Better Wages Make Gap Between Rich and Poor a Little Less Wide in Brazil

Paraisópolis, a shantytown in the heart of rich Morumbi, São Paulo There was a decline of 7% in income disparity among employed persons in Brazil from the fourth quarter of 2002 until the first quarter of 2008. The conclusion was taken from a survey by the Institute of Applied Economic Research (Ipea) conducted in the metropolitan regions of Salvador, Recife, Belo Horizonte, São Paulo and Porto Alegre.

According to the president of Ipea, Marcio Pochmann, the reason for the reduced inequality must be linked to the recovery of the minimum wage's purchasing power in recent years. Pochmann also ascribes the reduction to investment by the productive sector over the last few years, which enabled the hiring of lower income workers.

The survey points to a reduction in the Gini index, used internationally for measuring social inequality. The index ranges from zero to one. The higher the index, the greater the inequality. The index fell from 0.540 in 2002 to 0.509 in 2007.

"By the end of president Lula's (Luiz Inácio Lula da Silva) term, the Gini index should reach 0.49," says Pochmann.

The Gini index has improved because the income recovery of the poorest, in Brazil, was nearly five times as high as that of the richest. In other words, the largest wage raises during the period in the country were granted to the most impoverished workers.

Ipea's president ascribed to the real minimum wage readjustment policy and to income transfer policies, such as the federal government's Bolsa Famí­lia (Family Voucher) program, the fact that the most impoverished obtained greater gains in income than the remaining workers.

On the other hand, the contribution of workers to the Gross Domestic Product (GDP) remains practically stable.

ABr/Anba

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