Brazil sees protests against proposed privatisation of pensions

_{- Aishwarya Dakhore}

Sao Paulo: The Pension Reform Project in Brazil proposed by President Bolsonaro got approved on Wednesday, despite the past protests carried by the citizens against it. With 379 votes in favour and 131 in opposition, the reform passed with more than the required majority vote count of 308. There have been hundreds of social movements, student organizations, and twelve of the country's largest trade unions that have been protesting against the reform.

This Pension reform is being said to be the cornerstone of President Jair Bolsonaro's neoliberal economic agenda. According to him, this step is essential to restore confidence in Brazil’s economy, which faces the prospect of a return to recession in the second quarter. The bill mainly includes provisions where the minimum retirement age for men and women will be raised in order to restore public finances. Precisely, by raising the retirement age to 65 for men and 62 for women, the legislation seeks to tackle the government’s precarious fiscal position with savings of $250bn over the next 10 years.

If the bill is approved by the Brazil Senate, it would also eliminate labor protections for pregnant women and breastfeeding mothers. The bill faces a confirmatory second vote in the house before it moves to the Senate, where it will also be voted on twice. Lawmakers and experts expect the legislation to pass conclusively around September. The passing of this bill is being seen as a deciding step for Bolsonaro's political performance, especially in terms of economic control. The issue is getting more controversy and attention surrounded around it amid continued infighting between the president and the Congress and supreme court. 

This reform proposal, which was originally initiated under Michel Temer, Bolsonaro’s predecessor, unfortunately, became a victim of political bargaining when the former president was implicated in graft claims. However, since Bolsonaro came into power, lawmakers have gradually come round to the idea of reining in Brazil’s vast web of public payments obligations, which have undermined the state’s ability to make crucial investments in health and infrastructure. The country spends almost 13 percent of its gross domestic product on pensions.

According to the IMF, Brazil’s public debt will reach 90 percent of GDP by the end of the year. While there have been major protests against the reforms, experts are with the views that with a bad and potentially worsening condition of Brazil's economy, the reform would be a stepping stone towards its betterment.  "The pessimism of the first quarter of the year has greatly affected investment and this lowers the prospects for growth for the coming years,” said Silvia Matos, a senior researcher at the Getúlio Vargas Foundation in Rio de Janeiro. “We have lost a lot of time and the population has become very pessimistic, with growing unemployment and falling incomes.” 

The economy ministry, meanwhile, has revised annual growth downward from 2.2 percent at the start of the year to 1.6 percent in May. However, independent economists forecast less than 1 percent. If the pension reform passes, the focus is likely to shift to what comes next on Bolsonaro’s economic agenda. Many businesses are keen for the president to use his powers of the decree to slash the red tape that they say stifles industry.

There are also growing demands for the country to simplify its byzantine tax system. Average medium-sized Brazilian companies each spend 2,000 work hours a year settling their tax obligations, according to the World Bank. With all the controversies already prevailing around the issue, the tension between the executive and legislature was also highlighted before Wednesday’s vote when Rodrigo Maia, the house speaker, sought to claim credit for parliament for the pensions bill.

“The construction of the text was a parliamentary construction, and the construction of victory, if it happens, will be parliament’s, not the government’s,” he said. The passing of this reform would basically be seen as a coin with both sides. While citizens would be disappointed with raised retirement ages and unemployment, the economy will get gradually boosted. “The link between the approval of the pension reform and growth is not direct, but clearly it is important. Approval means that we stop walking toward the cliff and there is the opportunity to change course and chart a new path,” said Ana Carla Abrão, a markets analyst at consultancy Oliver Wyman.

_{Aishwarya Dakhore is an Intern with Indie Journal.}