4 July 2016: Brazil announces it can pass polemical pension reform in 2016 regardless of headwinds
The reform seeks to establish the world’s largest minimum retirement age (to 70), irrespective of the level of their contribution to social security. The pension reform has become an issue of national priority – Presidential Chief of Staff Eliseu Padilha said the project still needs to be submitted to Congress, although it will be approved by the end of this year conceding that the impeachment of President Dilma Rousseff is confirmed by the Senate.
Brazil’s current pension system makes up roughly 40 percent of public expenditures and the minimum pension individuals currently receive in Brazil is equivalent to the minimum wage, which accounts for 70 percent of pensioners. The austerity measures are being conducted as a part of Temer’s plans to regain investor confidence. However, this reform has drawn harsh criticism from unions as the nation is amid a crippling recession during which it has lost almost 2 million jobs in over a year.
Brazil has been subject to a massive fraud scheme in the state-owned oil giant Petrobras, while suffering a contractive economy (it has the biggest recession since 1930). Among the crisis, the opposition led by Eduardo Cunha, linked President Dilma Rouseff to the scandal. Eduardo Cunha himself has been asked to step down by the Brazilian Supreme Court as he’s also said to be implicated in the scandal and has also appeared in the Panama Papers. While President Dilma Rouseff’s impeachment trial is taking place, Michel Temer has taken her post as Interim President.
The new government assigned by Temer has been making various changes, in which government spending is being cut which they claim will help better the economy, whereas critics point out the reforms are being conducted at the cost of social benefits. Recently, a third minister, appointed by the Interim President has been denounced due to links to corruption (following the resignation of the Minister of Transparency). Temer has also been linked to the corruption scandal by the allegations made by a former Petrobras executive, Sergio Machado. A verdict in the impeachment trial will come after Olympics.
