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Lula Raises Minimum Wage by 13%. Opposition in Brazil Wants More.

The leader of the PCdoB (Partido Comunista do Brasil – Brazil’s Communist Party) in the House, representative Renildo Calheiros from the northeaster state of Pernambuco, calls the new minimum wage of 350 reais (US$ 156), effective in April, a "conquest for the Brazilian worker."

Calheiros adds that it is exactly what is needed for the working class: "The security of real gains in wages." He points out that raising the minimum wage from 300 reais (US$ 134) to 350 reais is a real increase of 13%.

According to the union-linked socio-economic studies organization, Dieese, the real increase is exactly 12.07%, adding that it calculates inflation between May 1, 2005 (when the last minimum wage increase occurred) and March 31 of this year, at 4.1%.

The announcement of the new minimum wage, along with an adjustment of income tax brackets of 8%, met with a mixed reaction. The government praised it, the opposition criticized it. The PFL Party, for example, argued that the minimum could easily be raised to 375 reais.

Some economists lament the link between the minimum wage and social security (INSS) benefits in Brazil because any increase in the minimum wage increases the problematic INSS deficit.

According to Brazil’s Labor Ministry, the readjustment is the biggest real salary increase in 10 years. In 1995, the Fernando Henrique Cardoso administration raised the minimum to 100 reais.

The government says that the salary increase will benefit around 40 million active and retired workers, contributing US$ 6.7 billion to the 2006 salary mass.

As for the budget, the government admits the new minimum wage will cost US$ 2.94 billion (6.6 billion reais), but a spokesman said  the shortfall is only US$ 311,94 million (700 million reais) and will be taken care of without any problems.

Agência Brasil

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  • Show Comments (2)

  • Guest

    did Nobody said discreetly….
    …in Lula’s ears that from 300 to 350 the increase is 17 %, not 13 % ?????

    Or may be it was repeated to him everyday, but he has short memory ?

    Or could it be that so drunk he was during the interview, that any numbers were good anyway ?

  • Guest

    ????????
    – from 300 reais to 350 the increase is 17 % NOT 13 %. Great Brazilian maths !!!!

    – an increase in the minimum wage is supposed to reduce the wealth inequality in the whole world BUT NOT IN BRAZIL because millions and millions of salaries contracts are a MULTIPLE OF The minimum wage.
    Therefore those who have 1, 5, 10, 20, 50 Minimum wages ARE ALL INCREASED BY THE SAME RATE OF 17 % !

    Can anyone explain where the wealth inequality will be reduced ?

    As to the 1995 minimum wage of 100 Reais going now to 350, it is in fact going from US$ 100.- to US$ 155.- !!!!!
    And now you are even complaining that your currency is too strong.

    Well, well, just think a moment about it :

    SOMETHING IS DEAD WRONG.

    The anual compounded increase is just 4 % in US$ terms !!!!

    Is this a great achievement for a country that want to eliminate poverty, further knowing that millions and millions of citizens dont even earn 1 minimum wage ????????

    This is a human tragedy, a shame to humanity !!!!!

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