MercoPress. South Atlantic News Agency

Brazil's pensions reform past the first hurdle

A massive protest was the first popular reaction to the approval by the Brazilian Lower House of the controversial public pensions' system reforms. An estimated 35,000 protesters marched along Brasilia's streets destroying public property and finally tried to break into Congress where riot police pushed them back.

Early Wednesday morning, after a full night of debate, -- and weeks of negotiations-- Brazilian Deputies passed the reform bill by 359 votes (51 more than needed) against 126 of the opposition and 9 abstentions.

The reform, described as "crucial" for Brazil's long term financial stability by the Luiz Inacio Lula da Silva administration, (and previous governments that failed to have it passed) is expected to help contain the growing 17 billion US dollars deficit of the privileged civil service pensions fund which also contemplates salaries' ceilings.

The original bill was watered down in four main points: government employees and the civil service will see their salaries limited to a maximum equivalent to 85% of the retribution of a Supreme Tribunal magistrate that now stands at approximately 6,000 US dollars. Regarding pensions, they will have a ceiling equivalent to 200 US dollars when beneficiaries made no contributions to the Fund; government employees with salaries below the equivalent of 800 US dollars on retiring will receive the same amount, and only 50% of earnings above that ceiling; retiring age will be higher, 60 years for men and 55 for women, with a minimum 35 years contribution to the Fund. Additionally the estimated forty million Brazilian informal workers are invited to incorporate themselves to the Federal Social Security system with an 8% contribution from one national minimum monthly salary equivalent to 80 US dollars.

However since the pensions system reform is a constitutional amendment, it not only needs a three fifths majority but must now return to the Joint Reform Committee followed by a second vote in Deputies in one of the next five sessions of the Lower House. The bill will then be considered by the Senate.

"For President Lula it was a great victory and he's very pleased. He will continue to personally conduct negotiations until the reforms finally become law", remarked Luiz Dulci Government House Secretary General.

But it wasn't an easy victory: negotiations forced President Lula to postpone a week's visit to Africa and the Workers Party has virtually expelled three of its Deputies for voting against the bill, and is considering sanctioning eight others who abstained.

In Brasilia's streets protestors carried banners saying "PT: Treason Party", "Lula, IMF serf", "Dishonest Lula, we'll never vote for you again" and some of the most violent were arrested.

In Sao Paulo financial markets reacted positively and the Brazilian currency recovered lost ground to the US dollars.