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Brazil Lula’s Family Voucher Is No Charity and Makes Economic Sense

Brazilian family helped by Bolsa Família In the results of Brazil’s National Survey of Sample Households (PNAD) there is an explanation for the President Luiz Inácio Lula da Silva’s popularity that intrigues the center, the right, and part of the left. Brazil became less unequal in many senses. To call the advances which have been achieved “welfare” doesn’t help to understand the current reality nor to work toward more profound changes.

It’s time to clear the air. With the media’s usual ideological slanting of data, it becomes necessary to look at the primary information sources, the data of the IBGE (Brazilian Institute of Geography and Statistics)(1) to see how things are going.


His re-election showed strong approval for Lula from the poorest segments of the country, but getting the real numbers on the evolution of Brazilian living conditions is subject to the natural delay in the process of developing surveys.


The IBGE published the results of PNAD for 2006 and also the Social Indicators of the last 10 years. It’s worth looking at the image that emerges: this explains not only the votes, but also the road ahead.


The most important figure is clearly the growth of 8.7 million jobs in the country during the last administration. This represents an immense advance, since it involves one of the principal causes of inequality: a large part of Brazilians see themselves as excluded from their right to support themselves and to contribute to the country’s development in general.


Between 2005 and 2006, this growth was particularly strong, with an increase of 2.4%, a result of the entrance into the job market of 2.1 million people. The expansion of female-run businesses was particularly strong (3.3%) given that men attained 1.8%.


Formalization of jobs is very significant: three out of every five jobs that were created do not use the employment ID card and record of work. We estimate then, in 2006, 30.1 million formal workers, an increase of 4.7 % in one year.


This advance is very positive, but in an inherently dramatic scenario that the very IBGE points out: “more that half of the working population (49.1 million people) continues to be made up of workers without employment ID, self-employed, or unremunerated.”


The second number that made headlines in all the newspapers is the 7.2% increase in workers’ income between 2005 and 2006. It’s an extremely strong number, and consistent with prior years: workers’ remuneration had been falling since the last two years of the 1990’s and began to rise in 2003, taking since then the form of an ascending curve.


This is a hugely important number, since inequality is, by far, our number one problem. It is a number that reflects the aforementioned advances in the creation of jobs, and also the advances in the minimum wage.


The minimum wage had a real gain of 13.3% in 2006 relative to 2005, which represents an enormous jump for the workers who are at what is called today the “base of the economic pyramid.” Consultations with people who work with statistics from the Survey of Employment and Unemployment (PED) of the organizations Dieese/Seade suggest that 26 million workers were covered by this increase. Even so, since the minimum wage is a trigger for pension readjustment, another 16 million people would also have benefited.


Salaries and Inequality


It is necessary to make a point here: 100 reais (approximately US$ 50) increase for a family that has, for example, an income of 4,000 reais is not significant. Nevertheless, 100 reais, for people that have to survive on a few hundred reais per month, represents an immense relief, the difference between being able or not to buy better food or medicine for their children.


The marginal utility of the income, in terms of an impact on the families’ comfort level, goes down as their income goes up. From the point of view of the economy, to maximize the usefulness of the country’s resources involves raising the income of the poorest of the poor.


This matters as much from a social point of view, in terms of the satisfaction it creates, as in terms of the creation of demand and the consequent dynamization of economic activities. The poor do not engage in financial speculation; they buy goods and services. To lift people from poverty is not charity; it is good sense, socially and economically.


Another way in which PNAD evaluates the evolution of income is no longer by worker, the source of remuneration, but by household, the point of arrival. This permits them to add together the various forms of remuneration in the family. The average household income increased 5% in 2005, 7.6% in 2006.


This matches the data of income from employment and makes the data very dependable because they agree. It is important to remember, for those who have less familiarity with this type of statistics, that an increase of 7% per year means that their income doubles every 10 years.


Looking carefully at the above figures, we see other interesting facts. The employment income of employed persons, whose national average increased 7.2%, rose 6.6% in the Southeast, but it rose 12.1% in the Northeast. In the case of household income, the average national increase, as we saw, was 7.6%. But in the South and the Southeast, it was 7% while in the Northeast, it was 11.7%.


In other words, we not only had a strong increase as a whole, but the region that was farthest behind, whose advancement is most important for national equilibrium, had the most accelerated increase. That means that the regional lack of equality is, for the first time, being corrected and with very significant numbers.


Relevant, without a doubt, yet still very insufficient: The average household income in the Northeast represented 52.8% of income in the Southeast in 2005, changing to 57.8% in 2006. A great advance, but a long road ahead.


Another important focal point of the lack of equality is linked to the difference in remuneration levels between men and women. The data show the following evolution: the remuneration of women, which was equivalent to 58.7% of that of men in 1996, increase to 63.5% in 2004; 64.4% in 2005 and 65.6% in 2006. Note the slow progression, starting from a level that now is in itself extremely unequal. In other words, here also the direction is positive, but we need much more.


Women and the Workforce


The situation of women is particularly affected by the disintegration of the family. These extremely harsh figures appear in the IBGE document on Social Indicators 1996-2006. The number of families characterized as “single woman with children” surpassed 15.8 million in 1996 to 18.1 million in 2006.


Since there are a little less than 60 million families in the country, this means that almost a third of the families are headed by a woman who, if she doesn’t work, has no income, and if she does work, has no one to take care of the children.


Clearly this can be a crisis situation when it is associated with poverty, and constitutes a main target of the Family Assistance Program, whose success is largely due to the fact that women manage the resources they receive better.


For those who criticize these redistribution programs, it is key to remember other data from PNAD, showing that “around 31% of families where a woman is head of household live with a monthly income of less than half the minimum monthly wage per person.”(2)


On the positive side, it is important to note the data that PNAD shows us, that women are progressing rapidly in terms of educational level: 43.5% of them have a high school education (11 or more years of schooling), while only a third of men have this level of education.


Women invest more also in higher education, where 55.3% of the students were women in 1996 and 57.5% in 2006. In a society where the need for an educated workforce is rapidly growing, this is highly promising.


The feminine presence in the work force is continually growing: 43 million out of a total of 90 million employed persons. Nevertheless, between work, school, and family caretaking, along with being frequently single heads of households, their workload is clearly reaching its limit.


The Synthesis of Social Indicators 1996-2006 comments that “in relation to the average weekly work hours spent on domestic chores, we have verified that women work more than twice as much as men in these activities (24.8 hours).”


In other words, in this other important dimension of inequality, which shows up in the inequality of genders, we document advances in relative remuneration, advances in educational levels, advances in the workforce, but it is still overall enormously unjust in a system characterized, in other words, as “social reproduction” in the widest sense. The inherited structural inequalities are simply very great.


Education and Illiteracy


Another dimension that is worth commenting on that both PNAD and the Synthesis of Social Indicators 1996-2006 amply document are the increases in educational level. For now, it is huge: in Brazil, there are 55 million students, 43.7 million in the public system and 11.2 million in private schools.


If we include teachers and the administrative support system, we have here almost a third of the country’s population. The greatest quantitative expansion took place under the administration prior to Lula, but the advances continue strongly.


In particular, with law 11.274 of February. 6, 2006, basic education was increased to nine years and begins at six years of age. School fees for five and six-year-olds increased 3% in one year. The number in this group that are not in school fell from 35.8% in 1996 to 23.8% in 2001 to 14.7% in 2006.


In the seven to 14-year-old group, the number that don’t go to school dropped from 8.9% to 3.5 % to 2.3% respectively. For the group of 15 to 17 year olds, it was 30.5%, 18.9%, and 17.5% respectively. The average number of years of study completed by people over 10 years old was 6.8 years in 2006, an increase of 3% relative to the year before.


In higher education, there was an even greater increase, 13.2% between 2005 and 2006. This was primarily due to the expansion of higher education in the private sector but the public role in reducing inequalities appears clearly in the distribution between the two systems:


“Regarding the North and Northeast Regions 41.9% and 36.6% of the students in higher education attend public schools; in the Southeast, South, and Central West, these percentages were 18.2%, 22.1 % and 26.5% respectively.”(3)


Here again we are going in the right direction, but the ground to make up is immense. Upon analyzing the educational level of the employed, PNAD shows that people with 11 or more years of school made up less than 22% of the work force in 1996, 28.9% in 2001, and 38.1% in 2006. The progress is strong and is due particularly to the educational efforts of working women, among whom 44.2% had 11 years or more of school in 2006.


On the other hand, we have 15 million illiterates over 10 years old (a reduction from 10.2% to 9.6%). Functional illiteracy affects 23.6% of people over 10 (a reduction of 1.3%), and in the Northeast it affects 35.5%. Evidently, between the two ends of the country there is an immense mass of under-qualified people.


Increase in Social Policies


If we briefly summarize this evolution, we can see a strong expansion of employment (particularly in the formal economy), an increase in income from work in general (and particularly in the Northeast), significant progress in educational levels and women’s salaries, a strong increase in the employed population with 11 years or more of schooling, along with a reduction in child labor and other tendencies that we do not have room to comment on here. These numbers are internally consistent and lead to a clear conclusion: a lot is being done, and the results are showing.


To label these policies as “assistencialist” doesn’t make a lot of sense: the 12.5 billion reais for family farms support their capacity to produce. The 8.5 billion reais of the Family Assistance program Bolsa Família (Family Voucher) constitute an excellent investment in the next generation that will be better fed – along with the essential impact of involving the non-profit sector in the organized public policies of the country.


The increase in the minimum wage, along with the other above-mentioned programs, begins to energize popular demand and to stimulate small-scale local production.(4)


In other words, perhaps we will be reaching a threshold from which the income generated at the base of society begins to transform itself into a self-sustaining mechanism. For this, we will have to advance much more. What is at stake here is not just helping the excluded masses of this country.


It is creating a dynamic in which income, education, technical support, credit, and other organized support initiatives permit us to actually break the structures that create and propagate inequality. The pressure on this government is positive, when one takes into consideration the advances already achieved, and promotes an expansion of these policies, not their reduction.


What becomes evident, upon analyzing these data, is that the least privileged citizens in the country, voted for a second term for Lula not because of misinformation, but because they felt that their situation is improving. To badmouth the government is, for us, almost a reflex action; it goes together like beer and peanuts.


To speak well of the government is suspect, as though it were less “objective.” But to speak evil of the government may be equally suspect. It is much more important to understand what is actually happening. Because behind the scenes of the official politics that the press shows us daily, there is the visible side of the great discussions, there is the immense organized labor of millions of people that are changing programs, literally “milking the rock” of a governmental machine that historically was set up to administer privileges, not to render service.


End Notes


(1) The National Survey of Sample Households, for whomever is unfamiliar, constitutes the principal instrument of evaluation of how things are going for the families in Brazil. PNAD interviewed 410,241 people in 145,547 households, and represents the real situation in a trustworthy manner, although it is divided up only at the level of large regions or states and so it covers over local inequalities, lost in the averages. The data are available on line, under “Comentários 2006.”


(2) See the data from the IBGE’s Synthesis of Social Indicators 1996-2006, figure 4.1, and following pages. The complete document is Synthesis of Social Indicators 2007. Regarding the tendencies toward family disintegration, see our article “Economy of the family,” under the heading “Artigos (articles) Online at the website www.dowbor.org.


(3) IBGE, PNAD 2006, commentaries, p. 7.


(4) It is worth consulting the monitoring system of the 149 social programs distributed among various ministries, available under “Geração de Emprego e Renda (Creation of employment and income)” at www.mds.gov.br: each program is shown with its goals and budget, along with a contact for anyone needing more information.


Ladislau Dowbor is a professor in the post graduate department of the Pontifical Catholic University of São Paulo. This article was originally published by Le Monde Diplomatique. Translated from the Portuguese article “Para compreender a força de Lula” for the Americas Program – americas.irc-online.org – by Patricia Black.

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