility. The AI assistants in the terminal show the current state of these tools.
- Fundamentals age slowly. Networking, operating systems, databases, and algorithms remain as valuable as ever. The trendy framework does not.
Where the jobs are and how much they pay, with market data, is covered in the post IT jobs on the rise and in decline in Brazil. The size of the training gap is covered in Shortage of IT professionals in Brazil.
Timeline
- 2011 — payroll tax relief begins: the 20% contribution on salaries is replaced by a percentage of revenue.
- 30/03/2017 — MP 774 ends the benefit for dozens of industries, including IT. Associations project 83 thousand layoffs.
- 09/08/2017 — MP 794 repeals MP 774. The government backs down and tax relief continues.
- 2018 — Law 13.670 reduces the program from 56 to 17 industries.
- 2020–2021 — the pandemic normalizes remote work and heats up technology hiring.
- 2022–2024 — a cycle of mass layoffs at major technology companies after overhiring.
- 16/09/2024 — Law 14.973 defines the gradual end of tax relief between 2025 and 2027.
- 2026 — the industry pays 50% of the payroll contribution; this rises to 75% in 2027 and 100% in 2028.
The original text, from April 2017
Understand why 83 thousand IT professionals could become unemployed over the next 3 years.
Ending payroll tax relief for software and IT services companies will negatively affect both job retention and government revenue. This is the argument industry associations and companies will use to try to dissuade the government from ending the program to cover the R$ 58,2 billion hole in this year's budget.
The government decided to end payroll tax relief for companies in 50 industries, preserving only four labor-intensive segments, which will contribute on monthly gross revenue: collective road passenger transport, rail and subway passenger transport, civil construction and infrastructure works, and communications.
The payroll tax relief policy began in 2011. It replaced a social security contribution rate of 20% on payroll with a percentage ranging from 1,5% to 2,5% of revenue, depending on the industry. The original idea was to grant the benefit temporarily to segments facing competitiveness problems, with the prospect of job creation.