Anger Stirs in Brazil as Temer's Pension Drive Ignores Voters

  • Government failing to get public opinion behind reform plan
  • Unpopularity risks reform’s approval chance, market rally

A posse of shadowy ghouls lurks under the cape of a cartoon vampire bearing a passing resemblance to Brazil’s President Michel Temer on the fliers being handed out in downtown Brasilia one recent afternoon.

“They want YOUR BLOOD,” the pamphlet warns. “And your pension.”

A demonstrator holds a banner depicting Temer as a vampire in Rio de Janeiro.

Photographer: Dado Galdieri/Bloomberg

Temer’s administration has proved adept at working the corridors of Congress but has had less success conveying its message to the Brazilian people. While the strategy has managed to get parts of his agenda through Congress, the risk is that the government will spark a popular backlash over its controversial pension reforms just 18 months away from elections.

Legislators running scared of angry voters may only approve a watered down reform that does little to address the country’s long-term problems.

There remains "a disconnect between the government’s leadership, who recognize the need to approve a robust reform to guarantee an economic recovery, and its rank and file, who is understandably concerned with the blowback from voters," Eurasia Group wrote in a note published on March 16.

Temer came to power vowing to rebuild Brazil’s financial credibility regardless of his popularity, as he says he won’t seek re-election. But, without deep changes to the pension system, his own aides say any success in reining in public spending will be short-lived. A local market rally over the past year has started to tail off in recent weeks on signs that the reform may be faltering.

Overhauling pensions -- or obliging workers to work longer -- is rarely a vote-winner, anywhere in the world. Unsurprisingly then, the Brazilian government’s proposal is proving a tough sell. According to a poll conducted earlier this month, 72 percent of Brazilians are against the reform and only 11 percent favor it -- the others didn’t express an opinion.

“There’s a perception that the government has lost the communication battle,” said Ricardo Tripoli, leader of the Brazilian Social Democracy Party, one of the parties in Temer’s coalition. “Without detailing how the changes will come about, it’s harder to overcome opposition.”

Under the proposed rules, young Brazilians would need to work an additional seven years on average before benefiting from the system. For older contributors, there is uncertainty about how the transition period would work. The plan sets the minimum retirement age at 65 for both men and women, and requires at least 25 years of contribution. At present, the average retirement age in Brazil is around 58.

Marketing War

The Brazilian government has a strong case. It argues that the current system’s generosity costs 13 percent of GDP -- well above the average of developed countries -- and runs unsustainable deficits. A drop in birth rates and rising life expectancy exacerbates the problem. Youthful pensioners who start enjoying their benefits in their fifties, such as Temer himself did, also make a compelling argument for reform.

"If we don’t do this now, we’ll have to do it in three years’ time," Temer said in a speech on Wednesday. "If not, in seven years the country will grind to a halt."

A marketing war is unfolding across Brazil, and so far the government is on the back foot. Its decision to exempt the military, and more recently, state and municipal civil servants have undermined its argument that the pain will be shared equally.

Adding to the government’s woes, a judge suspended its advertising campaign, saying it was using public funds to “undermine democratic principles” by suggesting Congress could not make modifications to the proposal. That nixed a campaign that depicted a city in ruins and warnings of an end to social programs should the reform fail.

Temer’s best hope of appealing to the public may be the National Industry Confederation, an industry lobby group, which is developing a campaign that will target some 10 million workers of its 300,000 affiliates. It has yet to launch.

Meanwhile, the opposition is moving ahead at full speed. Over the next few days, individual lawmakers who support reform are to be targeted in billboard ads bankrolled by public university unions.

Brazil’s largest union association, the CUT, is warning members: “Your retirement will end! React now or die working!”. Its website offers marketing material that can be printed or used on social media. One widely-shared meme depicts desk-bound workers wasting away into skeletons as they wait to retire. Even priests are railing against the proposal.

2018 Elections

More popular Brazilian presidents such as Luiz Inacio Lula da Silva and Fernando Henrique Cardoso achieved very limited results when trying to reform the pension system. Temer, whose government is approved by only 10 percent of Brazilians, may have an harder time pushing for a broader reform that has all but united in opposition a population that has scarcely agreed on anything since the polarizing impeachment of President Dilma Rousseff last year.

“It’s very wrong, I’m not in favor,” said Lyzandra Bittencourt, 16, who participates in a program preparing underprivileged youth for the job market. “They seem to be only seeing their side, and not thinking about our generation.”

As protests and debates take place across the country, reform supporters are finding that their arguments resonate little with the population. That was the case in a recent high-school debate in Rio de Janeiro where an economist tried to warn the audience that failure to overhaul the pension system would bring about fiscal crisis and more economic hardship.

His argument mostly fell flat.

“I tried to make the case for reform, but young people and teachers have the perception that it’s about taking away rights,’’ said Eduardo Zilberman, the economist who also teaches at Rio’s Pontifical Catholic University. “If you don’t agree, it seems like I’m blackmailing. But I’m not blackmailing, I believe it.”

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