MAY DAY-BRAZIL:
Unions Upset by Minimal Increase of Minimum Wage

Mario Osava


RIO DE JANEIRO,  (IPS) - Workers in Brazil were given a new reason Thursday to protest the economic policy of the government of President Luiz Inácio Lula da Silva, a former metal-worker and trade unionist, in the rallies and events scheduled for May 1, International Workers' Day.

The new national minimum monthly wage, which goes into effect in May, will be increased from 240 to just 260 reals (from 82.50 to 88 dollars), Lula decided after six meetings with at least nine of his ministers held since last week to discuss the decision, which was repeatedly put off.

It is ''lamentable'' that the country's financial authorities once more triumphed within the government, imposing the ''most minimal adjustment of the minimum wage,'' said Luiz Marinho, head of the Central Unica dos Trabalhadores (CUT), the country's leading trade union federation, which was founded by Lula and has close ties to the leftist governing Workers' Party (PT).

Labelling the decision ''an extremely serious error,'' Marinho accused the government of abandoning the minimum wage as an instrument for reducing social inequalities in Brazil, which has the largest gap between rich and poor in Latin America, the region in the world with the most unequal distribution of wealth.

The 8.3 percent increase of the minimum legal wage that has been in effect since last April is ''a disgrace,'' especially for a president who pledged to double the real value of the minimum wage by the end of his four-year term in 2006, said Paulo Pereira da Silva, president of another central trade union, Força Sindical.

The decision represents only a tiny increase in the real value of the minimum wage, because official cumulative inflation in the past 12 months amounted to 5.9 percent. Brazil's two largest trade unions were demanding a minimum monthly wage of 300 or 320 reals (102 or 107 dollars).

The issue is expected to heat up the May 1st demonstrations on Saturday.

To live up to the objective of the minimum wage as stated by the Brazilian constitution, which is to ensure an adequate diet, housing, health care, education and recreation for a family of four, it would have to be raised to 1,400 reals (476 dollars) a month, according to the Inter-Trade Union Department of Statistics and Socio-Economic Studies (DIEESE).

But that goal can only be achieved in the long-term, through a national policy of shoring up the minimum wage, whose buying power was reasonable in the 1950s, but has deteriorated greatly, especially since the 1980s, DIEESE technical expert Ilmar Ferreira da Silva told IPS.

Authorities argue that one hurdle standing in the way of any generosity on the part of the government with regards to this question is that a greater increase would aggravate the deficit in the pensions system, the biggest factor of imbalance in the public accounts.

The pensions earned by two-thirds of the more than 20 million retirees in this country of 178 million are pegged to the minimum wage, which means that raising it any further would entail additional public expenditure, requiring budget cuts, or tax rises which the productive sector has staunchly opposed.

To ease the frustration of the country's workers, the government decided to raise the family stipend paid to poor families for each child under 18, from 13.48 to 20 reals a month (4.58 to 6.80 dollars), in order to increase the incomes of heads of households without swelling the social security deficit.

The business community welcomed the new minimum wage. Armando Monteiro Neto, the president of the National Confederation of Industry (CNI), termed it a ''responsible'' decision that is ''compatible with the country's fiscal reality.''

A greater increase would endanger Brazil's economic stability, generating inflation that would mainly hurt workers themselves, he argued, adding that the municipal governments of many towns and small cities will also be hard-pressed to raise the salaries of their public employees.

The impact on industry is small, because nearly all companies represented by the CNI pay wages above the legal minimum, he said.

But it is a reference point that influences wage agreement negotiations in many sectors, especially those that employ unskilled labour and pay just above the minimum wage, like the construction industry, trade, and some service sectors, said Ferreira da Silva.

DIEESE, a research centre that supports trade unions, advocates higher adjustments of the minimum wage as a means of redistributing the national income and promoting economic growth, by bolstering consumption among the poorest segments of the population.

Up to now, the minimum wage has been a reflection of the inequality of growth and development in Brazil. From 1940 to 2003, per capita Gross Domestic Product (GDP) rose fivefold, while the minimum wage lost two-thirds of its real value, according to a DIEESE study.

Alternatives must be sought to gradually build the value of the minimum wage back up, as part of a national debate on a broader package of measures, said Ferreira da Silva.

Economic growth, which would increase the contributions paid into the pensions system, is one of the indispensable conditions for that, he added.

But little progress is made by repeating, year after year, the controversy that crops up in the run-up to or after the announcement of the new minimum wage, because the adjustment has already been determined and limited by the state budget, which is approved the year before, he argued.