1

Unionism, pension reform, and decision-making process in Brazil

Prof. Dr. Sidney Jard da Silva – sidney.jard@ufabc.edu.br

Universidade Federal do ABC – UFABC

Santo André – São Paulo – Brazil

Tel. 55 11 3641 5309

2

Abstract Unionism, pension reform, and decision-making process in Brazil

In situations where trade union representatives in Congress support the party in power, the union caucus tends to defend the interests of their representation basis or to follow the guidance of the partisan coalition of which it is part? This paper addresses this research problem by analyzing the participation of representatives from the Unified Workers´ Central in the social security reform led by the Workers' Party, under Luiz Inácio Lula da Silva´s administration. The Brazilian pattern of union-government interaction was shown to be shaped more by the peculiarities of the decision-making process than by the demands and power of union organizations.

Key words: unionism, social security reform, decision-making process, Executive-Legislative relations, Brazil.

3

Introduction In the early years of democratization of the country, the nonpartisan

components of the Brazilian political system constituted the main explanation for the difficulties faced by governments to sustain a consistent agenda of economic, political, and social reforms. Social heterogeneity, federalism, and the power of governors would form the "Gordian knot" of coalitional presidentialism in Brazil (Abranches 1988).

Notwithstanding, judging by recent academic production, the term coalitional presidentialism although still widely used even outside of academic circles, has a vague relationship with the original wording, especially with regards to the need to build nonpartisan coalitions in order to govern successfully.1

Limongi (2006) points out that even though from a descriptive point of view the political system can be defined as coalitional presidentialism, the thesis that the parties are unable to structure the coalitions required to support government policy is weak. The "Gordian knot" of the coalitional presidentialism would have been cut by the 1988 Constitution.

Unlike what occurred in the Magna Carta of 1946, the 1988 Constitution endowed the Executive with the instruments required to govern by means of the majority party. No ad hoc negotiations support the political agenda, but the coalition of the parties that constitute the coalition government. When setting forth the legislative powers of the Executive, the constituents of 1988 preserved the essence of the institutional experience of the military period: the power of the decree (provisional measures) and the control over the development and implementation of the budget. In other words, the power to propose and the means to process the proposals were focused on the President of the Republic (Santos 2002).

The centralization of the legislative process indicates that individual members of the Congress are less able to influence what will be voted on, how it will be voted, and when it will be voted. Inside the House, this decision is in the hands of the Chairman and the partisan leaders of the coalition government. In this institutional context, there is little chance for minorities to influence the formulation of public policies, "be part of the coalition government or elect the next President of the Republic" (Limongi 2006, 41).

In the post-constituent period, the concentration of legislative powers in the Executive made the partisan role in the coalition government to be the best individual strategy for representatives to influence the legislative process. Unlike what occurred in the period of 1946-1964, where the representatives counted individually with institutional resources to promote their clientele, in the post-constituent period "the collaboration with parliamentary parties is the best strategy for parliamentarians to strengthen their bargaining power before the head of the Executive" (Santos 2002, 246).

This institutional political scenario poses an interesting question regarding the participation of the trade union in the pension reform decision-making process: in situations where labour representatives in Congress support the party in power, the trade union caucus tends to defend the interests of their representation basis or to follow the guidance of the partisan coalition of which it is part?

4

This paper addresses this research problem by analyzing the participation of representatives from the Unified Workers' Central (CUT) in the pension reform decision-making process led by the Workers' Party (PT), during the first term of president Luiz Inácio Lula da Silva (2003-2006).

The research sheds light on the purported union-party-government relationship in a process of change of the public policies, in which a government regarded as ally of trade unions imposes specific and immediate losses on specific sectors of the trade unionism, particularly on federal, state, and municipal civil servants.

Where the minority stands From the institutional point of view, the legislative committees contribute

to solving coordination problems in the decision making process and to provide the process of formulating public policies with greater stability and predictability. The decentralization of the legislative process has as one of its main objectives to provide the decision making process with increased functionality and dynamics. Moreover, it attempts to provide answers to the multiplication of the themes and issues addressed within the political system scope (Rocha and Barbosa 2008; Santos and Almeida 2011).

In institutional contexts in which the executive prevails, there is somewhat of a consensus in the literature in the sense that the assertion of improvement in the committees' work is a way for the Legislative to become stronger before the Executive. (Gomes 2006; Santos 2002).

From the political point of view, the decentralization of the decision making process allows minorities to increase their influence in the Legislative. Participation in committees is one of the most effective strategies for minority groups to influence the political game, its main asset being the power to delay or block legislative proceedings of matters to be discussed in the House floor.·.

In previous works we showed that the main opportunity for union participation in the decision-making process of pension reform lies within the legislative committees (Jard da Silva and Cortez 2007; Jard da Silva and Diniz 2009). This is because the committee system holds the main chances for minorities to influence changes in public policies (Ricci and Lemos 2004).

In Brazilian Congress, the composition of parliamentary committees is formally defined by the chairs of the House of Representatives or Senate, respectively. But, in practice, in both chambers, party leaders are those who hold the choice of the parliamentarians (deputies and senators) and assign names for the chair.2

Santos (2002) notes that two basic criteria are considered in the composition of committees: I) party loyalty and II) expertise. Party loyalty is related to the expectation that within the committee, the representatives behave in accordance with the guidance of the party in relation to the theme in the agenda. But on the other hand, the expertise is related to the quality of the information contained in the projects analyzed by the commissions, which can be better evaluated by members who directly or indirectly act in the area in question. Thus, the political concerns with loyalty are balanced with fair expertise in the policies addressed.

In Brazil after 1988, however, the majority relies on several tools to overcome possible political obstacles posed by committees, among them,

5

"urgent proceedings." In the Brazilian institutional arrangement, the minority has no way to prevent materials contrary to their interests to be considered and voted on by the Plenary Assembly. In other words, the commission system was not designed to veto (Diniz 1999; Figueiredo and Limongi 2001; Pereira and Mueller 2000).

Nevertheless, the minority can use institutional channels at its disposal, including strategic location in committees, to exploit any potential divisions in the majority and thus blocking or delaying decisions to be made. More strikingly, the agenda of the Executive cannot be imposed on the Congress without the support of the majority.

It is this latter aspect of the Brazilian legislative process that we intend to explore in the following sections of this paper, with emphasis on the union caucus participation in the pension reform decision-making process in Luiz Inácio Lula da Silva (Lula)'s first administration.

As well noted by Melo and Anastasia (2005), pension reforms are political proposals that impose immediate costs and generate diffused long-term benefits. In this sense, they are characterized by the academic literature as "politically unfeasible" (Arnold 1990; Pierson 1997).This peculiar characteristic of the pension reform favors the action of opposing groups, be they inside or outside the decision-making process.

In the specific case of this research, what interests us is to see how the unions representing public sector workers exploited the peculiar characteristics of the Brazilian decision-making process in the pension reform legislative debate. More specifically, how the Members of Parliament (MPs) linked to the trade union movement acted in the pension reform decision-making process.

The convergence of rules The convergence of the rules of the Social Security General System

(RGPS) and the Social Security Special System (RPPS) was the main argument of the pension reform of Lula's administration. It was not about the creation of a single pension system for workers in the private and public sectors, but the approximation of actuarial and ruling principles of the two systems.

The discussion on the unification of the pension system is not new and dates back to the discussions on constitutional revision of 1993. However, although it is easy to find advocates in many sectors of society, the effective unification of the RGPS and RPPS was not included in the Brazilian pension reform agenda (Jard da Silva 2007).

Just like the predecessor, President Fernando Henrique Cardoso, the reform proposed by the Luiz Inacio Lula da Silva administration merely approximated the eligibility and benefits grant criteria of the two systems, without proposing formal unification of the system:

It is about moving towards convergence of rules among currently-existent pension systems, applying to public servants, to the extent possible, requirements and criteria closer to those required for private sector workers. With this approach, we seek to make the Social Security System more equitable, more socially fair and financially and actuarially viable for the long term. (Brasil 2003)

6

The first distortion appointed by the government was the lack of a direct

relationship between contributions and benefits in the pension system for civil servants, whose retirement was based on the last salary earned before retiring; while the calculation of the benefits of private sector workers corresponded to the arithmetic average of contributions.3

Until the Pension Reform of 1998, the prevailing conception regarding the pension system for civil servants was that it was a pro-labore facto working relationship. In this case, the remuneration of the activity was automatically converted into earnings of inactivity.4(Guerzoni 1999; Pacheco Filho and Winkler 2005).

The second distortion referred to the lack of wage ceiling in the civil service. While private sector workers were limited to the RGPS ceiling for the public sector there was no remuneration ceiling for benefits. According to the government, such a situation promoted major inequity in the provision of social security benefits, not only among public and private sector workers, but also among public servants of different powers (Executive, Legislative and Judiciary).

The pension reform proposed by the Lula Administration has also identified "distortions" in relation to pension benefits upon death. In the civil service, the benefit corresponded to 100% of the compensation or the proceeds earned by the retiree, while in the general system this was calculated based on the average of 80% of the highest wages earned while contributing.

In terms of social equity, the distortions of the criteria for granting the benefits offered by the RGPS and RPPS were presented by the government as a redistribution of income from private sector workers to public sector workers:

In light of the applicable rules, one sees a regressive tax situation, whereby public servants, who notoriously have an average income higher than that of private sector workers, are eventually awarded the grant of benefits without the necessary contribution counterpart, an authentic income distribution in reverse, where the poor work to support the benefits of the richest. (Brasil 2003, 12)

In summary, the pension reform of the Lula administration can be

classified in two major blocks: I) homogenization measures for the RPPS and RGPS rules and II) corrective measures for the RPPS imbalance. It is not possible to draw a definite line between these two groups of measures, but the proposed classification allows us to visualize more clearly the meaning of each group of changes proposed.

7

Table 1

Pension Reform

Homogenization measures for the

RPPS and RGPS rules

Specific adjustment measures for

the RPPS rules

Change in the basis for calculating

pensions.

Establishment of ceiling for social

security benefits due to death (70%).

Establishment ceiling for social

security benefits.

Establishment of a reductant for early

retirement (5%).

Change in the calculation of benefits

readjustments.

End of proportional retirement.

Raising of the ceiling of the General

Social Security System (RGPS).

Contribution of retirees.

Among the measures of homogenization of the rules of the pension systems for the civil servants and private sector workers are: I) change to the basis for calculating pensions; II) change to the calculation of benefits readjustment; III) establishment of ceiling for pension benefits; IV) increase of the ceiling for the RGPS.

The change in the basis of calculation refers to the way of calculating the retirement benefit of public servants. As we saw earlier, until then, the retirement benefits were calculated based on the servant's remuneration while in an effective position at the time of the retirement, corresponding to the total remuneration.5

According to the government's proposal, the new calculation would be based on the calculation of the contributions of the servant throughout their working life, including the RGPS (as it is the case). Thus, the calculation of the public servants retirement would keep greater "conceptual proximity" with the method of calculating pensions of private sector workers.

The project also subjected the pensions of public servants to the same criteria for readjustment of the RGPS. Until the reform, the benefits of retired employees were revised at the same rate and on the date of the revision of the remuneration of active servers. In addition, retirees were granted the same benefits or advantages granted to active servants, including in regards to the

8

conversion or reclassification of the position or function in which the retirement occurred.

After the reform, the periodic readjustment reference of the retirement benefits and pensions ceased to be the remuneration of the active public sector workers and became the periodic adjustments granted to private sector workers, basically the replacement of inflation. The measure not only strengthened the bond rupture between raises paid to working and retired public servants, but also approximated expectations of recovery of the actual value of the benefits by the public sector retirees to the private sector retirees.

The second important shift towards the homogenization of the rules referred to the establishment of a limit for the maximum amount of benefits paid to public servants equal to that practiced in the General Social Security System. The adoption of this ceiling was depended on the implementation of complementary pension schemes in the federal, state, and municipal levels.6

The reform also included the raising of the ceiling of RGPS benefits from R$ 1,561.56 to R$ 2,400.00 (equivalent to ten times the minimum wage). Whereas the new pension ceiling would also serve as reference for the RPPS, it was a supplementary measure to the end of the full pension in the public sector which would cover a larger number of servants with the new proposed ceiling.

Moreover, in the short and medium terms, raising the ceiling for the benefits would also allow an increase in contribution among private sector workers and, therefore, more resources to finance the transition costs of the reform, in which the government would give up part of the social security contributions of civil servants who exceed the new ceiling for the organization of the complementary pension fund in public sector.7

The specific adjustment measures for the RPPS rules include: I) reducing early full retirement (5% per year); ii) establishing limits for the pension benefit; III) ending the proportional retirement and IV) instituting the contribution of retirees.

Regarding the rule of transition to full retirement, the proposal provided a reduction factor of 5% of the pension´s value for each year of retirement before the minimum age (55 and 60 years limit for men and women, respectively).8 On the other hand, it was proposed to the servants that have completed the requirements for voluntary retirement, but opted to continue working, a bonus equivalent to the value of the social security contribution (11%).

The establishment of the 70% (seventy percent) limit of the value to which the servant would be entitled to in relation to their retirement for the grant of the widow´s pension was one of the main specific adjustment measures adopted regarding the public servants dependents. As we have seen so far, the full or partial value of the pension was defined according to the circumstances of the death of the servant.

The third change refers to the end of the proportional retirement for servants who had entered the service prior to the enactment of Constitutional Amendment 20, which could be requested at 48 years of age, for women, and 53 years of age for men, as occurred among workers in the private sector. Said benefit was kept in the RGPS.

One of the most polemic proposals was the establishment of social security contributions for retired civil servants and pensioners, which would exempt active servants and retirees who, until the date of enactment of the

9

pension reform amendment, received proceeds that exempted them from tax income.

At this point, it is interesting to note that on one hand the main goal of the reform was to homogenize the rules for granting benefits in the RGPS and RPPS; on the other hand, the rules established for the RPPS became stricter than those practiced in the RGPS, as is the case of the age limit for retirement (60 years of age for men, 55 years of age for women), reduced value of pensions (70% of the benefit), end of the proportional retirement and contribution by retirees.

None of these measures was extended to private sector workers, although the homogenization of the rules for granting pension benefits of the RPPS and RGPS has been the main argument for the reform.

The emphasis on inequality among public sector and private sector pension systems marked the first major disruption of the Lula government with an important segment of the Workers´ Party (PT) and the Unified Workers’ Central (CUT). During Cardoso's two terms, with the support of the PT and the CUT, civil servants were the main protagonists of the social movement against the pension reform.

Besides Lula himself, the President, senior officials of the Executive and Legislative branches, originating in the labor unions, had been prominent in opposition to the pension reform by the FHC government, as was the case of the Minister of Social Security, Ricardo Berzoini, the Minister of Communications, Luiz Gushiken, and the President of the House of Representatives, João Paulo Cunha.

Melo and Anastasia (2005, 305) identify this “contextual change" as one of the main factors that explain the relative success of the pension reform in the Lula administration when compared to the pension reform of his predecessor:

Lula, on the contrary, focused on how to reform the public service’s social security, thus isolating public servants, who had already lost an old ally – the PT itself – and drawing national labor confederations to his side, in the fight against “privileges” and in favor of equity. Hence while Cardoso united several attentive publics against his proposal, Lula sought to divide them. (Melo and Anastasia 2005, 132)

For these authors, "the exchange of posts between government and

opposition" interfered in the distribution of preferences and resources among the actors involved in the pension reform debate. In this case, the conversion of PT and PC do B to the precepts of the pension reform to which they opposed during the FHC administration stands out. Regarding civil servants, the change in the position of the main left wing leaders has further reduced the influence of the civil servants on the reform.

Although the academic production has already pointed out that one of the greatest trumps of the pension reform by the Lula administration was not proposing simultaneous changes to the RPPS and RGPS; one can say that the government was far beyond this localized strategy. Lula used the homogenization of the rules of the pension systems as one of the main arguments in favor of the reform: “fighting against the privileges of the RPPS in favor of the rights of the RGPS”. In other words, he explored the differences

10

between the interests of public and private sector workers that once, under the direction of CUT and PT, all together resisted the pension reform proposed by the FHC administration.

Trade unionism and decision-making process Pension reform was the first of the reforms announced in the inaugural

speech of President Luiz Inácio Lula da Silva on January 1st, 2003. On April 30th the same year, accompanied by the 27 governors of the federation and 82 members of the newly created Council of Economic and Social Development (CDES), Lula submitted to the National Congress his proposed reform to the Brazilian social security system.

The project rescued several points defeated in the proposed pension reform of the Fernando Henrique Cardoso administration (1995-2002), many of which, it is worth noting, had been harshly criticized by the Workers’ Party (PT) itself and its main ally in the trade union movement: the Unified Workers’ Central (CUT).

Comparing the two reform processes, as pointed out by Melo and Anastasia (2005), Lula faced fewer institutional and political obstacles and achieved greater success than FHC. The Lula administration suffered no major defeat in the decision-making process of the Constitutional Amendment Proposal 40 (PEC 40/2003), unlike the FHC administration, which suffered several defeats in the adoption of the Constitutional Amendment Proposal 21 (PEC 21/95).9

The first step in the pension reform within the House of Representatives was to evaluate the constitutionality of the matter. This was also the first time that members of the PT, including the proposal reporter himself, Deputy Maurício Rands (PT / PE), were ranked among those opposed to the pension rights of civil servants in the publications of the Inter-Union Department for Parliamentary Advisory (DIAP).

Within the Constitution, Justice and Citizenship Committee (CCJC) of the House of Representatives (CD) the coalition government had 36 MPs (63.16%) among the 57 that were part of the committee. Of these only one was a member of the trade unionist caucus, Luiz Carlos da Silva (PT/SP), known by his nickname of “Professor Luizinho”. During the voting process on the constitutionality of the matter, the project was approved by 44 representatives (77%) and reproved by 13 (23%). A first sign that the government could count on the opposition sectors to compensate possible disputes in its support base.

11

Table 2

Voting in the CCJC

While the government had disciplined the voting of 33 (91.2%) of the 36 members in the CCJC, accounting for only two dissenting votes in the PMDB and one in PDT, the opposition, in turn, was divided: five representatives (50%) of the PFL and five (75%) of the PSDB followed the reporter’s vote.

PARTY MEMBERS YES NO

PT 10 10 0

PMDB 8 6 2

PL 5 5 0

PTB 4 4 0

PSB 3 3 0

PDT 2 1 1

PPS 2 2 0

PC do B 1 1 0

PV 1 1 0

Coalition 36 33 3

PFL 10 5 5

PSDB 7 5 2

PRONA 1 0 1

Opposition 18 10 8

PPB 2 1 1

Nonpartisan 1 0 1

Independent 3 1 2

TOTAL 57 44 13

Source: DIAP (2003)

12

Independent representatives of the PPB were also divided, with a vote in favor of the constitutionality of the matter and one against it.10

The DIAP recorded 10 votes from PT among the 44 considered contrary to the civil servants in assessing the constitutionality of PEC 40/2003 on CCJC. Conversely, among the 13 votes in favor of public servants, not one was from a member of PT. The only trade union member on the committee, Professor Luizinho (PT/SP), was faithful to the political party’s instructions and voted for the constitutionality of the matter. It was the first indication of how the trade union caucus would behave throughout the legislative course of the reform.

This situation greatly reduced the bargaining power of trade unionism in the legislative debate of the pension reform. As we observed in the first stage of the processing within the CCJC, representatives related to left-wing parties that once defended the interests of the rank and file in Congress now voted for the bill submitted by the Executive.

During the FHC administration, with support from the public civil service, the PT representatives fulfilled an important role in exploiting the weaknesses of the coalition government and in delaying, as much as it could, the pension reform legislation processing. In the Lula administration, in addition to position itself in favor of the reform, PT also had the support from former adversaries, advocates of deeper changes in the pension system for civil servants, as was the case of members of the PSDB and the PFL.

In other words, the government not only had the disciplined control of its support base, but also could count on votes from opposition sectors, notably from members of PSDB and PFL originating from states in which these parties were in power and therefore had a direct interest in extending the actions taken in the federal pension level to the state pension level.

In this case, it should be noted that all governors of the federation supported the Lula administration’s pension reform, which would promote an improvement in the state reserves when it comes to spending on the inactive public servants. Thus, representatives linked to their respective state governments have tended to vote along with the federal government, even though they were in the opposition (Melo and Anastasia 2005).

As we shall see, from the vote on the constitutionality of the matter until the second round vote in the Senate, several times the Executive could rely on the indiscipline of the opposition to compensate for the indiscipline of the coalition government. While parts of the government voted with the opposition, parts of the opposition voted with the government.

In previous works we showed that the trade union members had no institutional veto power in the pension reform decision-making process, but through the trade union representatives caucus in Congress they could influence the reform’s decision-making game (Jard da Silva 2007; 2008). This strategy was used by the Brazilian trade unions to exploit the lack of cohesion of the governing caucus in the first administration of Fernando Henrique Cardoso (Jard da Silva 2013).

However, during the Lula administration, this indirect participation in the reform’s decision-making process was hindered due to changes to the PT’s position regarding the pension system reform for civil service. The location of the PT caucus inside the coalition government has completely changed the pension reform game. The servants had lost an important ally in the parliamentary arena.

13

On the Special Commission on Social Security (CESP), the Executive was able to ensure greater discipline of its support base, while the opposition parties, PSDB and PFL, remained divided over PEC 40/2003. MPs members of the PPB, although declaring independence from the coalition government, also voted in favor of the reform.

As for the game of political institutions, the government majority was extremely careful in indicating CESP’s chairman and reporter, the first role was allocated to Deputy Robert Brant (PFL/MG), former minister of social security of the Fernando Henrique Cardoso administration, and the latter was Deputy José Pimentel (PT/MG), a member of the Congress loyal to the government’s guidance. Two political leaders, one from the opposition and one from the government, strongly committed to the success of the reform.11

Table 3

CESP Voting

PARTY MEMBERS YES NO

PT 6 6 0

PMDB 6 6 0

PL 3 3 0

PTB 3 3 0

PSB 2 2 0

PDT 1 0 1

PPS 1 1 0

PC do B 1 1 0

Coalition 23 22 1

PFL 6 1 5

PSDB 4 2 2

PRONA 1 0 1

Opposition 11 3 8

PPB 3 3 0

Independent 3 3 0

TOTAL 37 28 9

14

In CESP, the coalition government had 23 MPs (38.60%) among the 37

that were part of the Commission. The opposition had 11 members (21.05%) and PPB, 3 (5.26%). The Commission had five trade union MPs, four from PT and one from PC do B. Twenty-two (95.65%) out of the 23 representatives part of the coalition government voted for the pension reform bill. Only one member from PDT voted against the proposal, but the government could still count on the vote of three "independent" members from PPB. The opposition parties (PFL, PSDB, and Prona) also showed greater cohesion, only three (27.27%) of the 11 representatives part of the Commission voted in favor of the government’s proposal.

The five trade union members who were part of CESP (four from PT and one from PC do B) followed the government’s guidance and voted for the bill. Once again, in the coalition government, the orientation of the party coalition was ahead of the corporate interests of the trade union caucus. Even representative Jandira Feghali (PC do B - RJ), classified as "long-time defender of civil servants", voted with the government.12

Considering the key votes of PEC N.o 40/2003, the Lula administration did not have great difficulties in approving its proposal in the different instances of the legislative process in both houses. On average, throughout the decision-making process, the government had 75% of the votes to approve the pension reform bill, more than the minimum required (60%) for approval of constitutional amendments.

In all those votes the Executive counted on the disciplined vote from the trade union caucus in favor of the pension reform project. On average, 80% of trade union representatives in Congress voted in favor of the government. It is worth noting that at crucial moments in the second round of voting, the fidelity of the trade union caucus surpassed the fidelity of the coalition government.

Table 4

Legislative Proceedings

House Senate

1. Round 2. Round 1. Round 2. Round Average

Plenary 72,6 69,7 85,2 63,0 72,6

Coalition

government 83,5 83,8 86,3 74,5 82,0

Union Caucus 82,0 84,0 80,0 80,0 81,5

15

Throughout the pension reform legislative proceedings the Executive could count on, in average, 72.6% of the votes of the MPs. In the first and second rounds of the Senate, the government’s success was easier (85.2%) and harder (63.0%), respectively. The coalition government remained cohesive in the voting process with an average of 82.0% of the favorable votes. The trade union caucus, in turn, was equally loyal to the government’s guidance with the favorable vote of 81.5%.

The resistance expected from trade union members, pressured by civil service representative bodies and social movements contrary to the reform did not take place. The political party’s guidance weighed more than the corporate pressure in the decision made by MPs of trade union origin. In other words, between the interests of an important sector of the Brazilian labor movement and the orientation from the partisan leadership, the latter prevailed.

In the first round voting of the pension reform, out of the 50 union members in attendance, four voted against and five abstained. The dissenting votes (against and abstentions) came mainly from representatives who had tied their political career to public civil sector employees (civil servants and employees of state-owned companies): three doctors, three teachers, a civil servant, one from the telephonic services sector, and one from the electric sector. However, even in the broad category of “public/civil sector workers” the government was victorious, gaining the support of 17 out of the 26 trade union members (65%).

A similar result was reached by the government in the second round voting. The same representatives who voted against or abstained from voting in the first round repeated their votes in the second round. And the government could once again count on the majority of votes (65%) of the public/civil sector trade union caucus.

In the Senate, the situation encountered by the Executive was even quieter. Only Senator Heloisa Helena (professor) opposed to the government's proposal in a systematic way (one absence and one vote against), the other trade union senators (four) voted in favor of the pension reform in the two rounds of voting: Ana Julia Carepa (bank worker), Fatima Cleide (teacher), Ideli Salvati (teacher), and Paulo Paim (metal worker).

It is worth noting that, once again, even among teachers, one of the most important professional groups in the public sector and more resistant to pension reforms, the trade union senators’ favorable vote won: 2 to 1. On the other hand, among the senators from the professional groups linked to private sector (banking and metallurgical), fidelity to the Executive was absolute.

The voting results indicate that even among representatives and senators tied to the professional groups of the public sector, the party’s guidance prevailed to the detriment of specific demands from civil servants. Thus, the data analyzed confirms the thesis of the predominance of the Executive over the Legislative, even in situations that affect the immediate interests of a direct and important sector of the parliamentary basis.

With the support from the trade union caucus and opposition parliamentary sectors, the Lula administration approved its pension reform bill in the Congress with few significant changes. In the controversial retirees´ and pensioners´ contribution, the Executive agreed to raise the ceiling for exemption from R$ 1,200.00 to R$ 1,440.00. For pensions, it agreed to decrease from 50% to 30% the reducer applied on benefits exceeding R$ 2,400.00. Finally, it

16

reduced from ten to five years the requirement for minimum stay in office in order to be granted full pension (value equal to last wage before retiring).

On the other hand, it caused profound changes to the civil servants regimen, among which: a) definition of minimum requirements for current servants to obtain full pension, b) establishment of a R$ 2,400.00 ceiling (the same amount of private workers) for retirements of new servants; c) maintenance of parity then subsisting between raises paid to active and inactive only for current servants; d) end of the proportional retirement and establishment of a reduction factor of 5% of the pension´s value per year for those retiring before the minimum age; e) institution of a tax of 11% of the pension´s value for retired civil servants; f) 30% discount on the value of the widow´s pensions; g) definition of higher payment to the Supreme Court members – STF – as a salary cap for federal employees (Melo and Anastasia 2005).

In summary, the pension reform of the Lula administration has imposed heavy losses to civil servants. Many of them consisted of redemptions of the social security policy agenda of the FHC administration, which has suffered, at the time, great resistance from the opposition parties - PT, PDT, and PC do B - and from the major union confederations in Brazil - CUT, CGT, and FS.

Notwithstanding, the trade union representatives in Congress voted in favor of the Executive's proposal, following the partisan leadership’s guidance. Paradoxically, it had on its side its former political opponents - PSDB and PFL - that were once unable to obtain the union caucus support for its pension reform project.

Final provisions

In situations where trade union representatives in Congress support the party in power, the union caucus tends to defend the specific interests of its base of representation or to follow the guidance of the partisan coalition of which it is part? This was the fundamental question raised earlier in this paper.

In light of this issue there are two possible reactions: i) the MPs elected with the support from trade unions oppose to initiatives that involve losses to their constituencies; II) the trade union representatives in Congress follow the political party’s guidance rather than the demands of its base of representation.

In its core, the research problem that guided this work refers to the implied trade union-party-government relationship in a process of changes to the public policies in which a government allied with trade unions imposes focused and immediate losses on specific sectors of the trade union caucus, especially on active and inactive servants of the civil sector

The research problem was approached from the analysis of the participation of representatives linked to the Unified Workers´ Central (CUT) in the pension reform decision-making process led by the Workers' Party (PT) during the first term of President Luiz Inácio Lula da Silva (2003-2006).

The peculiar characteristics of the coalitional presidentialism defined opportunities for the participation of groups of interest in the pension reform decision-making process. In the event of trade union participation, the main opportunities were found at the moment of analysis of the matter in legislative committees.

17

In the Brazilian institutional political arrangement, legislative committees do not constitute veto arena. The Executive, through the majority party, has at its disposal several political instruments to overcome institutional resistance of minorities within the legislative committees, including the very dissolution of these committees. This fact limits the range of strategy available to lawmakers to oppose themselves to the processes of change to public policies.

Throughout this paper we have argued that the rules of the pension reform decision-making process and the loyalty of trade union representatives in Congress to the partisan leadership’s guidance drastically limited the power of resistance of the civil servants in the pension reform decision-making process.

Unlike what occurred in Fernando Henrique Cardoso’s administration (1995-2002), during Luiz Inácio Lula da Silva’s administration (2003-2010) the trade union caucus was part of the support base of the Executive in the Congress. And in light of the oppositional pressure by the civil service and the political party’s guidance for approval of the pension reform, the trade union representatives in Congress followed the latter.

This "contextual change" was the main asset of the Lula administration in the pension reform (Melo and Anastasia 2005). The left-wing parties that, as opposition, rejected the pension reform, once in the government, began to support it. On the other hand, the opposition whether due to political coherence or pragmatic interests with regards to the financial balance of state pension regimens, also approved the Executive’s project, particularly those representatives whose opposition was in the state government.

As showed, even among members historically linked to trade unions, the favorable vote to PEC N.o 40/2003 prevailed. Only a minority of representatives linked to civil service trade unionism resisted the proposal before the threats of retaliation by the partisan leadership.

In summary, the data presented in this paper confirms the thesis of party discipline and Executive dominance over the Legislative. Furthermore, it shows that between the pressure imposed by the base against the reform and the pro-reform government’s guidance, the absolute majority of trade union representatives in Congress followed the party’s direction and voted with the government.

18

Glossary of Political Parties and Union Confederations

CGT – Central Geral dos Trabalhadores (General Workers’ Confederation) CUT – Central Única dos Trabalhadores (Unified Workers’ Confederation) FS – Força Sindical (Union Force) PC do B – Partido Comunista do Brasil (Communist Party of Brazil) PDT – Partido Democrático Trabalhista (Democratic Labour Party) PFL – Partido da Frente Liberal (Party of the Liberal Front) PL – Partido Liberal (Liberal Party) PMDB – Partido do Movimento Democrático Brasileiro (Party of the Brazilian Democratic Movement) PPB – Partido Progressista Brasileiro (Brazilian Progressive Party) PPS – Partido Popular Socialista (Socialist Popular Party) PSB – Partido Socialista Brasileiro (Brazilian Socialist Party) PSDB – Partido da Social Democracia Brasileira (Brazilian Party of Social Democracy) PT – Partido dos Trabalhadores (Workers´ Party) PTB – Partido Trabalhista Brasileiro (Brazilian Labour Party) PV – Partido Verde (Green Party)

19

Reference List Abranches, Sérgio H. 1988. “O Presidencialismo de Coalizão: O Dilema

Institucional Brasileiro.” Dados- Revista de Ciências Sociais 31 (1): 5-33. Arnold, Douglas. 1990. The Logic of Congressional Action. New Haven:

Yale University. Brasil. Câmara dos Deputados. 2003. Proposta de Emenda à

Constituição, Exposição de Motivos Interministerial. H.R. PEC 40/2003. Diniz, Simone. 1999. “Processo Legislativo e Sistema de Comissões.”

Revista do Legislativo 26 (April): 59-78. Figueiredo, Argelina C., and Fernando Limongi. 2001. Executivo e

Legislativo na Nova Ordem Constitucional. Rio de Janeiro: FGV. _____. 1998. “Reforma da Previdência e Instituições Políticas.” Novos

Estudos 51(July): 63-90. Gomes, Sandra. 2006. “O Impacto das Regras de Organização do

Processo Legislativo no Comportamento dos Parlamentares: Um Estudo de Caso da Assembleia Nacional Constituinte (1987-1988).” Dados- Revista de Ciências Sociais49: 193-224.

Guerzoni, Gilberto. 1999. “A Previdência dos Servidores Públicos, a Questão Contributiva e os Institutos e Fundos de Pensão.” In Reforma da previdência: vetores do debate contemporâneo. Rio de Janeiro: Konrad-Adenauer-Stiftung, 1999.

Jard da Silva, Sidney. 2007. Reforma da Previdência em Perspectiva Comparada: Executivo, Legislativo e Sindicatos na Argentina e no Brasil. São Paulo: Humanitas/Fapesp.

Jard da Silva, Sidney. 2008. “The Executive and Legislative Branches and Trade Unions in the Argentine Social Security Reform.” Dados - Revista de Ciências Sociais3 (Selected Edition): 345-377.

Jard da Silva, Sidney. 2013. Companheiros Servidores: O Sindicalismo do Setor Público na CUT. Belo Horizonte: UFABC/Fino Traço.

Jard da Silva, Sidney, and Rafael Cortez. 2007. “Interação Sindicalismo-Governo na Reforma Previdenciária Brasileira.” In Políticas Públicas no Brasil, ed. Gilberto Hochman, Marta Arretche, and Eduardo Marques. Rio de Janeiro: Fiocruz.

Jard da Silva Sidney, and Simone Diniz. 2009. “Reforma Previsional, Sindicalismo y Proceso de Toma de Decisiones en Argentina y en Brasil.” Documentos y Aportes en Administración Pública y Gestión Estatal 12 (June): 31-58.

Limongi, Fernando. 2006. “A Democracia no Brasil: Presidencialismo, Coalizão Partidária e Processo Decisório.” Novos estudos – CEBRAP76 (November): 17-41.

Melo, Marcus A. B. C. de. 2002. Reformas Constitucionais no Brasil: Instituições Políticas e Processo Decisório. Rio de Janeiro: Revan.

Melo, Carlos Ranulfo, and Fátima Anastasia. 2005. “A Reforma da Previdência em Dois Tempos.” Dados – Revista de Ciências Sociais 48 (June): 301-332.

Pacheco Filho, Calino, and Carlos R. Winckler. 2005. “Reforma da Previdência: O Ajuste no Serviço Público.” Indicadores Econômicos FEE 32 (March): 221-248.

20

Pereira, Carlos, and Bernardo Mueller. 2000. “Uma Teoria da Preponderância do Poder Executivo: O Sistema de Comissões no Legislativo Brasileiro.” Revista Brasileira de Ciências Sociais 15 (June): 46-67.

Pierson, Paul. 2007. Dismantling the Welfare State? Reagan, Thatcher, and the Politics of Retrenchment. Cambridge: Cambridge University Press.

Power, Timothy J. 2010. “Optimism, Pessimism, and Coalitional Presidencialism: Debating the Institutional Design of Brazilian Democracy.” Bulletin of Latin American Rese6arch29 (January): 18-33.

Ricci, Paolo, and Leany B. Lemos. 2004. “Produção Legislativa e Preferências Eleitorais na Comissão de Agricultura e Política Rural da Câmara dos Deputados.” Revista Brasileira de Ciências Sociais19 (June): 107-129.

Rocha, Marta Mendes da, and Cássio Felipe Barbosa. 2012. “Regras, Incentivos e Comportamento: As Comissões Parlamentares nos Países do Cone Sul.” Revista de Sociologia e Politica16 (August): 93-104.

Santos, Fabiano. 2002. “Partidos e Comissões no Presidencialismo de Coalizão”. Dados – Revista de Ciências Sociais 45 (January): 237-264.

Santos, Fabiano, and Alcir Almeida. 2011. Fundamentos Informacionais do Presidencialismo de Coalizão. Curitiba: Appris.

21

1 For an analysis of ‘coalitional presidentialism’ views since Brazilian democratization in the mid-1980s,

see Power (2010). 2 As shown by Gomes (2006) the centrality of the party leaders figure in the legislative process began in

the constitutional process itself. 3 At the time it took into account "eighty percent of the entire contribution period, multiplied by the

Social Security Factor which is applied to calculate retirement pensions for contribution time and for

age." (Brasil 2003). 4 As pointed out by the government itself: "In fact, this critical point goes back largely to the date of

enactment of the Federal Constitution, since before the establishment of the Unified Legal System of

Federal Civil Servants - RJU as well as those for states and municipalities, the servers, which were

already provided statutory status, contributed only to the pensions to be paid to their spouses and

dependents (and not for their retirement). (Brasil 2003, 9) 5 A measure indirectly linked to the pension system reform, but of great interest of the senior civil service

was the establishment of a ceiling for the perception of pay, earnings and pensions in the public service.

In this case, the project provided for higher pay of the monthly allowance of Justices of the Supreme

Court (STF). 6 The Complementary Social Security Foundation for Federal Public Servants (Fundação de Previdência

Complementar do Servidor Público Federal - FUNPRESP) was regulamented by Dilma Rousseff´s

administration in 2012. 7 According to studies conducted by the Social Security Department, increased revenues would account

for 147 million reais a month (Brasil 2003), while the initial costs to implement the social security

pension fund of civil servants would involve initial contribution by the Federal Government of 50 million

reais. 8Applicable to servants that "had entered the public service after the publication of Constitutional

Amendment 20, of 1998" (Brasil 2003, 19). 9 PEC was divided into four distinct proposals: 30/1995, 31/1995, 32/1995, and 33/1995. The latter, with

several changes, focused on the social security reform. 10

The congressman from Rio de Janeiro, Eduardo Paes (then not affiliated to any Party) also voted

against the constitutionality of the matter. 11

It is worth noting that during the FHC administration, the first CESP’s chairman and reporter were two

critics of the Executive’s proposal, congressmen Euler Ribeiro (PMDB/AM) and Jair Soares (PFL/RS),

which made the matter-obstruction work much easier by the opposition, leading the President of the

Congress, Luís Eduardo Magalhães (PFL/BA), to dissolve the Committee (Figueiredo and Limongi,

1998; Melo, 2002). 12

The following trade union representatives in Congress were also members of CESP: Anselmo de Jesus

(PT/RO), Arlindo Chinaglia (PT/SP), José Pimentel (PT/CE), and Luiz Antônio de Medeiros (PFL/SP).