As early as late April our readers knew that the government of President Lula da Silva was willing to make some concessions in order to secure passage of the most opposed of its two major reform proposals - the one drastically reducing the privileges of public-sector pensioners (WR-03-17).
That this knowledge was available makes nonsense of the 'dismay' now being professed by many 'market-shapers' at the news that, indeed, the government is considering some changes in order to secure consensus beyond the confines of congress.
In late April the most cited candidate for the chop was a provision for taxing the higher pensions. Now it appears to be the one capping public-sector pensions at 70% of the last salary earned.
Two-pronged opposition. The shift is largely due to tactical brilliance (deliberate or accidental) by the unions. The major union confederations, Central Unica dos Trabalhadores (CUT) and Força Sindical (FS), decided to eschew strike action and instead seek to negotiate amendments with the government. On the other side, a large segment of the public employees' union last week launched an 'indefinite' strike action seeking the withdrawal of the planned reform in toto.
Observance of the strike was patchy throughout last week; overall, between 30% and 40% of government employees stayed at home or downed tools. Initially, Lula dismissed the whole thing, saying that he would start worrying if the congressmen who must vote on the reform 'downed tools'.
One group of public employees spent much of the week threatening to join the strike: the 17,000-member association of judges -the group with most to lose from the capping of public-sector pensions, as they were up among those taking the US$6,071 a month maximum.
It is this group that is being credited with producing the compromise formula, based on keeping pensions at 100% of the last salary. In any case, there were already CUT and FS negotiators hard at work.
Actually, the negotiation is not over. In May, Lula took the precaution of getting all state governors to endorse his draft pension reform. Now he is saying that any changes must be approved by all the governors, which makes for a complex further round of bargaining.
Lula has said he expects this reform and the parallel one on taxation to be passed by September.
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