Volume 2

Politics, Fiscal Crisis and Social Security Reform in Brazil (1985)

James M. Malloy

Malloy, J. Politics, Fiscal Crisis and Social Security Reform in Brazil Latin American Issues [On-line], 2.

About the Author

James M. Malloy is Professor of Political Science and Chairman of the Department of Political Science at the University of Pittsburgh. He is author of Bolivia: The Uncompleted Revolution and The Politics of Social Security in Brazil and is editor of Authoritarianism and Corporatism in Latin America. His areas of specialization are comparative politics, public policy, and political-theory in Latin America. He served as a member of the Executive Council of the Latin American Studies Association from 1982 to 1985.


The social security system of Brazil, that is one of the largest and most sophisticated systems in Latin America, is currently in a state of acute crisis, because it is paying out much more to meet claims than it can generate in revenue. However, according to the author, the problems of social security are a kind of “subplot of the larger drama” of the political economy of Brazil. Therefore, to examine the social security system is, in effect, to examine also the political and economic systems of the country as a whole.

As a Bureaucratic/Authoritarian state in the 1960’s and 1970’s, Brazil reformed its social security system in such a way as to limit the political power of certain interest groups, and to increase the power of certain other groups. In this way the power of the State was asserted through the military/technocratic alliance that it then characterized Brazilian government. In other words, social security was used as a tool of governance.

However, in the current context of developing democracy, the system also reflects the changes now taking place in Brazilian government and politics. The final conclusion of the author is that analyses of specific cases, such as the one that follows, might contribute to developing “middle range theories in the areas of statecraft and public policy.”

-Frank J. Kendrick, Editor



Brazil’s social security system is in a state of acute fiscal crisis. Presently, the system is paying out substantially more in meeting benefit claims and providing mandated services than it is generating in revenue. The result is a deficit that in January 1984 was reported at more than U.S. $1.4 billion; a sum so large that there has been talk of suspending benefit payments and even threats that the system’s medical assistance program could collapse. Even if these predictions prove apocryphal, the situation is grim economically and potentially explosive politically.

To speak of fiscal crisis and potentially negative political consequences is, of course, hardly news with regard to contemporary Brazil. Owing largely to its staggering U.S. $95 billion in foreign debt and the stringent policy constraints imposed on it by international agencies such as the International Monetary Fund (IMF), the political management of fiscal crisis in a climate of enforced austerity has become the name of the political game in contemporary Brazil. In the present context, the management of the fiscal crisis of the social security system is perforce a subplot of the larger drama of crisis-driven political economy in Brazil.

Yet, the fiscal problems of the social security system are hardly a minor subplot in the current scene. Presently, Brazil has one of the largest and most sophisticated social security programs in Latin America, and among the less developed countries generally. The system boasts the nation’s second largest budget, provides some mode of nominal protection to the bulk of the population, and consumes some 6% of the nation’s gross domestic product. As we will see below, social security policy became, during the 1970’s, one of the key instruments of statecraft of the authoritarian regime that has dominated Brazil since 1964. While one would not classify Brazil as a welfare state, during the 1970’s it evolved into a cross between what we might term a social insurance state and a social service state.

Social security policy will, no doubt, be one of the crucial areas of public policy in Brazil over the next months and as such should pose a substantial test of the government’s political and managerial creativity. Likewise, an analysis of the political context of this crucial policy area provides the outside observer with a particularly useful way to cut into the morass of political economy in contemporary Brazil, and to think about a number of important political questions such as dynamics of public policymaking, the role of the state, and the impact of the external environment on the policy process.

In this paper, we will examine the political and economic context around the crisis of the social security system and attempt to think about how this issue interacts with the larger crisis of political economy besetting Brazil. This effort will be devoted more to raising and clarifying questions, and to suggesting linkages and explanations rather than to the formulation of any precise hypothesis or casual statements.

The present crisis of the social security system is deeply embedded in the larger immediate fiscal crisis of the state, which includes the severe set of problems and constraints engendered by the foreign debt problem and the government’s attempts to negotiate with its creditors. However, we will argue below that the larger crisis did not really cause the problems in the social security system, but rather has acted to aggravate the problems inherent in the social security system, and to severely limit the options available to the government to deal with the fiscal problems of the system. The same can be said with regard to the issue of how the international factor impacts on the social security crisis.

To understand adequately the present problems of Brazil’s social security system and their significance to the unfolding dynamics of political economy in Brazil, one must proceed at two levels of analysis: One, of course, is the immediate domestic and international context, the sources of the system’s liquidity problems, and the politics behind some recent attempts to grapple with the problems. That is, one must analyze what the Brazilians call the conjuntura. This will be done in the latter parts of the paper.

However, one must recognize the fact that fiscal crisis is nothing new to the Brazilian social security system. This suggests that the system’s problems are related to structural questions that, while they are exacerbated by the present general context, really go beyond it.1

Moreover, one must recognize that the crisis of social security in Brazil is not an isolated phenomenon. Throughout the capitalist world, social security systems are to one degree or another in a state of financial crisis.2 Indeed, in the minds of many observers, the multiple problems of social security in advanced capitalist societies are symptomatic of a broader “Fiscal Crisis of the Capitalist State” or more specifically a crisis of the welfare state. In short, the need to reform social security systems in environments of political and economic constraints has become a generalized problem of modern capitalist societies.

Throughout the twentieth century, Brazil, as the rest of Latin America, has developed as an integral, albeit dependent, part of a global process of capitalist development. This fact has conditioned the evolution of crucial sociopolitical structures in Brazil, such as its social security system, so that the present crisis of that system is both affected by and reflective of broader processes at work in the global system of capitalism.

The present system of social security in Brazil is a politico/administrative artifact produced by historical processes at work throughout the century both within Brazil and the global capitalist system. Hence, an adequate understanding of the present scene demands some analysis of the historical evolution of social security policy both within Brazil and the capitalist world at large. An analysis of the main contours of the development of social security is important for a number of reasons, not the least of which is the fact as a politico/administrative artifact, these systems embody a set of politically ­created constraints that inhibit future attempts to reform them. For example, many would argue that the present crisis of social security in Brazil and elsewhere is the result of previous decisions produced by the political process. These have created conflicts between the needs to finance such claims and the process of capital accumulation in modern capitalist societies. Indeed, few policies speak so directly to the ongoing issue of capital accumulation versus politically-mediated social consumption as does social security policy.

Hence, before looking at the current scene, the paper will present a brief analytical perspective on the development of social security policy first in modern capitalist societies and then in Brazil. These parts proceed from the broad analytical perspective of the literature on “dependency” and the “world system” perspective. Brazil will be viewed as a dependent part of the broader process whose development occurs in simultaneous interaction with the global process and not in some linear process of following “behind” and through a set of fixed developmental sequences defined by the advanced states. Indeed, in certain crucial policy areas such as social security, Brazil has at times in fact been ahead of more economically developed societies such as the United States.3

In this regard, the important point is that owing to its dependence, a society such as Brazil has periodically and consciously had to adapt to developments generated by the more powerful central societies of the system such as the United States and Western Europe. This kind of defensive adaptation historically induced the state to assume a more activistic role in managing both its domestic environments and its relations with the external environment in dependent countries like Brazil. An important manifestation of this situationally-induced mode of activistic and interventionistic statecraft has been the production of policies such as social security. Such, at least is the perspective of this paper.

Before proceeding into the body of the paper, some terminological comments are in order. In this paper, the term social security (Portuguese, previdencia social) is used in its original sense of a system of compulsory social insurance designed to protect the insured from certain predictable risks in the modern work cycle, e.g., accidents, sickness, old age, invalidity, and death. Classically, social security protection is based on a contribution by the insured often supplemented by contributions from employers and the state. These programs usually embrace workmen’s compensation, disability payments and various types of pensions. Some systems also give unemployment protection and, as in much of Latin America, health insurance.



From a political point of view, social security policy is linked to a restructuring of the relationship between the state and the economy in modern capitalist societies. At the end of the nineteenth century, there was a general trend throughout the Western capitalist world for the state to reassert a more regulatory and managerial role in relationship to the market. This trend has, of course, continued and expanded throughout the twentieth century. Among the many factors behind this shift to a more political or managed capitalism (reminiscent of mercantilism) was a combination of the attempt in some countries to consciously stimulate capitalist development, and a growing perception throughout the capitalist world of the need to cope with the tremendous dislocations caused by market-centered development and the society-threatening levels of conflict produced by the process. In some senses, the state was pulled into the breach, and modern statecraft, as a result, has increasingly involved a complex process by which the state seeks to manage the tension between the needs, on the one hand, for capital accumulation and investment, and, on the other, for legitimation of the system by means of sociopolitical integration.4Social insurance policy emerged as the first political/administrative approach to this dual problem inherent in the art of statecraft in modern capitalist society. As such, social insurance became a near-universal characteristic of a particular phase of capitalist development in the twentieth century.

The timing of the adoption of social insurance programs varied according to a number of factors, such as the level and type of development achieved by specific countries, the timing of development surges relative to other capitalist societies, the extent to which development was a consciously directed process, and the dominant legal and ideological orientations of specific countries.

Significantly, the first major social insurance program was adopted in 1889 by Germany, which was a relative latecomer to both capitalist development and national integration. Social insurance was an integral part of Bismarck’s policy of promoting national unity and stimulating capitalist development under the aegis of a strong state that sought to control the working class and to promote social peace through “paternalistic” social policies. Although more market-centered and ideologically liberal societies resisted the statist and paternalistic aspects of Bismarckian statecraft, the fact remains that the programs eventually adopted throughout Western capitalist societies in the first three decades of the twentieth century were basically variations on a social-policy theme defined by Bismarck’s Germany. The Bismarckian mode of statecraft was particularly attractive to the early adopters of social insurance in Latin American, such as Argentina, Chile, and Uruguay.

The First World War played an important role in the diffusion of social insurance as the first approach to state-managed capitalism, just as the Second World War was to be crucial in the emergence of the welfare stare. The War and the Russian Revolution focused attention in the West on the need to alleviate the disruptive and conflict-generating effects of market-centered development, which at that time was referred to as the “social question.” The Treaty of Versailles dealt with these matters and articulated a reformist approach to the social questions, which was then diffused primarily through the International Labour Organization (ILO).

The ILO became the center of what we might call a technobureaucratic approach to socioeconomic reform, particularly in matters pertaining to labor.5 Central to this approach was the view that the social question was essentially a matter of social engineering to be managed by technically trained experts. Social insurance became a key program in this technobureaucratic approach to the management of social conflict, and the ILO became the home base of a cadre of social insurance experts, who over the years linked into and became a reference group for social insurance professionals in specific countries. Social insurance was integrated into a technobureaucratic approach to the management of the socioeconomic process; hence it was a political matter in the sense of being an object of public policy- Simultaneously, this approach sought to depoliticize the social question by defining it as a matter for technical solutions defined by experts rather than policies produced by the push and haul of competing interests. From its inception in Bismarckian Germany through its diffusion by the ILO and other bodies of professionals in social policy, social insurance has been linked to a state centered preemptive approach to socioeconomic management. This approach ran against the concept of state and society of nineteenth-century liberalism, which held that government policy should be limited in range and basically reflect demands pressed on it by groups in society.

Social insurance was a substantially different approach to social protection from the poor laws developed in the patrimonial states during the mercantilistic phase of capitalist development. However, in both stages, social-protection policy was directed less at eliminating poverty than at structuring the control of society and channeling (and generating) the flow of labor as a key socioeconomic resource: at base, social-protection policy in the West has always been both a social-control and a labor policy.

The social question and the class conflict generated by it was, among other things, a manifestation of the loss of cohesion in capitalist society. The problem of cohesion had two dimensions: the need for a mechanism to integrate society at the base; and the need to create at the top a nexus of power capable of linking society to the structure of rule. In the first three decades of this century, the two dimensions of the problem of cohesion were manifested in interclass conflict and the equally serious problem of intra-class conflict at the apex of society, which created what has often been referred to as a hegemonic crisis of rule in modern capitalist society.6 In retrospect, it seems clear that the dual problem of social cohesion acted to pull the state back into the center of the socioeconomic process as the key to guaranteeing the overall coherence of society, by devising means to integrate society and create a new ruling coalition. Social insurance was an important policy at both levels, but most particularly at the level of integration.

In the mercantilistic phase, the incipient capitalist economy was politicized, and the patrimonial state increasingly acted as a major structure of social integration. As such, the poor laws in places like England were an integral part of the dynastic states’ integration strategy. As Polanyi has pointed out, the problem was that the stabilizing and integrative aspects of the poor laws were in contradiction with the labor needs of the emergent market system.7 The poor-law reforms of 1834 were important to the emergence of market capitalism because they allowed the conversion of the undermass of society into the abstract phenomenon of labor, and then removed blocks on the flow of labor into the market system. In this and other aspects of the state’s retreat into its “watchman role” in the liberal era, the division of labor mediated by free exchange in the market was supposed to integrate society at the base. Indeed, the market was supposed to become the master mechanism of social cohesion.

By the early decades of this century, it was more than evident that the market was a far more disintegrative than integrative mechanism. Hence, if overall social cohesion was to be achieved, new means of integration were needed in the form of consciously formulated labor policies. The trick was to find policies which, unlike the poor laws, would be compatible with the underlying logic of the market, that would supplement the market and alleviate its more disruptive effects. Social insurance emerged as an acceptable, indeed attractive, solution to this underlying set of problems.

Unlike the poor laws or means-tested public assistance, social insurance is tied less to the phenomenon of poverty or deprivation than to the work cycle within a modem division of labor. Social insurance was based on the recognition that in modern capitalist society an increasingly large number were dependent on an occupation for their well being and connection to society. Anything that disrupted stable and predictable employment translated into individual insecurity, social conflict, and potential collective disintegration.

Originally, social insurance was aimed at maintaining the income of individual family units by protecting breadwinners from calculable, predictable risks in the modern work cycle, such as accidents, sickness, disability, old age, death, and unemployment. These translated into different kinds of programs, all of which provided some range of cash benefits and some of which also provided health care. While compulsory, state-enforced social insurance spread out in almost universal form in Western society during the first four decades of this century, specific national programs varied considerably in terms of adoption, range of coverage, mix of benefits, modes of financing, and administrative structures. Hence, while the policy was universal and a manifestation of a general mode of convergence in modern capitalist society, the specific impacts of the policy varied considerably. This, in turn, was linked to the fact that while the imperative behind the creation of social insurance was universal to capitalist society, the actual political context varied considerably among geographic regions and specific nations. The programmatic diversity among nations was and is mainly a function of the diversity within the politics of social insurance policy.

As a universal approach to problems inherent in a specific stage of modern capitalist society, social insurance policy is connected to what many have pointed to as the two basically contradictory imperatives facing statecraft in these societies, namely, the need to create legitimacy for the system (heightened by the absence of a hegemonic class rooted in civil society) and the imperative of capital accumulation. Because it involves regulation of the work cycle and massive transfers of income, social insurance obviously impinges on these twin imperatives in many complex ways. Many of these matters are beyond the scope of this chapter.

Social insurance is connected to the problem of legitimacy through the question of promoting social cohesion by means of integration at the base. Social insurance was clearly part of the general process of incorporating (some would say coopting) the working class into modern capitalist society. However, it was just as significant in incorporating the constantly expanding, dependent, salaried middle class. Indeed, in many instances, the dependent middle class benefited more than the working class, not only because of the insurance benefits they received, but also because of the middle-class employment generated by the administrative expansion of the state.

As an insurance program, compulsory social security pooled or diffused the costs of covering the specific risks of specific insured beneficiaries. As a program within the political economy of modern capitalist statecraft, compulsory social insurance was also a means of socializing the costs of generating legitimacy for the system and, some would argue, of socializing the costs of capital accumulation as well. In any event, in this I will analyze social security in the United States and Latin America from the particular perspective of legitimacy and the politics of social integration and class incorporation.

From a political/legal point of view, the politics of integration and incorporation is tied to the articulation of the concept of citizenship, and particularly the dimension of rights pertaining to citizenship. Social insurance is often viewed as part of a twentieth-century extension of social rights onto the classic civil and political rights of modern citizenship.8This is a crucial but complex matter, beyond the immediate concerns of this chapter. For the moment, it is sufficient to note that social insurance is not a citizen right in the original sense. Classically, social insurance was (and largely remains) a compulsory contributory system in which a beneficiary’s right to make a claim is rooted in his having made a contribution, which is usually matched with a contribution by an employer, and in some countries by the state as well. Both the employee’s and employer’s contributions are tied to the fact that the beneficiary is employed, hence the right to make a claim in social insurance is rooted in the status of employment, not that of citizenship; or, at a minimum, the ability to enjoy this type of social right is mediated by the employment structure of society. Historically, this has been an important matter in the United States and Latin America, where specific capitalist societies have been unable and/or unwilling to articulate and enforce full-employment policies and where, unlike the more progressive systems of Western Europe, no viable notion of a general citizen right to a national minimum or some level of adequacy above a minimum has developed. (And, as we shall see, one of the crucial issues in both the United States and Latin America has been the politics of who got covered, when, and how.) Moreover, as recent debates in the United States have highlighted, there is a clear notion that social security claims are a right, whereas means-tested social assistance is not, creating thereby a rather explicit sense of dual citizenship which again is rooted in the structure of employment and the perceptions of autonomy and dependence that it generates in the public consciousness.

One final observation on the question of rights is in order. As Richard Wilson has pointed out:

Insofar as social security rests on a foundation of social insurance, the scarcities it allocates are made available only in the event of particular contingencies . . . . What each participant in a social security system receives is less a fixed quantity of scarce goods and services than the right to make potentially unlimited future claims upon a limited, but usually quite large, supply of these goods and services.9

As Wilson notes, the political appeal of social insurance is the ability rot only to socialize costs within society, but to socialize and defer them over time as well. There is a bit of a pyramid game in social insurance where it is possible politically for policymakers to inflate immediate disposable resources while deferring certain types of claims into the future. This reality has been significant in the politics of the expansion of social security coverage and benefit levels in Latin America. Before we enter into that, it would be useful to examine briefly Latin America’s position in the modern capitalist system as a basis for noting the somewhat different policy context there, than in the earlier developing core capitalist societies, such as the United States.



The usual models of development that characterize regions like Latin America as made up of a backward set of nations strewn along some linear set of developmental sequences are not very helpful to our understanding the main processes of political economy there or elsewhere. The development of twentieth-century Latin America is better described by the concept of delayed, dependent, capitalist development.10 Development has been delayed in the sense that the process began somewhat after processes initiated in the core (much as some European countries began after England); it was and is dependent and capitalist in the sense that patterns have been conditioned by the particular way Latin America was integrated into what emerged as a global system of capitalist development. The dependency image conceives the global system of capitalism to be based on an asymmetric division between a set of core countries and those on the periphery and semiperiphery. Development in the core, while not autonomous (it is less and less so in the current phase), is dominant and provides the thrust for the system; development in the periphery is dependent in the sense that it responsive to and conditioned by stimuli and processes generated in the center.

The point is that, from at least the end of the nineteenth century, capitalist development has been a singular and increasingly global process with core and peripheral faces. The passage through states or sequences likewise is general and simultaneous. Development in the periphery is less a process of following behind through stages already passed by the core states, than one of specific national adaptations to the demands of each specific stage. Given the constraints of the system, the process of adaptation in the periphery becomes more and more conscious. Moreover, an examination of the sequences in twentieth-century Latin America shows that the periphery, where possible, adapts to the latest and most advanced aspects of the center, although they take a different shape in the periphery; this accounts for the dualistic nature of most Latin American societies and the peculiar mixes of “modern” and “traditional” elements that one finds in these nations. Indeed, in some important aspects of modern political economy, the need to consciously adapt in the periphery means that certain patterns appearing there often anticipate, rather than follow developments in the center. This is particularly true in the areas of state craft and social policy, a reality that was perhaps first manifested in Bismarckian Germany.

The need to consciously adapt to processes generated in the center, in a sense forced the peripheral countries to develop an activistic mode of statecraft prior to some center countries. Very quickly the state becomes the main structure of mediation between the peripheral society and the general system. Adaptation to general sequences in the system at large increasingly becomes a matter of conscious state-centered management. Moreover, the distortions, dualisms, and modern-traditional mixes characteristic of the periphery translate into the fact that the question of social cohesion so important in the center is often posed earlier and more acutely.

In Latin America, these characteristic of peripheral capitalism combined with the basic patrimonial and mercantilistic legacy of the recent past to overcome the anti-state bias of imported liberal ideologies and induce more state-centric or neomercantilistic patterns of development. Compared to some of the core capitalist counties, like Great Britain and the United States, state-induced and managed capitalism appeared sooner; in terms of modern capitalist statecraft,many Latin American countries actually anticipated and pointed the way toward later developments in countries like the United States and Great Britain.

In Latin America, components of modern statecraft, like social insurance policy, have not been purely imitative or the product of some demonstration effect. Rather, they have been generated by the same basic problems of cohesion, integration, and legitimation that led to the adoption of social insurance programs in the core capitalist countries. The particular types of programs reflected the peculiarities of the context of dependent development.11 When social insurance emerged in the first two decades of this century as a general approach to the preemptive reform of capitalist society, many Latin American countries were quick to adopt the approach and adapt it to local circumstances. In subsequent decades, these earlier adopters increasingly integrated social insurance policy into the statecraft of conscious adaptation to the developmental sequence of the international system. Other countries adopted social insurance programs later, usually reflecting the slower growth of the secondary sector relative to the primary sector in their economies; but when they adapted, they usually hooked into the latest in international theory regarding programmatic form as defined and advocated by organizations like the ILO, which in turn had been influenced by the experiences of the early Latin American adopters as well as by those of core countries. There was, of course, diffusion going on, but it was a more complex process than simply diffusion down some hierarchy of developmental sequences: diffusion stimuli emanated from and within the region as well as coming from without.



Social protection articulated in the form of compulsory social insurance, or social security, became an underlying theme of the process of restructuring the relationship between state and society in modern capitalist society. The program developed in Brazil during the 1920’s and 1930’s, and reflected the peculiar political and economic context of Brazil, but nonetheless was essentially a variation on the underlying world system theme. An important conditioning dimension of the Brazilian context was the way that Brazil was incorporated into the World Capitalist system as a producer of primary products and a consumer of goods manufactured in the center economies. A result was that capitalist development in Brazil came in stages conditioned by the international economic context. Then in each stage, capitalist relationships were not only reorganized and set on different bases (primary product exporting, followed by import substituting, etc.) but the degree of penetration of capitalist relations into the human fabric of Brazil increased with each new stage; in the early years, the degree of penetration was limited, and a certain duality between more modern capitalist relations and more traditional relations persisted until relatively recently. That duality played an important role in shaping the development of Brazil’s social security system.

Basic social security programs were initiated relatively early in Brazil, beginning with workmen’s compensation in 1919 and the establishment of pension programs for railway workers in 1923 and seamen in 1926. The basic system that was to shape all subsequent developments was elaborated in the early 1930’s during the authoritarian rule of Getulio Vargas. That system was quite clearly a part of an activistic mode of statecraft pursued by Vargas in which he sought to strengthen the position of the state in Brazil by preempting the capacity to organize the relationship between the state and key groups, such as organized labor. Indeed, in Brazil, social security was quite consciously a part of a general labor policy articulated by the state in an attempt to channel labor as a key economic and political resource.

Social security protection was expanded incrementally on a group-by-group basis in which groups to be covered were defined in terms of their functional relationship to the modern capitalist sector of the economy. In the first instance, coverage in the public sector (military and civil servants) came first and remained distinct from the “private sector.” In the latter, the pattern of coverage reflected the underlying economic structure generated by Brazil’s relationship to the international economic system; coverage was restricted to workers in the modern capitalist sector. Within that sector, coverage went first to workers in key infrastructure activities servicing the export sector, then to those in crucial urban services and lastly to workers in the incipient industrial sector. While coverage clearly reflected the strategic position of groups in society (and hence was a kind of power map), the programs were clearly defined and implemented as a result of preemptive techno-­bureaucratic supply rather than group demand.

The agricultural sector and an inchoate urban informal sector of marginal and self-employed groups were consciously excluded for protection, although the financing schemes can he said to have forced these sectors to help pay for those who were covered. The limited extent of state penetration of society based on reliance upon social security benefits was reflective of the degree of penetration of modern capitalist economic relations into the society and served to a certain extent to reinforce the duality of the socio-economic system, a duality reflected in all aspects of Vargas’ statecraft including the political parties he ultimately fostered.

The system was based on a multiple fund model in which each group had, in effect, its own program, the quality of which varied according to the timing of the coverage, e.g., earlier programs superior to later programs. All funds were income maintenance schemes granting pension and death benefits, and over the years, each developed its own program of health care. Each fund was financed theoretically by equal contributions from workers, employers, and the state, but in practice, the state has consistently been in arrears in its payments. The funds were administered by boards of representatives of employers, unions, and the state following the general corporatist structure of labor relations set up by Vargas.

While coverage was aimed at specific sectors of the emerging working class, it is important to note that the system was also a boon to the emerging urban middle class both in terms of coverage and as an important source of middle class employment that quickly became part of a state-centered patronage system created by the regime. In fact, by the 1960’s, one in seven federal jobs were in the social security institutes.

The issue of social security as a source of politically-controlled patronage became a persistent source of conflict since the late 1930’s between what one might call the political and the technocratic wings of the social security system. Actually, this ongoing tension mirrored a broader division set in motion by Vargas between, on the one hand, techno-bureaucratic elites charged with running the expanded and modernized state structure and, on the other, the politicians and pay rollers created by a clientelistic system of political control. Most of the early social security institutes were incorporated into the patronage system and set off against techno-bureaucrats centered in the ministry of labor and the industrial workers institute (IAPI), which was the last to be created.

In the 1940’s and 1950’s, the bulk of the institutes came under the control of labor leaders created by Vargas and who later came to control the Vargas sponsored labor party (PTB). They became an important source of intermediate power in the system and a mechanism by which labor leaden built their own power bases. In reality, the flow of control from the top down envisioned by the ideological architects of Vargas’ system was reversed, and key groups such as labor used the system to penetrate the state and colonize it from within. The social security system in Brazil quickly became embroiled in the complex power struggles that developed in Brazil; it became and remained a focus of intense political concern.

Throughout this period, social security in Brazil conformed to the general pattern but with some unique Brazilian twists. One central universal tendency is that, once in place, social security systems tend to expand along three lines: a) the number of persons covered, b) the social categories covered, and c) the kinds and value of benefits. Expansion in social categories covered in Brazil occurred mainly in the 1930’s and then again in the 1970’s. As we have seen, the first phase of category expansion restricted coverage to the modern capitalized sector and reflected Brazil’s dependent growth model; that is, coverage first reflected the social group map brought into being by the primary product export model, e.g., groups formed in the state, infrastructure and services; as Brazil shifted to a state-sponsored import substitution, industrialization model coverage expanded to workers in the industrial sector with that sector increasing in importance as Brazil went into the 1940’s and 50’s.

Implicit in Brazil’s multiple fund, group specific, corporatist administrative model was an interesting twist on the limited and qualified notions of citizenship introduced in the area of social rights with contributory social security. Specifically, it conformed to a concept of citizenship, which the Brazilian social analyst, Wanderley Guiherme dos Santos, has called regulated citizenship which he sees as general to the relationship between state and society in Brazil since the 1930’s. As dos Santos argues in this mode of citizenship, the link between the status of citizen and occupation is strengthened because in this politico-legal reality social rights inhere in specific occupational categories, or what Brazil terms professions (profissoes); such categories are created legally by the state which also regulates them. In this system, each group negotiates its own deals with the state (usually through the ministry of labor) and pursues its own group specific “rights.” The result is a system of legally-created occupational stratification which also equals a stratification of participation in the phenomenon of citizenship.12

Until the 1970’s, social security in Brazil expanded less in terms of the categories covered than in terms of numbers within categories and more importantly the quality of protection (e.g., benefits and financing) accruing to categories. The latter reflected the political power of specific legally recognized categories and the ability of their leaders to negotiate deals with the ministry of labor. The resulting stratification of social security protection and citizen rights implicit in it cut two ways: First, between those who were covered and not covered, with the latter (rural sector, urban informal, etc.) majority of the population forming a kind of residual category of what dos Santos calls pre-citizens. However, within those covered, there was also a clear hierarchy of stratification of benefit schemes as mentioned above.

By the 1960’s there existed a sectoral differentiation among groups and their citizen rights somewhat similar to what O’Connor has pointed out for advanced industrial societies.13In the latter, the division is between the state sector, the monopoly private sector, and the competitive sector with benefits proceeding in a descending hierarchy of quality. In Brazilian social security, the division was between the state, the covered private sector, and the residual excluded groups. Again the differentiation was a descending hierarchy in which segmentation within the private sector was also marked. This basic underlying logic continues into the present, although previously excluded categories are now covered, because: a) benefit schemes still vary substantially, and b) covered workers in the oligopolistic private sector have supplementary schemes provided by corporate employers, that are not available to workers in the competitive sector or to categories like domestics and the self-employed.

This leads to the crucial point that in Brazil, as elsewhere, while social security benefits and the rights there too have been and remain unequally distributed, the funding of the system has, in fact, socialized the costs across the society at large. This is owing to the fact that the contribution of the state was financed through regressive indirect taxes while employer contributions (especially in the oligopolistic sector) were passed off as de facto indirect tax in the form of higher prices. Indeed, since the 1930’s, social rights in Brazil have been heavily financed through taxes on the wage bill of urban enterprises (reaching now over 50%), and in the main, these are passed on across the society, including those who cannot make claims or whose claims are to benefits of lesser value than those of other groups.



During the democratic phase in Brazilian politics (1945-64), the social security benefits of covered groups expanded differentially as groups used their political leverage to wrest specific gains. The fact that labor leaders acting through the PHB were a key power reality in this period, facilitated the general expansion of benefits in the system. Thus by the late 1950’s, the social security institutes were perceived by all to be a key power base of the PTB and the quasi-official labor leaders known in Brazil as pelegos. The politically-driven expansion of benefits, combined with the less than efficient investment of the institutes’ capital funds, resulted in the fact that by the late 1950’s, most of the major institutes were in a state of chronic financial crisis.

Throughout the capitalist world, social security policymaking has tended to be the preserve of cozy triangles of social security technocrats, leaders of key interest groups like labor, and interested politicians. Moreover, until the recent general fiscal crisis, these cozy triangles were able to operate without much pressure from other elites and audiences. These cozy triangles of policymakers were able to come to a commonality of interests in pushing the expansion of these systems forward.

In Brazil and most of the rest of Latin America, such triangles existed, but the policy process was a bit different. First, owing to the fact that: a) the system became such an important power base, and b) financial crisis became chronic, social security policy was less insulated and often erupted as an important general political issue. This was particularly true in Brazil by the late 1950’s. Secondly, the policy triangles in Brazil have been less than cozy and in fact became rather conflict ridden. Basically the conflict was between the social security technocrats (in the ministry of labor and the industrial workers fund IAPI) that began to push for reform of the system, and the politicians and labor leaders who had a clear interest in maintaining the system as it was.

Interestingly, the social security technocrats were pushing a model of reform derived from the incipient welfare state schemes emerging in the post­war industrialized center countries in plans such as the Beveridge report. This fact confirmed the internationals nature of the phenomenon of social security, and the fact that certain policy elites in Brazil were seeking to adapt up to the latest thinking generated in the center. However, a problem emerged because the policy model diffusing throughout the post war capitalist system was, in a real sense, too divergent with the economic and political structures extant in Brazil at that stage of its pattern of dependent capitalist development. Specifically, the model called for universalization of coverage, uniformization of benefits, more progressive financing, and administrative unification. The financing changes and universalization of coverage points were in the eyes of many incongruent with Brazil’s level of development. But the key resistance came from interest groups wishing to maintain their privileges in the stratification of social security, and the labor elites who saw administrative unification as a threat to their power bases.

At another important political level, the battle over social security reform was a microcosm of the split in the original Vargas ruling pact between the more managerial and “apolitical” techno-bureaucratic wing and the more “politicized” wing of populist and clientistically-oriented labor and the political elites. In any event, social security reform became a persistent issue on Brazil’s policy agenda until after the Revolution of 1964 established a Bureaucratic/Authoritarian regime that thoroughly reorganized the social security system as part of a broader process of reordering Brazilian society.14



The present social security system of Brazil is the product of an extensive reform and reorganization of the system built by Getuho Vargas, and was carried out by the regime which came to power in 1964. Until the late 1970’s, Brazil’s social security reform was the most thorough and innovative implemented anywhere in Latin America. It is interesting to not that like three other partial or complete reforms (Argentina, Peru, Chile) it was imposed on recalcitrant groups and policy elites by a military-backed authoritarian regime. In all cases, the reforms reflected an attempt to establish a technocratic, seemingly apolitical mode, of policy formulation.

In Brazil, social security reform came in two stages. The first phase occurred roughly between 1964 and the early 1970’s. In this phase, the new regime was concerned mainly with defining its approach to governance politically, while economically it moved to impose a broad policy of austerity. A key goal politically in this period was to break the power of certain groups like organized labor and to reassert the power to the central state within an authoritarian and “technocratic” mode of rule which Guillermo O’Donnell dubbed Bureaucratic/Authoritarianism.15 Economically, policies were aimed at accumulating an investible surplus by containing the reducing the politically-mediated levels of popular consumption produced in the previous populist democratic period.

During this first phase, social security reform was exclusively aimed at administrative reform and reorganization. The reform reflected, in miniature, the military/technocratic alliance that came to characterize the Bureaucratic/ Authoritarian regime in Brazil. The bulk of the social security technocrats active in the previous periods either actively backed or later joined the new regime which, in effect, provided them at long last with the political will and muscle to impose the reforms they had been pushing since the late 1940’s. The military, in turn, recognized the critical importance of the social security institutes as a source of power in the system and sought social security reform as part of its broader project of weakening the labor movement. In some senses, social security reform pointed up the fact that in part, the revolution of 1964 involved the attempt of the state centric techno-bureaucratic wing of the Vargas coalition to control the more politicized populist wing of the same coalition which came to be centered in the PTB and organized labor.

One of the first acts of the new regime was to intervene in all of the existing institutes and place them under the control of the new minister of labor, who was an old line social security technocrat. It is both interesting and important to note that in the first discussion of reform within the regime, the social security technocrats pushed for the entire reform package on the boards since the 1940’s, including expansion of coverage. The notions of expansion and progressive financing were, however, vigorously resisted by those technocrats in the finance and planning ministries who were charged with administering the regime’s austerity program. When push came to shove, the broader economic policy technocrats carried the day, and reform was restricted to organization and administration.

This early intra-regime policy elite battle was indicative of some important permanent changes being introduced into the process of policy formulation in the social protection area.

Until 1964, social security policy was dominated by the policy triangle discussed above. Although the matter periodically escalated into an open political issue, it remained by and large an isolated policy area, the parameters of which were set by the key players defined in the Vargas period. Moreover, while they were not able to dominate policy as such, against the resistance of entrenched groups, the social security technocrats did have a practical monopoly in conceptualizing the policy, generating information, and projecting alternative schemes. In general, they set the terms of the debate to which entrenched groups then responded either by supporting or exercising veto power. It was in a sense their policy arena which was discussed and debated in terms of their presumed expertise.

Things, however, changed in the post-1964 regime. In the short term, the power of the entrenched groups was eliminated and the way opened to impose far reaching change. However, at that moment, the intellectual and technical monopoly of the social security technocrats was challenged by other regime technocrats charged with broader planning and economic programs. The policy isolation of social security was ended and with it the expertise monopoly of the social security technocrats.16 Rival technocrats succeeded in integrating social security policy into the broad techno-bureaucratic projects for the economy as a whole. Henceforth, all aspects of social security policy were to be judged by their impact on broader macro-economic plans and schemes. As a result, the continued elaboration of social security policy became enmeshed in a mode of intra-bureaucratic conflict and bargaining in which non-social security technocrats have become a key source of “outside” evaluation and criticism of the policy.

The most important reform of this first phase involved a partial but nonetheless substantial administrative unification and centralization of social security protection in the modern urban private sector. All of the existing private sector institutes and funds were abolished, and their insured shifted to a new single institute called the National Institute of Social Security (Instituto Nacional de Previdencia Social INPS) which was and remains the largest single social security institution in Brazil. The old mode of group representation in the system was eliminated in key policy areas, which henceforth, were to be the subject of top down policymaking.

The second phase of reform began in the early 1970’s, when reform moved along both lines of reorganization and expansion of coverage. While the first phase of reform coincided with the consolidation and austerity phase of the new regime, the second phase of reform coincided with the more expansive J phase of the so-called economic miracle, although it was shaken briefly by the oil crisis of 1974. The policies implemented during this stage, including expansion, were clearly the product of techno-bureaucratic supply reflecting the broad macro-social, political, and economic goals of the regime.17

In 1971, the newly created INPS took the control of workmen’s compensation away from private insurance companies, thus completing the stratification of social security coverage. More importantly, in 1971, the government set up a new scheme of coverage for rural workers called the Assistance Program for rural Workers (PRO-RURAL). This program marked a significant innovation in policy. Aside from being one of the first developing countries to cover the rural sector, Brazil introduced with PRO-RURAL some new concepts of linking financing and benefits.

PRO-RURAL offered rural workers a separate and much reduced set of benefits from urban workers; specifically, limited pensions (retirement and survivors), a one-time death benefit, and a projected system of health care to be elaborated as funds became available. Pensions had a fixed value that was set at one-half the national minimum wage. Most importantly, the rural scheme broke the connection between contribution and benefits. Rural workers did not contribute, and the scheme was financed by a 2-1/2% tax on the wholesalers of agricultural products and a 2½% tax on the wage bill of urban enterprises. The scheme clearly involved a radically new mode of redistributing wealth from the urban to the rural sector. However, given the fact that both taxes were passed on in the form of higher prices, it amounted to a shift from the urban poor to the rural poor.

Expansion of coverage also took place in the urban sector. In 1972, the regime moved to incorporate all self employed workers into INPS, which expanded the system into the informal sector. This was followed later in the year with the obligatory incorporation of domestic servants into INPS. Thus, most previously excluded groups were, in principle at least, brought into the system, although enforcement was obviously another matter.

Even as the regime moved towards the long-standing goals of universalization of coverage, it moved as vigorously to complete the process of unifying and centralizing the administration of the system. In 1974, a new Ministry of Social Security and Social Assistance (Ministerio de Previdencia y Assistencia Social MPAS) was created to oversee all programs in these areas. Then in 1977, the functional and financial unification of the system was completed when the National System of Social Security and Social Assistance (SINPAS) was formed as the chief administrative entity in the field under the tutelage of the Ministry of Social Security and Social Assistance.

SINPAS oversees all areas of traditional social insurance and the newer programs of social assistance (also introduced in the 1970’s) which are presently functionally differentiated into a series of separate but subordinate administrative entities. As presently set up, INPS is charged with disbursing all traditional social security cash benefits in both the urban and rural sectors. Most significantly, INPS also generates, by far, the bulk of the system’s financial resources. The second most important entity is the Institute for Medical Assistance (INAMPS), that oversees the delivery of all curative medical services provided by the system. The administration of the system is overseen by a specific administrative institute (IAPAS) while all data gathering and analysis activities are under the charge of a separate entity called DATAPREV.

Historically, social assistance activities have been minimal in Brazil, but during the 1970’s, efforts in this area were pushed as well. Flat rate pensions were instituted for the aged and for the incapacitated who fell outside of INPS coverage. In addition, curative medical assistance was made available to the indigent, and efforts were increased in the area of preventative medicine, in a new program called PREV-SUADE. Other efforts in social assistance are administered mainly by two entities subordinate to SiNPAS: The Brazilian Legion of Assistance (LBA) and the FUNABEM, which oversees assistance to minors.

Thus, in 1977, the goals of universalization, uniformization and unification first articulated in the 1940’s by social security technocrats were, for all practical purposes, realized. In the present scheme, the basic programs of the military and civil servants remain separate. However, the definition of civil servant has been tightened considerably so that now the majority of the employees of the government and state enterprises are covered by INPS.

By the late 1970’s, according to government data, some 87% of the EPA received at least some nominal mode of social security coverage which, in absolute terms, translated into some 37 million insured. There were more than 3½ million receiving retirement benefits, some 1.7 million receiving survivor pensions, and some 1.2 million receiving old age and disability pensions. When health care is added, some 7.5 million Brazilians collected from SINPAS in 1980.

In spite of these achievements, there is yet, for all practical purposes a three tier system in Brazil. The best system is that accruing to the military’ and civil servants. The next best (in some cases the superior) is that of workers employed by public, mixed and private corporate entities in the oligopolistic sector; for, in addition to their superior benefits, they receive supplemental programs administered by their firms. Last, and by all means least, are those in the competitive sector, the self-employed, domestics, and rural workers. The cash benefits of rural workers are fewer in number. Among most of these groups the value of benefits is less, and, in most cases, they receive no supplemental programs. The significance of the differentiation is heightened by the fact that the bulk of the financing of the system is still through taxes on the payroll which, in one way or another, fall regressively on the entire population causing those with inferior programs to support the schemes of those above them in the hierarchy.

Viewed historically, there were two major periods of social security organization and/or reorganization in Brazil 1930-45 and 1965-77. In both periods, social security policy was an integral part of the statecraft of authoritarian regimes oriented to increasing the capacity of the state to structure its relationship with both its external and internal environment. Not coincidentally, both periods also saw a shift in the structure of Brazil’s relationship to the international economic system as a result of state-centered attempts to adapt up to the latest stages of development in the world capitalist system. In both periods, social security policy flowed from the state in a mode of bureaucratic supply defined and implemented primarily by social security technocrats operating as part of a strategy of de-politicizing and technifying key dimensions of social policy.

The reforms of the 1965-77 period were aimed at undoing the unanticipated political consequences of the 1930’s system and the realization of international standards defined in the 1940’s. It was also a part of the statecraft of the post-1964 Bureaucratic/Authoritarian regime dominant in Brazil. The new reforms increased the central control of policy elites formed in the state apparatus, even as it increased the state’s penetration of society, especially into the rural sector and the urban competitive sector.

The new programs, in effect, sought to eliminate the entrenched power of non-state or quasi-state organizations, such as unions, and simultaneously establish direct links of dependence between citizens and the state. Hence, there was clearly a movement toward a broader notion of citizen rights in the social area, although specific values remained unevenly distributed.

The new program was also geared toward addressing the underlying issue of capital accumulation versus legitimacy. Through an emergent ideology of what might be termed corporatist welfareism, the regime clearly sought to use the social security system to ameliorate some of the harsher affects of the draconian accumulation policies pushed through the wage and price system.

In the 1970’s, social security was articulated as an integral part of official plans for national economic and social development. Specifically, the policy pivoted around a concept of “national integration,” a global concept that boiled down to the notion of pulling the population into a single national socio-economic system (i.e., overcome historical dualities) while simultaneously upgrading the populace as an economic, political, and strategic resource. The latter highlighted the fact that socioeconomic planning and attendant statecraft was shaped by the politico-strategic doctrine of national security, which informed all aspects of the thinking and planning of the post-1964 regime.

Under the present regime, social security policy is clearly aimed at building ties with the working population of Brazil, which is another way of saying that social security policy remains essentially a labor policy and a mode of social control. A key notion in this new scheme is the concept of a “social salary;” that is, a state-controlled system in which workers give up part of their present income through direct and indirect means in order to receive a set of social services that should increase their real income in the long run. Hence, the addition of benefits within SINPAS and the creation of other schemes, such as an unemployment fund, profit sharing schemes, and educational aid to families. The upshot of all this was to theoretically increase the state’s ability to manage the dual process of capital accumulation and building legitimacy.

The ability of policy elites to use social security policy as a centerpiece of their mode of statecraft was conditioned by a tremendous increase in revenues accruing to the system in the 1970’s. Revenues were increased, first by the legal incorporation of millions of new dues paying insured, and secondly, by the economic boom which increased the level of employment and the value of the wage bill. Given the fact that Brazil had gone to a straight pay-as-you-go system, the internal pyramid club logic of generating substantial concrete resources in the present against legal claims in the future came into play. That is, the regime could apparently achieve a number of crucial immediate goals at minimal apparent cost.

Thus, political motivation again combined with the logic of classical contributory social insurance to push forward a tremendous expansion of the system. This time, however, the political motivation for expansion came not from pressure groups formed in society (as in the 1945-64 period), but from the military/technocratic policy elites seeking to increase their ability to structure and manage the socioeconomic process in Brazil.

This is not to say that political developments in the larger society had no effect on the expansion of the social security system in the 1970’s. The regime’s quest for legitimacy was not simply the pursuit of some abstract function posited by social scientists, but also was a concrete problem created by new patterns of electoral politics that developed in the 1970’s, as the regime sought to carry out a controlled opening of the political system. First, under President Geisel’s policy of political decompression and then President Figueiredo’s policy of political opening, the “politics of redemocratization” have shaped most aspects of public policy in Brazil and especially that of social policy.18

The relevance of electoral politics first emerged in the elections for legislative assemblies permitted by the regime in 1974. To the chagrin of some and the surprise of most, the opposition, in effect, won the elections. Subsequent analysis revealed that those urban sectors most hurt by the regime’s accumulation policies registered a protest by supporting the opposition party (MDB). The elections, moreover, focused general attention on the debate between the regime and its critics over the effects of the regime’s policies on income distribution and critical quality of life indicators, such as infant mortality rates. Pressed by both the ballot box and pointed expert criticism, regime spokespersons increasingly articulated the regime’s recognition) of a need to develop policies to offset the admitted negative effects of previous economic policies and to promote some “trickle down” of the wealth (created by the economic miracle. Social security policy quickly became a part of the regime’s general attempt to generate some popular support (or at least neutralize opposition) within the new electoral game emerging as a part of the process of controlled political opening. The fact that the new social security system did, in fact, engender a positive response was attested to by the fact that ministers of social security (MPAS) became instantly popular public figures.

Since 1974, electoral politics have affected social security policymaking, first, as a spur to expansion and more recently as a factor limiting options to deal with the fiscal crisis. However especially in the first phase, policy was still defined and shaped by policy and technocratic elites seeking to structure the regime’s relationship with broad categories of citizens by means of technocratic definition of the types of policies to be supplied from above. It was still mainly a matter of preemptive bureaucratic supply responding to a generalized sense of disaffection rather than focused interest group pressure politics.



The present crisis of social security began to be registered as an in-house technical problem in 1979. From the outset, regime technocrats sought to keep it a more or less private technical problem. Some public concern was, however, raised in early 1981 with the publication of an important book, A Crise da Previdencia Social, by the well known social security expert, Celso Barroso Leite, who, at that point, was not directly employed by the system. Aside from casting some public light on the problem, Barroso Leite’s book was important because it advanced the thesis the the crisis was generic to the system and not a product of transitory events.19

By mid-1981, the reality of the crisis could not longer be contained, and it began to emerge as a highly visible public issue. A number of factors converged to pull the matter into the center of public discussion: First, was the sheer magnitude of the crisis manifested in an accumulating deficit which in 1980 alone was some $50 billion cruceiros (approximately U.S. $600 million). Second, was the fact that to simply keep the system going demanded a large outlay by the federal government and that a long-term solution demanded legislative reform which, in the new scheme of things, the government would need bring to the attention of the legislature. Finally, the whole matter was complicated and intensified by the fact that the political system was gearing up for elections scheduled for the fall of 1982 which, aside from choosing a new legislature, would mark the first direct election of state governors since 1964; a fact that was given an interesting twist when in May, 1981, Jair Soares, then minister of social security, announced his intention to run for governor of the state of Rio Grande del Sul.

By mid-1981, the reality of the crisis could not longer be contained, and it began to emerge as a highly visible public issue. A number of factors converged to pull the matter into the center of public discussion: First, was the sheer magnitude of the crisis manifested in an accumulating deficit which in 1980 alone was some $50 billion cruceiros (approximately U.S. $600 million). Second, was the fact that to simply keep the system going demanded a large outlay by the federal government and that a long-term solution demanded legislative reform which, in the new scheme of things, the government would need bring to the attention of the legislature. Finally, the whole matter was complicated and intensified by the fact that the political system was gearing up for elections scheduled for the fall of 1982 which, aside from choosing a new legislature, would mark the first direct election of state governors since 1964; a fact that was given an interesting twist when in May, 1981, Jair Soares, then minister of social security, announced his intention to run for governor of the state of Rio Grande del Sul.

In its first state, the discussion of social security focused on conflicting diagnoses of the system’s ills. Analysts pointed to a number of factors, such as administrative ineptitude, evasion of taxes by employers, the failure of the federal government to pay its share of funding, escalating medical costs, fraud and others. However, careful statistical analysis began to reveal that, while all these factors played some role in worsening the situation, neither singly or in combination were they the real underlying cause of the system’s difficulties. Basically, these studies began to show that the problem was inherent in the structure of the system and its relationship to both short and long-term trends in the Brazilian socio-economic system.

Particularly during the 1970’s, Brazil’s social protection system had evolved away from its original contributory social insurance base into a mixed social insurance/social welfare, e.g., noncontributory pensions, family allowances, educational allowances, indigent medical assistance, and other assistance schemes. These schemes added to SINPAS’ outlays, but no compensatory funding was provided. It is in this context that the government’s debt to the system becomes most relevant. Instead of picking up the slack in the assistance area, government contributions as a percentage of total income of SINPAS actually fell during the 1970’s.

In terms of funding, SINPAS still relied overwhelmingly on contributory taxes levied on the wage bill of the urban sector (89%), and, of this, the lion’s share (63%) was drawn from employer taxes. This fact weighted heavily on the wage bill with possible negative consequences for employment creation and also reverberated through the price structure of the economy.

In any event, the structural key to the crisis lay in the problematic relationship between income (mainly wage bill premiums) and expenditures in a pay-as-you-go scheme, such as Brazil’s. As noted above, this type of system has a pyramid game dimension whereby the costs of present gains can be deferred across time; but, as in all such schemes, the time horizon shortens as critical variables, both internal and external to the system, change over time. The key external factors (not directly controllable) are first demographic, e.g., age structure and life expectancy, both of which impinge on the relationship between active and passive insured; and second, the employment structure, e.g., levels of employment and the value of the wage bill. Internal factors are mainly the number and value of benefits as well as conditions for entitlement. As we saw above, the history of social security in Brazil and elsewhere indicates that the internal variables tend to expand, driven mainly by the political dynamics that develop in the system. This was surely the case in Brazil.

During the 1970’s, social security benefits and hence outlays were expanded greatly as part of the regime’s mode of statecraft and socio­economic management. In addition to an increase in beneficiaries, types of benefits and value of benefit outlays were geared for automatic expansion by a policy of full indexation of benefits. At the same time, short-term financing increased because new contributors poured into the system as a result of expansion of the categories insured and a favorable trend in the employment structure (both numbers and value) pushed by the rapid growth of the economy.

By the late 1970’s, the system had exhausted the possibility of greatly increasing contributors by bringing in new categories of insured. Hence, failing a substantial increase in direct governmental contributions, the system was dependent mainly on the demographic and employment structure to continue to finance an automatically expanding outlay for benefits.

The underlying structural nature of the current crisis, both in the short and long-term, lies in the relationship between these financing and expenditure factors. It is also here that the relationship between the crisis in the social security system (SINPAS) and that afflicting the economy at large, becomes readily apparent. It is also here that the complex politically-mediated link with the international context and the actions of external actors on the Brazilian state comes into play.

While there is some debate on the matter, the long-term demographic trends are negative from the point of view of financing as birth rates and life expectancy combine to produce a graying of Brazil’s population, which is causing a decline in the active (contributor) versus passive (beneficiary) ratio among insured. This fact then increases markedly the salience of employment structure. Herein lies the immediate problem; for as the economy went into a tailspin, employment has fallen and so have the revenues of SINPAS. The onset of the present fiscal crisis of social security correlates directly with the onset of the broader economic crisis. Moreover, the course of the crisis of SINPAS and the nature of the government’s response has been conditioned by: a) the unfolding of the wider economic crisis; b) the regime’s avowed policy of a political opening, and c) the terms demanded by Brazil’s external creditors for relief from its debt burden.

From a political point of view, one of the more interesting aspects of the current debate on social security in Brazil is the fact that the diagnosis of and prescriptions for SINPAS have tended not to come from social security technocrats as such, but from technocrats in other branches of the government.20 Most notable, in this respect, has been the ministry of planning, which has steadily emerged as one of the most powerful branches of the post-1964 Bureaucratic/Authoritarian regime in Brazil. Planning has been particularly powerful under its present minister, Antonia Delfim Netto, who, in many ways, epitomizes the kind of politically-attuned technocrat that has become so important in contemporary Brazil. In any event, the tendency for social security technocrats to lose their monopoly over this policy area was confirmed in the reforms of the late 1960’s.

In the context of crisis, at least, social security policy becomes in the first instance a matter of inter agency techno bureaucratic struggle for the ear of the executive. In this struggle, it is clear thus far at least, that technocrats charged with more macro-socio-economic planning have a decided edge over those housed in the social security system. Thus, since the emergence of the crisis in 1981, the policy agenda with regard to social security has been defined mainly by the techno-bureaucrats of the ministry of planning.

This shift in the capacity to set the agenda in the area of social security was made clear in the latter part of 1981, when social security policy again emerged as a highly salient public issue. Two personalities were most prominent in the first stages of the discussion: Delfim Netto, the minister of planning, and Jair Soares minister of social security. By and large, Delfim, using studies produced by his stable of technocrats, took the lead in defining the thrust of the discussion, while Jair Soares responded to these positions and other questions about the system and its crisis.

During the discussions, there also seemed to develop a very important division in tone and style between the two agencies. As I noted above, the use of social security as a means of gaining popular support by alleviating some of the consequences of the capital accumulating wage and price policies during the 1970’s began to draw a lot of favorable public attention to the ministry. As a result, it became attractive to career-oriented politicians looking for springboards to higher posts, especially those connected to the emerging game of electoral politics. Such was the case with Jair Soares, who was a highly visible minister and clearly used the ministry to launch his electoral career in his home state. Hence, the ministry of social security began to adopt a tone and style that was more overtly sensitive to anticipating the effects of any social security reforms on public opinion. On the other hand, the ministry of planning followed a much more avowedly technocratic line in assessing the system and its effects on the broader economy.

This division between macro-structural technocrats and more politically-attuned, publicly-focused types quickly emerged as a more generally deep division within the government and its support groups. Indeed, the divisions that developed over the next three years in social security policy were a microcosm of the highly divisive splits that have developed within the regime as it limps into the presidential race scheduled for 1985.

During May and June, 1981, the discussion generated a number of proposals, including a very radical proposal to follow recent changes in Chile and totally privatize the system.21 However, after a brief flurry of interest, including some quick trips to Santiago, Minister Soares made it clear that the Chilean approach was not really relevant to Brazil.

In August, the government deliberately leaked to the press the main features of an in-house proposal to deal with the financial crisis. The proposals combined a series of increases in the taxes on wages (2% increase plus an increase in the wage base from 15 to 20 minimum salaries) and a number of benefit reductions. News of this package (pacote previdenciaria) set off a minor storm of protest in the congress, especially among the government’s own party (PDS).

Leaders of the PDS complained first that such an important legislative package had been put together without any consultation with the government’s own congressional support. Secondly, the PDS leadership evidenced concern that the tax increases and benefit reductions in the pacote would have an adverse effect on the party’s performance in the legislative and gubernatorial elections scheduled for the fall of 1982.

Congressional protest brought the government up short and forced it to develop a legislative strategy; something the regime was not really used to. After consultation with the PDS, a Congressional leader for the pacote was chosen and charged with shepherding it through the legislative process. He immediately counseled a shift away from any increase in taxes on insured.

In September, a revised and somewhat toned down pacote was presented to Congress. Focus on social security was temporarily lost, when the Congress took up the government’s proposals regarding the rules for the elections of 1982. A harbinger of the new congressional game came when the government’s electoral proposals were defeated by a legislature ostensibly under its control.

Perhaps in reaction to its defeat, the government then sought to use a parliamentary maneuver to slip the social security package through without any debate. The tactic failed, and the government’s own main congressional leader, Senate President Jarbas Passarinho (presently Minister of Social Security), convoked a special session of the senate to discuss the bill. The floor debate was intense and focused mainly on the tax increases and benefit cuts.

In October, the legislature passed a bill which effectively gutted the government’s pacote. The bill eliminated benefit cuts and sidestepped the increase in payroll taxes. The law proposed to solve the fiscal problem mainly through a set of 20% tax raises on so-called superfluous goods, e.g., alcohol, cigarettes, firearms, autos, etc.

Technocrats in both planning and SINPAS reacted negatively to the congressional bill and argued that it simply would not solve the problem. On November 10th, Minister Soares forecast that SINPAS could well end the year with a Cr. $160 billion deficit. At the same time, he announced his intention to resign and run for the governorship of Rio Grande de Sul in May of 1982. The next day, President Figueciredo, who had been on sick leave, resumed the full powers of the presidency and shortly thereafter, technocrats in planning challenged Soares’ forecasts opining that the deficit would be more in the order of Cr. $400 billion.

The planning technocrats, headed by Delfim, argued that given their projections, the only viable way out was to increase payroll taxes (the Aliquota). Soares, walking the line between government minister and aspiring electoral politician, argued again that the deficit would be less and that increases in the Aliquota, the politically most unpopular proposal, would be necessary.

There the matter seemed to stand as Congress turned its attention to another electoral law and the impending Christmas recess. Then, in a surprise move, the government used the Christmas recess to revert to its old ways and simply decreed a new pacote on social security.

The pacote of December 30, 1981 (decree law 1910), not only returned to but considerably stiffened the original stringent proposals produced by the technocrats of planning. Payroll taxes were increased according to a sliding scale for insured and a flat 2% for employers. The wage base was raised from 15 to 20 minimum salaries and pensions for the first time were subject to taxation. The taxes on superfluous goods remained in force. Finally, the government granted a special loan of Cr. 168 billion to SINPAS to cover its immediate deficit.

Like a good soldier, Soares backed the program once it was decreed and announced that the loan would solve the system’s immediate problem while the new taxes would resolve the long-term problem. He even opined that all the controversy of the last months would not really hurt his electoral campaign.

While many congressional figures were unhappy with both the content of the pacote and the way it was decreed, debate at that point shifted to the issue of choosing a successor to Soares. Both Soares and Delfim publicly backed different figures for the post. Other candidates were also discussed but, in the end, President Figueiredo came up with a surprise choice, Heho Beltrao, who at the time was a special cabinet level official charged with de­bureaucratizing the state in Brazil. In addition to that post, Beltrao had been a highly successful businessman; somewhat less well known was the fact that he began his career as one of the original social security technocrats formed in the original institute of industrial workers back in the 1940’s. By all accounts, Beltrao, who held onto his other position, was a most popular choice both within the government and among the public at large.

With the pacote in force and a new popular minister in place, the issue of social security faded from the open public agenda. Increasingly, attention shifted to the problems in the economy, the ballooning debt crisis and to the upcoming elections of the fall of 1982′. However, the attention and concern of technocrats in social security did not fade. Very quickly, private reports began to circulate among policy elites arguing that the pacote of 1981 was only a short term palliative and that quite soon a new and even more severe fiscal crisis would develop within SINPAS.22

Unfortunately, the dire predictions contained in these reports began to materialize all too quickly, and by the middle of 1983, social security was coming back onto the national public agenda. Basically, after only a year of relief, SIN PAS again began to accumulate a deficit at even a faster rate than before.

The issue of social security began to emerge again in the context of the increasingly intense public debate over the debt crisis and the conditions being imposed on Brazil for relief by the IMF. As is well known by now, these conditions boiled down to a process of state-enforced austerity which, in Brazil, was to hit the middle and lower classes rather hard. But local entrepreneurial interests were also concerned with the state-induced recession implied in these policies. Hence, many government supporters were concerned by the political impact of these measures in the context of the process of political opening into a new mode of quasi-democratic politics. The issue touched nationalist sentiments that ran strong on the regime, but also threatened to forge the old link between nationalism and populism, that the revolution of 1964 sought to quash. In short, it was a political Pandora’s box, which has, in fact, pulled the regime apart internally.

These deep divisions again manifested themselves around the issue of how the overall economic context was impinging on the fragile social security system. Again, the debate seemed to pit the more politically-attuned ministry of social security against the ostensibly more technocratic ministry of planning. This time the battle was charged with more intensity because it seemed to put the very popular Beltrao, who had begun to emerge as a contender for the presidency in 1985, against the long powerful Delfim, who had become the major proponent of accepting and imposing the bitter medicine of IMF austerity on the country.

The clash came during June and July of 1983. Beltrao, now openly bidding for popular support in his presidential aspirations, publicly attacked IMF-sponsored monetarist policies. He not only condemned the negative social effects of the policies, but also, playing directly to businessmen, he came down hard on the policies’ recessive effects. It was a popular tack, and polls indicated Beltrao was the favorite among Brazilian businessmen.

The main point around which the battle pivoted, however, was a series of decrees on wage policy backed by Delfim that had the effect of holding wages below prevailing monetary correction. Beltrao protested publicly, arguing that this forced reduction of the overall wage bill would severely reduce the income of SIN PAS, leading directly to a shortfall of some Cr. $400 billion by the end of the year. According to news accounts, Beltrao ultimately accepted the proposals because he was promised direct relief for his ministry by the federal treasury. Delfim, on the other hand, made no secret of his views that any shortfalls in SINPAS should be covered by increasing the contributions of employers and the insured.

The question of funding the deficit lay dormant while President Figueiredo traveled to the United States for medical care In the end the matter was not resolved until early November when the President informed Beltrao that the treasury would cover only Cr. $100 billion and that he would have to consider other means (e.g. raise contributions) to cover the rest Beltrao in protest, resigned using the occasion to again blast IMF policies and warn of even more severe economic consequences to come

In recognition of the delicate political nature of social security policy in contemporary Brazil, the government turned to one of its wiliest political leaders, Senate President Jarbas Passarinho, to assume the ministry. Under his tutelage, SINPAS has resorted to short-term borrowing and other strategies simply to stay afloat. The government, in turn, has floated proposals to cut costs by reducing benefits, &specially for those in higher income brackets. The basic crisis, as manifested in a gigantic accumulating deficit, however, continues unabated. Indeed, one study produced by the planning ministry’s think tank (I PEA) predicts that if no substantial changes are made, the system will be some Cr. $2,000 billion in debt by the end of 1984.23

Again, the sources of the system’s problems are many, but at base they are structural and linked to the rate and mode of economic growth and the structure of employment. The immediate cause of the 1981-1984 crisis is the dramatic drop in employment levels in the formal sector of the economy owing to the ongoing economic recession; a recession that, in part, at least, is state-induced by a government responding to external pressures regarding its debt. The level of the employment problem’s effect on the income of SINPAS was aggravated by the wage containment policies introduced during 1983, again as a response to external pressures. The immediate problem of SINPAS is, in large part, a result then of at least partially politically-mediated reductions of income vis-a-vis benefit commitments created by previous political decisions linked to the regime’s strategy of statecraft during the 1970’s. Recent studies indicate that basically over the past three years, SINPAS revenues have been increasing at a rate of 3% per year, while outlays have been growing at a rate of 10% a year.

The immediate issue of employment is a most complex one and has led to some compelling vicious circles for SINPAS. For example, one factor aggravating the income problem is that hard pressed employers are delaying and, in some cases, simply evading payment of the taxes they owe SINPAS. Indeed, the burden of SINPAS taxes on the wage bill is adding to the fact that whatever growth in employment which has taken place lately, has been in the informal sector of the economy which, by definition, skirts the elaborate social security system of the formal sector. The growth of the informal sector not only increases the number of Brazilians working without formal social security protection, but reduces the system’s income thereby increasing pressure to raise contribution levels, inducing more employers to go informal and so on.24 Moreover, most of the employers who are openly in arrears, are so financially pressed that attempts to force payment could send them under, thereby increasing unemployment in the formal sector even more.

In sum, there is no easy way out short of a massive economic recovery that would dramatically increase employment levels and the percentage of the economically active population EAP-employed in the formal sector of the economy. Again, recent studies are not sanguine on this account. Such studies indicate that even when recovery comes, the rhythm of job creation will be such that it will not match the 1970’s and will not be sufficient to absorb new entrants into the EAP.25 Thus, unemployment in the formal sector will probably remain high and force an increasing percentage of the EAP into the informal sector. These projections clearly do not bode well for the long-term economic health of SINPAS. The most likely prospect is that trends in employment will combine with an ongoing demographic shift in the population to force the system into premature maturity. As this process takes hold, the existing relationship between income and outlays will continue to deteriorate. Failing some combination of massive increase in contributions and draconian reductions of benefits, which in the Brazilian context are probably both politically and economically untenable, the outlook for the system as presently constituted is dismal.

Although its situation is more immediately severe, Brazil’s crisis in social security is similar to that afflicting most capitalist countries both developed and developing. Many pay-as-you-go contributory schemes, for both economic and demographic reasons, are running out of the ability to defer the costs of politically-mediated benefits over time. As the recent social security package passed in the United States indicates, manipulation of the variables of contributions and benefits in the existing system is at best a short-term stop gap that simply buys a little time. Sooner or later, the deep structural problems of these systems will have to be met, and policy elites will have to come up with some creative new policies to provide social protection to their populations as well as to amplify and regularize the social rights dimension of citizenship in modern capitalist states.



Analysis of the problems of the Brazilian social security system provides a rich field for analysts interested in a number of important theoretical issues regarding statecraft and pubic policy in modern societies. Here I will highlight three conclusions which tie Brazil into the central trends in the development of social policy in most contemporary capitalist countries in both the center and the periphery of the general international system.

First, it is clear that social security has been a major component of the statecraft of modern capitalist societies in the context of both Authoritarian and Democratic regimes. As such, key elaborations of policy, either in terms of the launching of systems or substantially overhauling of them, have occurred at historical moments when the state has had a substantial capacity to seize and maintain the initiative to define and structure its relationship with key groups of civil society. Thus, in Brazil, at least these key moments have reflected a situation in which bureaucratic and political elites in control of the state have been able to act with substantial autonomy from group pressure; at these moments, social security policy flowed mainly from a logic of preemptive supply rather than a response to specified groups demands. Recent studies of this policy in the United States, Western Europe and the rest of Latin America indicate that mutatis mutandis this is a general pattern.

The Brazilian case also shows, however, that this capacity of policy elites in control of the state to maintain their relative independence and initiative in the face of interest groups diminishes over time. This decline in the decisional capacity of the “state”, however, does not necessarily mean a rise in the initiative capacity of groups in civil society. Rather their capacity seems to be mainly one of casting a veto indicating that the power of initiative is in fact dissipated over time culminating a relative standoff among points of mutual reinforcing weakness rather than strength. In Brazil, this kind of situation generated extreme immobility and helped provoke a reconcentration of power at the center in the form of an Authoritarian regime. While this extreme reaction does not necessarily occur in all systems, the basic theme of concentrated initiative capacity followed by dissipation of decisional power and tendencies toward standoffs and relative immobility is in fact rather general.

This dynamic in Brazil lends support to the view social security is best seen as a policy sector with a powerful internal logic that in fact transcends the contours of any specific socio-political system. This policy carries within it a strong pyramid club kind of logic that sees an almost inevitable policy crunch around the problems of politically generated benefit levels. These collide with “maturing” systems confronting structural imbalances of between active and passive insured generated by demographic trends as well as levels of employment in the formal economy. In most contemporary capitalist societies this has become to one degree or another the key problem of classic systems of social insurance. In confronting these problems, policy elites come up against the added political fact that this policy sector inevitably generates within itself distributionally based coalitions ready and able to block any substantial alterations of the system’s boundaries, at least within the mode of democratic politics. Indeed, as we saw above, as Brazil shifts back to more democratic politics, the capacity of techno-bureaucratic elites to implement long term resolutions of the social security system’s fiscal problems diminishes a pace.

Finally, the Brazilian case also reflects another critical trend evident throughout modem center and peripheral societies in the unfolding policy process within this policy sector: Whatever the dynamic between policy elites and groups embedded in the system, a new mode of inter-bureaucratic rivalry and politics is emerging in this policy area. The old “cozy triangles” are breaking down as the monopoly ol policy specific techno-bureaucratic elites is being challenged by less policy specific techno-bureaucratic elites. Specifically, in Brazil and elsewhere, social security technocrats are losing out to macro-economic technocrats who submit social security and other issues to broader sets of evaluative criteria and question how specific schemes fit into more general goals of state-centered socio-economic management.

In sum, the Brazilian case, like that of other Latin American countries, is not some exotic phenomena reflective of some condition of underdevelopment or the like. The dynamics of social security policy in Brazil when proper analytical adjustments are made, are remarkably similar to those evidenced in so-called advanced or post-industrial Capitalist societies. This suggests that, at the least, a broader and reconceptualized arena of comparative analysis of this and other policy issues often deemed specific to advanced industrial societies is called for. And in such a new scheme, it might well be that the analysis of cases like Brazil could in fact help illuminate this and other policy areas in the advanced industrial societies and thereby make a significant contribution to the long term task of building viable middle range theories in the areas of statecraft and public policy.



1. For an extended analysis of the development of Brazil’s social security system, see: Malloy, James, The Politics of Social Security in Brazil (Pittsburgh: University of Pittsburgh Press, 1981).return to text

2. Rose, Jean Jacques (ed.), The World Crisis in Social Security, (Paris: Foundation Nationale D’Economie Politique, Institute for Contemporary Studies, 1982).return to text

3. This argument is elaborated at length in: Malloy James, “Statecraft and Social Insurance Policy in Latin America and the United States.” Paper presented to the International Conference on Social Security and Health Care in Latin America and the Caribbean in the 1980’s, Center for Latin American Studies, University of Pittsburgh, June 27-29, 1983.return to text

4. Wolfe, Alan, The Limits of Legitimacy: Political Contradictions of Contemporary Capitalism (New York: Free Press, 1977).return to text

5. Rosenberg, Mark, “Transgovernmental Relations and Social Security Policy Making in Latin America” (Paper presented at 19th Annual Meeting of the International Studies Association, Washington, D.C., 1978).return to text

6. Poulanuas, Nicos, Political Power and Social Classes (London: New Left Books, 1968).return to text

7. Polanyi, Karl, The Great Transformation (Boston: Beacon Press, 1957).return to text

8. Marshal, T., Citizenship and Social Class (Garden City, NY: Doubleday, 1964).return to text

9. Wilson, Richard R., “The Corporativist Welfare State: Social Security and Development in Mexico” (Ph.D. diss., Yale University, 1981), p.126.return to text

10. For a discussion of this concept see Evans, Peter, Dependent Development, The Alliance, of Multinationals, State arid Local Capital in Brazil (Princeton: Princeton University Press, 1979).return to text

11. For a case study from this perspective, see Malloy, James, The Politics of Social Security in Brazil (Pittsburgh: University of Pittsburgh Press, 1981).return to text

12. Guilherme dos Santos, Wanderley, Cidadania E. Justica, (Rio de Janeiro: Editora, Campus, 1979) Ch. 4.return to text

13. O’Connor, James, The Fiscal Crisis of the State, (New York: St. Martin’s Press, 1973).return to text

14. For background, see Malloy, The Politics of op. cit., Barroso Leite, Celso and Paranhos Villoso, Luiz. Previdencia Social Zahar, Rio de Janeiro, 1963. Cohn, Amelia, Previdencia Sociale Processo Politico no Brazil, (Sao Paulo: Editora Moderna, 1981).return to text

15. O’Donnell, Guillermo, Modernization and Bureaucratic Authoritarianism, (Berkley, Ca: Institute of International Studies, University of California, 1973.)return to text

16. This is a trend in most countries, see Freeman, Gary, “Ideology and Analysis in American Social Security Policymaking,” Journal of Social Policy, forthcoming.return to text

17. These are elaborated in Demo, Pedro, Politic Social No Brasil Apos 1964, mimeo, Brasilia 1979.return to text

18. See Sarles, Margaret, “Maintaining Political Control Through Parties: The Brazilian Strategy,” Comparative Politics, Vol., 15, October 1982, pp.41-72, and McDonough, Peter, “Repression and Representation in Brazil,” Comparative Politics, Peter, “Repression and Representation in Brazil,” Comparative Politics, Vol.15, October 1982. pp.73-100.return to text

19. Barroso Leite, Celso, (Rio de Janiero: A Crise da Previdencia Social, 1981).return to text

20. The most important have been a series of papers produced by the Instituto de Planejamento Economico e social (IPEA), an agency created by the presidency in 1967 and charged with aiding the planning process. Among the more important authors of relevant staff papers are Fernando Resende da Silva, Francisco Oliveira and Maria Emilia de Azevedo.return to text

21. Borzutzkyk, Silvia, “Politics and Social Security Reform in Argentina, Brazil and Chile.” Paper for Conference on Social Security and Health Care in Latin America and the Caribbean in the 1980’s, University of Pittsburgh, June 27-29, 1983.return to text

22. The most significant paper was that of Macedo, Roberto, “Previdencia Social, da Crisis Actual as Crises Futuras,” mimeo, University of Sao Paulo, 1982.return to text

23. Reported in “Latin American Regional Reports: Brazil,” London, January 1984.return to text

24. For a discussion of the relevance of the concept of Informal Economy to countries like Brazil, see Portes, Alejandro and Walton, John, Labor, Class, and the International System, (New York: Academic Press, New York, 1981).return to text

25. See Malan, Pedro, and Bonelli, Regis, “Economic Growth, Industrialization and the Balance of Payments: Brazil in the 1970’s and 1980’s.” Paper presented to conference on Opportunities and Constraints in Peripheral Industrial Society, University of California at Berkeley, February 1984.return to text

Associated Tables

Table 1

Structure of SINPAS
Source: Instituto DE Planejamento Economica E Social (IPEA) 1983
Social Security Cash Benefits INPS
Medical Assistance INAMPS
Administration IAPAS
Data Processing DATAPREV
General Social Assistance LBA
Assistance to Minors FUNABEM

Table 2

Evolution of Expenditures by Entities of SINPAS 1971/1982
Source: IPEA, 1983

Table 3

Structure of SINPAS Budget by Source in % of Total
Total 100%
Source: IPEA, 1983
1) Generated by SINPAS
a) Compulsory Contributions
b) others
2) Transfers from the Federal Government 7%

Table 4

Structure of Compulsory Contributions in % of Total
Total 100%
Source: IPEA, 1983
1) On the Urban Wage Bill
a) Contribution by insured
b) Contribution by employer
2) On Rural Production 4%

Table 5

Evolution of Social Security Income by Category
Category 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982
Source: IPEA, 1983
Contributions    83,44 85,42 87,05 88,81 88,21 88,04 89,68 87,97 92,10 91,62 87,61 93,06
Federal Govt. 10,98 9,80 8,48 6,95 6,24 6,21 7,09 5,96 4,94 5,21 9,53 4,57
Other 5,58 4,78 4,47 4,24 5,55 5,75 3,23 6,07 2,96 3,17 2,86 2,37
Total 100 100 100 100 100 100 100 100 100 100 100 100

Table 6

Growth in number of Contributors to Social Security and of Urban Population 1971-1981
Contributors to Social Security
Urban Population
Number in 1000
Rate of Growth
Number in 1000
Rate of Growth
as % Urban Pop.
Source: IPEA, 1983