In today’s issue: Pension reform announced, but still vague. The implosion of the president’s party. And the new faces in the Bolsonaro economic team.
What to make of the government’s pension reform proposal
President Jair Bolsonaro has settled on a minimum retirement age for Brazilian workers: 65 for men, 62 for women—with a transition period of 12 years. These pieces of information alone managed to push the São Paulo stock market index up 2.27% yesterday. A detailed bill, however, should only make it to Congress next week.
Markets were excited because Mr. Bolsonaro had defended lower minimum ages in the past. Many doubts, however, still loom—which are fundamental to calculate the effectiveness of the reform:
- At what age will the transition period start?
- Will pensions be halved, with 10% extra for each dependent, as initially intended?
- Will the minimum wage remain as the floor for benefits?
- What will the rules be for rural workers? Congress resists any changes on that front.
- How will the government deal with the rapid changes to the labor market—caused by new technologies and automation?
- How do these changes affect how much people will contribute to social security in the future?
While opinion polls show that...