An Unpopular Reform Agenda Moves Forward
Last week, Brazilians witnessed a heated debate in their Chamber of Deputies regarding pensions and social security reform, proposed by the Temer government’s allied base. Despite the persistent recession and political crisis, amplified by the uncertainty surrounding the anticipated release of the Odebrecht plea bargains in the coming weeks, President Temer has continued to press forward on his ambitious—and contentious—fiscal and structural reforms. Pension reform is not the only item on his agenda—up next are labor, tax code, and education reforms, which he hopes to tackle before the end of 2018. In an interview with The Economist published this week, President Temer defended his proposed reforms and asserted he would “rather be unpopular than a populist.”
A center-right, pro-business, constitutional lawyer, President Temer—now ten months into his unexpected presidency—has a good chance of accomplishing several of his goals. With a solid parliamentary base in Congress, his government has already passed a constitutional amendment designed to freeze federal spending for 20 years (allowing adjustment only to keep pace with inflation). Currently, the Brazilian Congress is reviewing the government’s proposal on pension reform, which would lift the retirement age from an average of 54 years to 65 years, among other changes. However, members from various parties have publicly stated that the proposal is unlikely to pass without considerable changes, especially to the proposed “transition period.” Both measures are designed to contain Brazil’s significant public debt.
The country’s fiscal situation is not the government’s only priority. After pension reform, Temer hopes to tackle current labor laws, which are a source of concern for the administration. According to employers, current legislation deters hiring; the president is working to “relax restrictions on employing temporary workers and let agreements between unions and employers override some rules in the labor code.” Education reform is also on the president’s reform agenda, although he plans to focus on pension and labor reform first. Once—and if—these proposals get through Congress, the president hopes to simplify the country’s complex tax code, making it easier for the country’s private sector to compete internationally. Opposition leaders and many Brazilians fear government spending cuts and other reforms will harm public employees and those currently benefiting from social programs, contributing to Temer’s abysmal approval rating. Temer has made clear, however, that he currently has no intention of backing down.