POLITICS-BRAZIL: Social Ills to Pose Challenge for Lula Govt

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Oct 29 2002 (IPS) - Brazil’s grave social problems, including profound inequalities in income and rising violence and unemployment rates, were factors that contributed to leftist Luiz Inácio Lula da Silva’s presidential victory, but now they loom as his major challenges.

The deterioration of the Brazilian economy and of social conditions along with it – particularly over the last three years – favoured Lula’s campaign call for change, pulling together the 61.3 percent of the valid votes cast for him in Sunday’s run-off vote.

The majority of the 115-million-strong electorate cast their "vote for change", opting for the candidate of the coalition led by the leftist Workers’ Party (PT), which stood in unyielding opposition to the government of President Fernando Henrique Cardoso.

Lula’s opponent, José Serra, was unable to convince Brazilian voters with his campaign slogan "change with security" – in which he promised to modify economic and social policies and to make jobs a priority – precisely because he was the candidate of the ruling Brazilian Social Democratic Party (PSDB).

Lula is to be sworn in Jan 1 as president of Brazil, where a third of the 171 million inhabitants live in poverty, where unemployment and crime are on the rise, and where infant mortality is four times higher than in industrialised countries.

On top of these troubles are the dengue and malaria epidemics afflicting this South American giant, as well as a deficit of 5.5 million homes and the enormous gap between rich and poor.

Improving social indicators amidst national financial woe will be the greatest test of the future government, which is under heavy pressure to meet the high expectations accompanying the presidential victory of a down-to-earth leftist who is also a former metalworker and union leader.

Official statistics for September showed that unemployment affected 7.5 percent of the economically active population, a relatively high rate for this country, where the informal economy tends to hide a large portion of unemployment through the creation of precarious jobs.

Unemployment in the Brazilian metropolis of Sao Paulo is 9.3 percent, the highest it has been in the two decades that this social indicator has been in place, and forebodes a pronounced industrial recession.

Widespread unemployment, the product of Brazil’s economic stagnation over the last few years, contributed to a campaign that did well in identifying Lula with hope for change, thus leading to the leftist coalition’s triumph, noted Sergio Haddad, president of the Brazilian Association of Non-Governmental Organisations.

But the country’s social problems in general have roots dating back long before Cardoso took office in 1995. Inequalities are historic and were aggravated during the last decade due to the economic crisis or, as the PT puts it, to the "neoliberal policies" adopted by the Cardoso administration.

The participation of the poorest half of the Brazilian population in national income fell from 16.5 percent in 1989 to 13.3 percent in 1999, indicating a strong flow of resources to the wealthier strata.

In 1993, 41.7 percent of Brazilians lived in poverty, a portion that fell to 31.7 percent in 1998 thanks to the ability of 1994’s Plan Real to get a hold on inflation. But poverty rates crept upwards once again to reach 33.6 percent in 2001, according to the governmental Brazilian Institute of Geography and Statistics.

That percentage is the equivalent to 58 million people, and of that total, the government acknowledges the fact that 22 million do not have enough income to maintain the minimum necessary diet.

Furthermore, the official minimum monthly salary of 22 reais (around 53 dollars) is considered "a disgrace" by the PT.

But the future PT government will have to resist pressures to increase the minimum wage much if it hopes to avoid aggravating the imbalance in Brazil’s social security system, as approximately 12 million pensioners are paid that same monthly minimum, say experts.

The "zero hunger" initiative, through which the PT intends to wipe out undernourishment in Brazil within four years, assumes that 44 million people lack sufficient food, based on figures that encompass other factors to measure the problem.

It is a "figure closer to reality", Francisco Menezes, co- director of the Brazilian Institute of Social and Economic Analysis, said in a conversation with IPS. The PT approach takes into account other basic necessities, such as housing, health care and transportation, which are not covered in the government’s poverty tally.

Lula’s policy platform states that the social arena will be the focus of Brazil’s new development model, making job creation, improved distribution of income and expansion of the social infrastructure the top priorities.

The commitment to fight the country’s grave social problems, beginning with hunger, was confirmed in the president-elect’s first public address, Monday.

However, economists point out that the future government’s actions will be limited by fiscal adjustment requirements.

The agreement Brazil signed with the International Monetary Fund, which Lula has promised to honour, establishes that public accounts must maintain a primary surplus – that is, before debt payments are deducted – of 3.75 percent of gross domestic product (GDP).

It may be necessary to expand savings of government resources in order to conquer the trust of the international financial market, considered essential if Brazil hopes to prevent further depreciation of its currency and to recuperate foreign credits, which have grown scarce in recent months.

The margin for manoeuvring is small because the potential cuts to the 2003 national budget that the future government would be able to make are very limited, noted deputy treasury minister Amaury Bier.

Maintaining or expanding social investments in order to keep his campaign promises and prevent the public from becoming disappointed, while also attending to the demands of the financial market, will require Lula to be more creative than the more "orthodox" economists believe is possible.

POLITICS-BRAZIL: Social Ills to Pose Challenge for Lula Govt

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Oct 29 2002 (IPS) - Brazil’s grave social problems, including profound inequalities in income and rising violence and unemployment rates, were factors that contributed to leftist Luiz Inácio Lula da Silva’s presidential victory, but now they loom as his major challenges.
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