Brazil: Civil servants strike against pension “reforms”

On the 8 July an estimated 350,000 civil servants in Brazil went on an indefinite strike against the pension ‘reforms’ proposed by the Lula government.

The reforms will mean lower pensions for civil servants, increases pension contributions, make the period of contributions payment longer, increase the retirement age and a open up private pension funds.

The strike, the first against the government led by Luis Inácio "Lula" da Silva from the Workers’ Party (PT), was called by eleven trade unions that organise civil servants employed by the federal state. Nineteen federal universities and many social security offices were closed today. Federal police, workers at government departments and health workers also went on strike. The strike involved around 40 percent of the workers on the first day of action and more can join.

It is a difficult period to start a strike, in the beginning of the winter holidays. Some universities postponed the strike till august, when it is also possible that civil servants employed by the councils and states also can take strike action.

For many years the PT blocked efforts by the previous government of Cardoso to attack pensions. Cardoso managed to implement cuts in pensions in his Amendment 20 in 1998 and many supporters of the PT expected that a Lula government would reverse these attacks. Instead Lula is now implementing all the attacks that Cardoso did not manage to carry out!

Government tries to divide workers

The government is trying to divide workers by saying that the civil servants are "privileged" compared to workers in the private sector. Lula has demagogically stated, "sugar cane cutters have no pension rights".

It is true the pensions in the private sector are very low or even not existent. 65 percent of workers retired from the private sector get only the meagre level of minimum wage, 240 reais (85 dollars). Forty million people from a total work force of seventy million do not have any pension rights at all! What should be done is to give them decent pensions, not attack the pension of civil servants.

The attack on pensions is consistent with the policies of the Lula government of sticking to IMF agreements and keeping the markets calm with austerity measures. The usual argument used by governments for attacking pensions around the world is that the "generous" pensions cannot be sustained. In Brazil it is claimed that the public pensions runs a big deficit, but the social security system, including other social benefits, like sick pay, has a surplus that now is used to pay debt service to the banks.

The real villains are the big companies and banks that owe a total of 180 billion reais (65 billion dollars) to the social security system. Eight of the biggest debtors are in the Council of Social and Economic Development that Lula initiated as a vehicle for social pacts, and which discusses proposals like the ‘new’ pension system!

Lula presented the pension changes on 30th April, with the support of the 27 state governors that will adjust their pensions systems to the federal state. That has already been felt by the civil servants in São Paulo, were the governor, Alckmin, has increased the contribution from workers to the pensions from 6 to 11 percent of their wages – in practice it means lowering wages by 5 per cent.

So what does the pension changes proposals mean in detail?

The minimum age for retirement will be increased by 7 years, to 55 years for women and 60 years for men. For every year you retire before that you lose 5 per cent of the pension.

The changes will see the end of 100 per cent pensions for workers. The average worker will now receive 50 per cent of their last wages in pension. (The government have today proposed an amendment that they hope will dampen down the resistance to the proposal, saying that you can have 100 per cent, but then you must work five more years (60 for women and 65 for men)). Pensions will not follow the wage increases.

Workers will have to make higher contributions to the pensions, to 11 percent, and this will also apply for those already retired.

A ceiling of 10 minimum wages for the pensions (2 400 reais, 850 dollars) will be imposed. Above that you pay to a complimentary fund, which opens up the way for private pension funds.

United struggle needed

The argument for the "reform" is purely fiscal, even if the effect in the budget is quite small. But the big beneficiaries are the financial sector and banks that will get lots of new capital to their funds. The new pension will not end the real privileges in society. High court judges and high-ranking military personnel will continue to have big pensions – and, of course, so will the politicians.

The government is trying to rush through the new system and hopes to have a vote by August, before the opposition grows too big. On 11 June 40,000 marched in the capital Brasilia against the proposal. They demanded, "Stop the reform or we will stop the country". Ministers that tried to defend the proposal were shouted down. Even the newly elected leader of CUT (Brazilian trade union congress) was not able to speak. The majority of the CUT leadership is in favour of the pension changes; they only propose some amendments.

The trade unions in the public sector stress that attack on pensions will have an effect on all workers, including the private sector, and that the pension "reform" must be scraped. But the stance of the CUT leadership, loyal to the PT, makes it a difficult struggle that will require political clarity and no vacillation from the left of the PT.

The CWI section in Brazil, Socialismo Revolucionario, calls for a total rejection of the pension "reform". The PT left must vote no to the proposal and build for a united struggle of the public and private sector workers to fight for a decent pension for all workers. To win that the PT must break with the IMF and stop paying the debt, but also nationalise the banks, financial institutions and big companies.

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July 2003