Discuss social reform? Jorge Bravo says it is “timing” suitable

O coordinator of the Social Security Reform working group today argued that “now it was the right timing” to begin the discussion of a structural reform, considering that there are proposals for “fast implementation”.

“Starting the process of discussing a structural reform [of Social Security] was now the appropriate ‘timing’,” said Jorge Bravo, who was heard today in the Assembly of the Republic, following requests from the Aquira, PS and Left Block (BE).

According to the coordinator, there is “a fairly broad set” of proposals from the working group that “are much faster to implement,” he said, giving as an example the grain-to-grain programme, the ‘Save As You Buy’ programme (saving through consumption) or the integrated guarantee for old age.

These “are reforms that are not very difficult to consensualize and recalibrate from a technical point of view and even, at the bottom, rearrange operational systems so that they are implemented easily,” he added.

On the other hand, Jorge Bravo admitted that “the most demanding reforms” from a legislative and operational point of view relate to the introduction of a public system of notional accounts with defined contribution because “he would have to prepare the entire public administration to do so”, he maintained.

The coordinator of the working group indicated that the creation of complementary automatic registration systems is another of the “fundamental” reforms and that “first requires consensus on the part of society”.

With regard to the adoption of a system of national accounts, and after this proposal has been the subject of several criticisms by some Members, Jorge Bravo assured that “it maintains everything that is the distribution system today”, changing “only” the form of constitution of rights.

According to the working group, the current system does not guarantee justice, social equity or “genera incentivizing contribution”, leading to no “any incentive” to the total declaration of income, which impairs the financing of the public system, detailed.

Jorge Bravo argued that the system of notional accounts is better “adequate” to the 21st century labor market, since it is a labour market “workers will switch between jobs for others and independent work, periods in national territory, periods abroad” or periods in which they can have both functions.

“The current system, very based on strict rules and on a model of employment hiring that no longer exists in the 21st century does not allow us to follow,” he argued, arguing that “fragmented jobs, insufficiently declared wages, interruptions for unemployment, for parenthood, are better covered” with this system.

Jorge Bravo also refused that the proposed system contributes to the reduction of pensions, arguing that, on the contrary, it “contributes to improvement because it generates incentives for labour market participation”.

The Minister of Labor, Rosario Palma Ramalho, has been pushing away a structural reform of Social Security, saying that this is a time for reflection, but admitted that a possible future understanding will have to depend on a regime pact.

On August 27, the Prime Minister had wished for “a national understanding” to be possible before the forthcoming elections regarding structural changes in social security that guarantee the sustainability of the system.

The report of the working group led by Jorge Bravo was handed over to the government in July and presented publicly on August 18, and among the various proposals suggests the reformulation of the penalty for early retirement, the creation of new public debt instruments of the retail segment to serve as a supplement to the pension or adoption of professional pension plans for automatic membership, which allow the resignation.

Following the presentation of the document, the Government reiterated that it will not proceed with a structural reform of social security in this legislature and said that the report is another contribution to the public debate.

Even before the report was presented at a regular hearing, Palma Ramalho admitted to introducing additional measures to improve the future of new pensioners, even without further structural reform.