Experts say that factors such as the aging of the population and the growth of informal workers influence the deficit trajectory
For experts consulted by Power360The trajectory dO RGPS (General Social Security Regime) leads to the need for a new reform of the system. In 2019, during the Presidency of Jair Bolsonaro (PL), Congress enacted the last change in the rules.
In 2024, accounts involving Social Security must show a gap in R$326.2 billion (2.5% of GDP), according to projections from the 2023 General Balance Sheet of the Union (full – PDF – 5 MB), released by the National Treasury. If nothing is done, by 2100 the financing need could reach R$25.5 trillion.
There are at least 3 factors that influence the growing trajectory of the pension deficit, one “time bomb” in public accounts:
1) growth of informality – there was a 26.7% increase in the number of workers without a formal contract from 2016 to 2023, according to a survey by the CNC (National Confederation of Commerce in Goods, Services and Tourism) based on data from IBGE (Brazilian Institute of Geography and Statistic). Last year, it reached 13.5 million. The rresult indicates the tendency of “uberization” in the business market;
2) slowdown between formals – there was growth of 3% in 2023 compared to 2022 among those with a formal contract: the stock went from 36.9 million to 38 million. In the previous year, the increase had been 6.9%;
3) aging of Brazilians – The population aged 65 or over increased 6.5% from 2010 to 2022: from 14.1 million to 22.2 million. This group represents 10.9% of Brazilians.
The growth in the number of elderly people in Brazil results in more spending on retirement. At the same time, there is a reduction in contributions to the social security system. All of this is linked to the advancement of informality – those in this condition do not transfer amounts to Social Security.
Ecio Costa, economist and professor at UFPE (Federal University of Pernambuco), says it is necessary to create conditions to attract the self-employed and informal workers. Furthermore, it reinforces the importance of broader reform.
“An interesting solution is to make the reform have a format similar to that of private pensions, with capitalization. It is something adopted by other countries and makes the regime more sustainable. Self-employed and informal people can be attracted”he declares.
The expert says that the decrease in the birth rate in the country also has an impact. “Younger people are having fewer children and this consequently has an impact on the base of the pyramid, which supports Social Security. Therefore, Social Security is destined to fail”he declares.
Costa states that the situation means that the government has to make increasingly larger contributions.
Upon taking office on January 3, 2023, minister Carlos Lupi signaled that he did not see the need for change when he said that Social Security “not deficient”.
O Power360 contacted the Ministry of Social Security to find out if it was interested in commenting on the data presented in this report and if there was any plan in progress to reduce the need for financing, but had not received a response until the publication of this report.
BREAKTHROUGH IN CITY HALLS
A CNM (National Confederation of Municipalities) states that the social security debts of cities with their own regime total R$43.1 billion. The entity says it is concerned about the debt of city halls.
Lawyer Pedro Melchior states that the growing social security debt has compromised the financial health of Brazilian cities. “Today, city halls use part of their revenue to make contributions to the Social Security systems because the collection from employees is no longer sufficient, especially in small and medium-sized municipalities”he declares.
OBSOLETE EMPLOYMENT RATE
With the advancement of informality and the aging of the population, the unemployment rate percentage he follows at a low level: 7.8%. IBGE researches unemployment in some metropolitan regions, and not throughout Brazil.
The agency disregards people who stop looking for a job after some time – they are unemployed, but leave the official statistics.
COLLECTION ON THE RISE
Federal government revenue totaled R$190.6 billion in March. It is the highest value for the month since 1995, the beginning of the historical series.
It grew 7.22% in real terms (adjusted for inflation) compared to March 2023, according to a report (full – PDF – 1 MB) from the Federal Revenue Service.
In the 1st quarter, revenue totaled R$660.85 billion in current values, which is also a record. It represents a real increase of 8.36% compared to the same period last year.
The increase in revenue partly helps the government cover the Social Security gap.
