The Lula government is portraying its first victory in the effort to push through its pension and tax reforms as a great achievement. The opposition is crowing that this was to their credit, and that the government would have fared far better if it had sat down to serious negotiations beforehand. Both have a point: clearing the first hurdle gave the government a psychological advantage over those who want to block the reforms, but this did indeed depend on the assistance of hitherto uncommitted opposition parties - and there is still a long way to go, with the month-long strike by public-sector workers continuing to escalate.
Price of opposition support
On 6 August the lower chamber voted to approve the pension reform in general. It did so by 358 votes to 126, with 9 abstentions. Of the votes against the reform, three were cast by representatives of the ruling Partido dos Trabalhadores (PT), which also provided eight of the nine abstainers. Many of the other opposing votes came from parties formally allied with the PT.
Without the contribution of 62 votes from the opposition, chiefly the conservative Partido da Frente Liberal (PFL), the government would have been defeated. [Note that, because the reform legislation entailed amending the constitution, a majority of 308 out of 513 congressmen was required.]
That support came at a price. The very next day, after intense negotiations in which even President Lula took part, two further amendments were approved, which embodied significant climbdowns for the government. One concession was to grant the judges' demand for their pensions to be kept at 90.25% of their last pay (the government had wanted to lower this to 75%, then had offered 85.5%). Another was to raise the ceiling for pensions exempted from a new 11% tax - to R$1,400 (US$400), as against the planned R$1,058 and a first offer of R$1,200.
The pension reform still has a long way to go. It must face a second vote in the lower chamber, then two successive votes in the senate. Still, it is much further ahead than the tax reform, stalled over objections from the state governors and the municipalities.
Strikers gain allies, seek more
The concessions made no discernible difference to the 630,000-or-so public-sector employees on strike (observance, a month on, is estimated at 70% of the total federal workforce of 900,000). Rather, they have announced their intention to seek the support of their peers in the 27 state and 5,560 municipal governments - about 7m in all. The state and municipal workers are less well organised than their federal counterparts, but the latter will have an important ally: the umbrella labour confederation CUT, once Lula's powerbase, whose executive director, José Maria de Almeida, now says, `It was a mistake to try to dialogue with the government, which with its reform proposals betrayed the government employees and the CUT.'
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