Date
April 05, 2019

Brazilian President Jair Bolsonaro presented a pension reform bill to Congress Feb. 20. The bill is largely supported by investors and economists as a potential fix to an ailing economy. However, significant backlash from both the political class and the public has followed every attempt at pension reform in recent years, and Bolsonaro’s proposal is already receiving significant criticism. Widespread protests and unrest are likely to materialize throughout 2019 in reaction to the proposed legislative bill. 

 

Brazil’s Pension Reform Proposal

Brazil is still reeling in the aftermath of the country’s worst recession in recent history, which the country emerged from in 2017. Prior to Bolsonaro’s election, the equities markets reveled at the prospect of an administration that would reduce the country’s large fiscal deficit – approximately 7 percent of GDP in 2018. One pivotal strategy has been efforts to revamp the country’s outdated pension system. However, history suggests that Bolsonaro and his administration will face an uphill battle. Former President Michel Temer failed to enact comprehensive pension reform during his tenure from 2016 to 2018, despite it having been a priority of his administration.

Although investor confidence in Bolsonaro and his Social Liberal Party (Partido Social Liberal, PSL) has outpaced that of his predecessor, the divisive power of several competing and vested interests in Congress makes the passage of such a controversial bill unlikely. Bolsonaro needs support from 60 percent of Congress to enact the constitutional change; confidence in the new government’s ability to enact the reform is already slipping. An increasing rift between Bolsonaro and President of the Chamber of Deputies Rodrigo Maia may soon exacerbate unease among investors, as the government will likely need to rely on Maia’s influence to push through the legislation.

A pension reform proposal was sent to Congress in February 2019, but significant amendments to the bill are likely to be implemented throughout the year. Even following such amendments, the backlash to any pension bill proposed will likely continue to be substantial. Ensuing protests are likely to cause operational and transport disruptions in major cities.
 

Widescale Opposition to New Pension Measures 

Even prior to Bolsonaro becoming president, major labor unions and civic organizations were increasingly concerned with the anticipation of new pension and social security measures. Labor and political groups aligned with the former ruling Workers’ Party (Partido dos Trabalhadores, PT), the main opposition political party, are particularly angered. Following significant bouts of protests and political opposition, Temer’s proposals failed to satisfy legislators in Congress during his administration. The high levels of discontent have washed over into Bolsonaro’s tenure.

Several influential groups have recently supported major strikes and protests in response to proposed pension reform. These include Union Force (Força Sindical, FS), the New Central Workers' Union (Nova Central Sindical de Trabalhadores, NCST), the National Workers' Confederation (Central Única dos Trabalhadores, CUT), and the Central Brazilian Workers' Union (Central dos Trabalhadores e Trabalhadoras do Brasil, CTB). These unions and organizations have the ability to galvanize large swathes of the population and paralyze major government services, causing widespread disruptions. Non-essential government services are likely to be temporarily closed during such actions. Lingering disruptions following government worker walkouts are also possible after services resume, as employees work to clear backlogs.

Previous anti-government actions have also had the support of the National Confederation of Transportation and Logistics Workers (Confederação Nacional dos Trabalhadores em Transportes e Logística, CNTTL); airport, bus, metro, train, and port workers have participated in walkouts, which have caused severe transport disruptions across the country. These walkouts have been directly related to social security issues and are likely to continue in the short term as the government continues to push for pension reform. Public transport in major cities is likely to be negatively impacted during future large protest actions.

Thousands took to the streets in cities across the country in late November 2018, and as recently as February and March 2019, to protest the administration’s reform proposals. These demonstrations caused commercial disruptions and severe transport disruptions. The largest protests have taken place in central Sao Paulo, while cities such as Rio de Janeiro, Brasília, and large northeastern metropolitan areas have also attracted large crowds. The ability of left-wing groups to rouse their supporters onto Brazil’s streets will likely be a recurring feature, frustrating the administration’s reform proposal. Though most protests have been relatively peaceful in the past, police may be quick to use tear gas, water cannon, or rubber bullets to disperse protesters.

 

Outlook

The language and propositions in the government’s pension reform bill will likely change significantly over the next few months to secure its successful passage through a divided Congress. Significant backlash from labor unions and civic organizations will certainly follow the bill at every turn, inspiring widescale protest actions throughout 2019. If the reform is to be enacted, it will likely need to be considerably watered down; even following significant amendments, opposition will likely be strong and expressed through large and disruptive demonstrations.

  • Advice for personnel in Brazil during periods of unrest
  • Avoid demonstrations; do not attempt to drive through roadblocks.
  • Seek shelter in a secure non-governmental location at the first sign of violence.
  • Heed the instructions of security personnel; do not attempt to bypass security checkpoints.
  • Allow additional time if traveling near known rally locations due to localized disruptions.
  • Confirm the status of public transport during protest periods.
  • Avoid low-income neighborhoods (favelas) if possible.
  • Arrange airport transfers and hotels in advance, or have your host meet you upon arrival.
  • Do not physically resist any robbery attempt.
  • Purchase travel insurance and medical evacuation insurance ahead of time.
     

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