Brazil‘s lower house of Congress approved a landmark overhaul of the country’s pension system on Wednesday by a far wider margin than predicted, delivering a resounding victory to the government in its quest to revive public finances.
The lower house passed the main text of the bill by a vote of 379 in favour and 131 opposed, well beyond the 308 votes required. The chamber is expected to vote on any amendments to the bill on Thursday.
House Speaker Rodrigo Maia said he hoped the complete bill could be put to a second, final vote by Friday or early Saturday. That would allow the Senate to take up debate in August after a two-week recess.
Pension reform is the cornerstone of right-wing President Jair Bolsonaro‘s economic agenda, aimed at saving the public purse around one trillion reais ($263bn) over the next decade as he tries to close a massive budget gap.
Wednesday’s vote followed months of acrimonious political drama, with Bolsonaro drawing fire from both leftist lawmakers opposing the social security cuts and from the bill’s proponents who blamed him for slowing progress of the controversial proposal.
“Brazil is ever closer to getting on the path to jobs and prosperity,” Bolsonaro said on Twitter, congratulating Maia following the vote.
The bill would change retirement rules, imposing minimum ages of 65 years for men and 62 for women who work in the private sector and increasing the contributions of active workers.
Under the current system, Brazilians do not retire by minimum age, but according to their time of contribution, which can range between 30 and 35 years.
Protesters in several major Brazilian cities said the proposed reforms hurt the working classes.
Edson Carneiro, one of the union leaders at the helm of a demonstration in Sao Paulo, said the pension reform would leave millions expecting to retire without benefits, or earning very little.
“The law that they are voting in Brasilia (in Congress) leaves millions of workers out from retirement, delays millions from entering retirement, and sharply reduces retirement pay.”
Laurent Mattalia, a high school teacher said: “This reform hurts the poor Brazilian enormously. It’s a time bomb, but we are not going to see it immediately. This reform is not going to create employment, it’s not going to create anything, is not going to give a cent more for the workers, absolutely nothing. In a few years, we will see misery on the rise and people who will not be able to retire.”
As he announced the vote tally, Maia said it was time for Congress to take a more central role in governing the country, after what he called some three decades of erosion of its power in favour of the executive branch.
“Our duty is to take back the power of the lower house and the Congress,” Maia said. “In taking back the strength of the lower house, we strengthen our democracy.”
He defended his allies in the centrist Centrao coalition, whom Bolsonaro has accused of perpetuating old-school transactional politics.
“Often our party leaders are disrespected,” Maia told the packed plenary. “But it is the Centrao that is carrying out pension reform – the parties of the so-called Centrao.”
Brazilian markets had bet heavily on Wednesday that the bill would pass, although few had projected such a wide margin.
Brazil’s benchmark Bovespa stock index closed 1.23 percent higher, reducing gains after hitting an all-time high of 106,650 points. The country’s currency, the real, hit 3.7585 to the US dollar, its strongest level since February.
Interest rate futures fell across the curve as traders bet that approval will pave the way for the central bank to lower interest rates.
The Economy Ministry says Brazil’s growth and inflation prospects for years to come will rest on closing the huge budget gap created by the country’s generous pension system.