Brazzil
March 2000
Shorter and Longer Notes
Money
So Minimal
Traditionally, the government uses May 1 (Labor Day in Brazil) to announce the annual correction for the minimum wage. The announcement this year, due to a political struggle among the government's allies who raised the flag of a more substantial increase, was anticipated by a few weeks. But the frustration for those who benefit from the raise wasn't smaller than in previous years. The new minimum, which is in force since April 3, is 151 reais ($84) a month. The increase was a mere R$15 a month, representing a gain of less than 9 dollars. "It's low, it's low," Labor Minister, Francisco Dornelles himself, admitted.
In still another move to steal some thunder from the opposition, the Cardoso administration announced that from now on state governors will have the power to decide on minimum wages for their states and there will be no upper limit to this increase. Labor Minister, Francisco Dornelles, in an attempt to simplify that complex issue and in order to lessen the burden for the President, placed on the governors' shoulders the responsibility to raise minimum wages above the federal index.
"The President," said Dornelles, "grants the governors the power to adopt the state minimum wage they choose. If the governor decides that the salary in his state can be R$500 ($280), it will be R$500. If he can give R$1.000 ($560) he will give R$1.000." Everybody knows, however, that such numbers presented by the minister are just a rhetoric game, since the economic situation of most states would not allow any largesse at all. Dornelles nevertheless warned governors that they will need to take the initiative and informed that laws governing this matter will not be allowed on election years.
The main beneficiaries of the minimum wage increase will be the 12 million retirees and pensioners from the INSS (Instituto Nacional do Seguro Social-Social Security National Institute). And where is the money for the raise coming from? There was money on the budget reserved for an increase, but it was assumed that the minimum would go up to 143 reais ($79) and not to R$151 ($84) as it ended up happening.
The senate President, Antonio Carlos Magalhães, a government ally who defended the adoption of a minimum that would correspond to $100 (roughly R$180) didn't seem too upset that he couldn't prevail. "That was not the ideal solution," he said, "but it was the possible one. The various leaderships and the President had to overcome opposition inside the government itself."
"I will not allow Brazil to lose its way," declared President Fernando Henrique Cardoso, a little before the increase was announced. "This is the moment to show courage," he added, urging his allies in congress to go along with his administration. "I ask the allied basis to back me up and I will insist on getting this backing."
During the two-hour meeting that the President held with his cabinet, Finance Minister Pedro Malan used the occasion to announce a recovery of the Brazilian economy and forecasted a 4-percent growth in the economy this year. Said the minister, "We have turned a page and we will consolidate this new trend this year. The President is taking a mature and responsible decision from the fiscal point of view."
According to the government, the R$15 increase represents an 11 percent raise. Not as much as that, said Dornelles, for whom the real gain was a more modest 5.08 percent. Not as much as that, corrected the experts at Dieese (Departamento Intersindical de Estatística e Estudos Sócio-Econômicos—Inter-Union Department for Statistics and Socioeconomic Studies). According to them, the raise was a mere 3.3 percent above the inflation rate of 7.5 percent, which occurred between April 1999 and April 2000.