The Labor Market and Social Security in Brazil

Abstract

In Brazil, social policy intended to provide for adults unable to provide for themselves and/or their dependents due to their advanced age, job tenure, or illness is carried out by three systems?two of them public, the other private. Of the public systems, the one dedicated to private-sector workers is the re sponsibility of the National Social Security Institute (INSS), while the other is organized around those who work for various levels of government. The private system may be closed?extending only to the employees at a com pany?or open?organized by banks or insurance companies and intended for all citizens interested in signing up with the system. Pension plans or systems covering public and private-sector workers have in recent years been the subject of lengthy discussions within Brazilian soci ety. In the federal government's view, a reorganization of the INSS was ab solutely necessary in view of financial difficulties. To form an idea of the importance of this system,1 note that in 1999 it provided assistance to 19,204,032 people at a cost of r$60 billion, or 5.8 percent of the gross do mestic product (GDP). It is basically financed by contributions from the pri vate sector of the economy?that is, by jobholders, workers, and employers. Beginning in 1994, countless changes were made to the pension funds system managed by the INSS. Some of these changes did not require leg islative approval, while others were simply easy to get through the Bra zilian congress. As example of these changes, we cite birth and funeral assistance, as well as the permission given to certain classes of profes