Brazil social security deficit jumps in 2009

Brazil’s social security deficit jumped in 2009 to 43.6 billion reais ($24.6 bln) as the global financial crisis slowed revenues from contributions in the first half of the last year, the Social Security Ministry said onTuesday.

The deficit widened 12.7 percent from 2008, adjusted for inflation, as slower job creation in the beginning of the year capped social security contributions, the ministry said.

Spending on social security also jumped due to a 12 percent rise in the minium wage to 465 reais per month, it added.

Many benefits are indexed to the minimum wage, which causes a domino effect on costs when it is raised.

For the year, revenue from social security contributions totaled 184.6 billion reais, a 6.1 percent jump from 2008, adjusted for inflation.

During the same period, benefits expenditure grew 7.3 percent, adjusted for inflation, to 228.2 billion reais.

Helmut Schwarzer, Secretary of Social Security, told a news conference the outlook for the labor market in 2010 was positive.

“With this, we should have a rebound in social security revenues,” he added.

Brazil’s economy emerged from a brief recession in the second quarter of last year and is expected to have grown around zero in 2009. It is expected to grow 5.3 percent in 2010.

As a result of the economic rebound and seasonal factors, the government posted a social security surplus in December of 1.75 billion reais — a record for that month.