RIO DE JANEIRO - Observers are hoping Brazil's Senate this year will pass a toughened version of the social security reform amendment that passed in the lower house last year.
But the proposal - which was drastically revised and weakened before being passed last March by the Chamber of Deputies - should remain stalled in the Senate until mid-1997. Social security reform and all other issues are being overshadowed by the government's proposed presidential re-election amendment, which would allow President Fernando Henrique Cardoso to run for a second consecutive term.
President Cardoso's government has made social security reform a key item in its fiscal reform program. But once the government's reform proposal was gutted in the lower house, the government began pinning its hopes on the Senate to restore much of the original, tougher tenets of the amendment. If the Senate does not restore the original proposals, the government will not be able to curb pension payouts enough to put the deficit-laden system back in the black.
The Chamber of Deputies gutted the core of the government's original amendment proposal, which had linked payouts to length of contribution and age, rather than the number of years worked, as is now the case. Currently men can retire after 35 years of work and women can retire after 30 years.
In its version, the lower house said that to be eligible for payments, men have to either be 65 years old or must have contributed for 35 years and women must be 60 years old or must have contributed for 30 years. Only in the public sector is there a minimum-age and service eligibility requirement. In that sector, men must be 55 years old and must have contributed for 35 years and women must be 50 years old and must have contributed for 30 years to be eligible for payments.
Brasilia-based political scientist David Fleischer at the University of Brasilia believes that because the government has a stronger ruling coalition in the Senate than in the Chamber of Deputies, "the Senate will try to come up with its own revised version of the social security amendment that will be a compromise between the government's original amendment and the watered-down version passed by the lower house, and thus a stronger reform proposal."
Mr. Fleischer believes the Senate's compromise amendment could include a minimum-age eligibility requirement for private sector wage-earners, a key point for substantive social security reform. Mr. Fleischer said if this modification meets with stiff opposition in the Senate, the upper house might try to eliminate eligibility distinctions between men and women.
But he adds the compromise proposal might only be able to reduce the high level of retirement payouts for public sector workers, another key modification. While the revised amendment, for example, says that both men and women must have worked 10 years in the public sector to be eligible for public-sector payments, the government favors an amendment change whereby public sector workers couldn't retire at their last wage promotion unless they'd been in that position for 10 years.
But Ana Maria Martins, the juridical consultant for Mercer MW Brasil, the Sao Paulo-based subsidiary of William M. Mercer Inc., said the Senate will have difficulty in substantially reducing the revised amendment's retirement perks for public civil servants.
"The public sector, because of its proximity to the government, will be able to put considerable pressure on the Senate not to remove retirement perks from the social security amendment," said Ms. Martins. "So, while I hope the Senate's revised social security amendment is stronger than that of the Chamber of Deputies, the question that remains is, 'How much stronger?'*"
Once the Senate passes its revised social security amendment, the Chamber of Deputies must vote on that revision. Although the lower house could again revise the amendment, the three-fifths vote necessary to do so makes this difficult. After its second passage by the lower house, the Senate must again vote on the amendment which, if passed, then becomes law. In order to be signed into law, amendments need to pass twice - by a three-fifths vote - in both houses.
This lengthy legislative process means the social security amendment shouldn't become law until well into the second half of 1997.
