LABOUR-BRAZIL: Problems in Plans for Social Security Reform

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, May 19 1998 (IPS) - President Fernando Henrique Cardoso if fighting an uphill battle to reform Brazil’s overburdened social security system but his efforts are not lacking in comic value.

Cardoso has labelled all those who retire before the age of 50 “lazy,” apparently forgetting that his own former minister of social security, Reinhold Stephanes, retired from the city government of Curitiba in southern Brazil at the age of 48.

Worse still, a constitutional amendment sponsored by the government – that would end early retirement by making it law tyhat the retirement age for men would be 60, and 55 for women. It failed to go through parliament by a single vote after deputy Antonio Kandir, a staunch defender of the proposed reform, pushed the wrong button during the voting proceedure.

Brazil’s National Social Security Institute (INSS) is in deep trouble, and last year’s 3.5 billion dollar deficit could double this year if the constitutional amendment in question fails to make it through Congress, authorities warn.

Independent analysts agree that without reform, the entire social system will inevitably become bankrupt, as the number of beneficiaries is growing much faster than the number of contributors, while life expectancy in Brazil is rising.

Another big problem is that as part of the shrinking of the state carried out this decade, the number of “inactive” public employees who swelled the ranks of those forced into early retirement ballooned.

The treasury deficit caused by inactive public employees still on the payroll was three times that of last year’s INSS deficit. The number of inactive civil servants will have equalled the number of active functionaries by the year 2000.

Cardoso employed the controversial term “lazy” while addressing a forum on development strategies last week in Rio de Janeiro. The label drew fire in Brazil, and added to the irrational terms of the debate on social security reform.

Cardoso himself retired at 37 back in 1968, although he was forced to do so by the military regime, which thus sought to keep him from giving classes in the University of Sao Paulo. The manager of his re-election campaign, Eduardo Jorge, however, is a 48-year-old retired legislator.

A full half of all public employees retire before the age of 50, and in many sectors, such as teachers, the average age is closer to 40, said Stephanes, who stepped down as social security minister last month in his bid for reelection as parliamentary deputy in the October elections.

Cardoso said in his speech that he was seeking to avoid “lazy people in a country of poor.” Stephanes justified the label used by the president by arguing that he was seeking to make an “impact” in favour of the proposed constitutional reform.

The lower house of Congress voted down the proposed constitutional amendment last week, when Deputy Kandir pressed the wrong button by mistake. His efforts to rectify his error have run up against parliamentary regulations.

Lawmakers are loath to pass unpopular legislation with just a few months to go to elections. But the opposition is keen on fighting privileges such as public sector pensions that are higher than salaries, and an average retirement age of 49, while private sector employees suffer a drastic drop in income upon retirement.

The opposition argues that there are alternative solutions, such as rooting out companies that fail to pay into social security and fighting corruption and the informal economy. Generating more formal sector jobs with social benefits would help the INSS balance its books, opposition legislators stress.