Conventional wisdom has it that you grow in order to distribute income. According to Brazilian President Luiz Inácio Lula da Silva, speaking on his weekly radio program, "Breakfast with the President" (Café com o Presidente), his administration has inverted the logic of the growth/distribution equation and is using social assistance programs to distribute income so the country can grow.

"Contrary to what they say, instead of waiting for growth so we can improve income distribution, we are distributing income so we can grow," said the president.

Lula cited the recent increase in the country's minimum wage (up from US$ 138 to US$ 161) and the government's family assistance program (Bolsa Família, Family Voucher) as examples of mechanisms that do not only promote social justice but create economical dynamics, as well. According to the president the rise in the minimum wage will inject US$ 6.9 billion in the economy.

Lula also pointed out that his administration negotiated with unions regarding the new minimum wage, something that had not taken place since 1964.

"Brazilian unions are mature. They know that a real increase of 13% with inflation at 4.5% is a good deal," concluded the president.

According to Lula, the increase of the country's minimum wage would mean more food on Brazilian's dinner tables.

"When we took office, the minimum wage could purchase 1.3 basic needs baskets (cestas básicas). Today the new minimum wage can buy a little more than two basic needs baskets - 2.2 of them, in fact.... That means the wage earner is taking home more food and his children are eating better," said the president.

Lula pointed out that the minimum wage was made law through a presidential decree because the Congress had been unable to vote on the measure.

Agência Brasil

Comments (1)

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US$ 6.9 billions ?
written by Guest, April 03, 2006

the cost of the increase in the minimu wage is
Reais 5.2 billions and not US$ 5.9 billions as Lula pretends.
At least this is what the government published here and there not so long ago.
That makes quite an unexplained difference....once more.

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