The advantage of the change to the government is that it is more likely to go through congress. The major disadvantage is that the change has annoyed both the state governors, who all lined up behind the original proposal, and the Central Unica dos Trabalhadores (CUT), which has also been backing the original reform. The CUT alleges that the government has caved in to the high-earners in the public sector.
The government held a meeting with the state governors to reassure them that nothing substantial has been changed. The governors are threatening to withdraw their support if the government makes substantial changes without consulting them.
The governors' shot across the the government's bows seems to have done the trick. The government appears to have backed away from imposing the changes. Ricardo Berzoini, the social security minister, has made it very clear that there will have to be some modifications, since, as even the governors admit, the original proposal is not perfect.
The change would have removed the cap on eligibility for a full state pension. The government reckoned that the original proposal, coupled with the raising of the minimum age for a pension to 55 for women and 60 for men, would save it R$16.5bn between 2004 and 2010. The new propsoal, under which it will only pay a public sector pension if the applicant has made contributions (30 years for women, 35 for men), has been employed for 20 years in the state sector and has reached retirement age, will save another R$1bn.
The CUT insists that the cap on eligibility for public sector pensions must remain at 20 minimum wages, or R$4,800 a month. Judges earn around R$17,000 a month. A strike by public sector workers called to protest against the pension fund reform is having an effect, especially on exports: these were down by 11% in the first week of the strike.
End of preview - This article contains approximately 418 words.
Subscribers: Log in now to read the full article
Not a Subscriber?
Choose from one of the following options
