When he was first elected in 1994, president Cardoso promised a
    sweeping political reform, but did next to nothing to make it happen. He repeated the
    pledge after his re-election. A year and a half into Cardoso’s second term, little has
    happened to indicate that a reform is actually in the works. This could change soon.
    By Brazzil Magazine

    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

    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.

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