ELECTIONS-BRAZIL: Unemployment and Social Problems Bag Campaign

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Aug 12 1998 (IPS) - Brazil’s election campaign has turned focus from the “Washington Consensus,” with the two main candidates emphasising social issues – especially unemployment.

The Washington Consensus – a group of multilateral and regional bodies based in the US capital – provided guidelines for the economic development of Brazil, and indeed the whole developing world, to the detriment of social concerns.

President Fernando Henrique Cardoso is promising to create seven million new jobs if re-elected on October 4 for another four- year term.

Meanwhile, Luiz Inacio Lula da Silva – the main opposition candidate proposed by a left-wing alliance – is offering work for 15.5 million people, including three million to be settled in agrarian reform and two million young people in voluntary service.

This raising of the stakes, which will not be decided on the amount offered so much as candidate credibility, also stretched to health and education. Lula’s programme plans an end to the illiteracy affecting 20 million Brazilians, with the efforts of 500,000 literacy teachers, especially young graduates.

In his second term, Cardoso would increase the number of families covered by the Minimum Income Programme benefit to 3.3 million. This mechanism provides payments of between 25.60 and 51.2 dollars to very poor families who keep their children in school.

This rally of offers and counter-offers arose from the recognition that the social questions will be crucial to the next government, taking over from the economic concerns which have ruled politics in Brazil and, indeed, the entire world in recent years.

Cardoso’s main achievements, like the successful war on inflation, privatisations, trade liberalisation and economic deregulation, agree with guidelines provided by the Washington Consensus.

As a result, the left-wing opposition accuse him of being “neoliberal” despite his membership of the Brazilian Social Democrat Party, which shares power with liberal, conservative and labour politicians, in a broad majority coalition.

Today, even the International Monetary Fund and the World Bank, both Washington-based, stress the need for a “second generation of reforms” against poverty and the factors of social inequality, strongly present in Brazil.

World Bank vicepresident for Latin America, Shavid Javed Burki, admitted in Brazil last week the Washington Consensus had limitations in acclerating development and combatting poverty.

Burki was in Brazil to support a project to improve education, and announced his organisation will contribute some two billion dollars to this area here over the next four years. “Education now receives most of the World Bank investments,” he said.

With forecasts of investments of less than three percent for this year, with an open market and only the electricity sector left to go in the large-scale privatisations, Brazil is still falling short of the fiscal discipline recommended by the Washington Consensus.

A deficit already running at seven percent of the Gross Domestic Product is considered the main element of vulnerability to the crisis currently in Asia, and it could be a serious obstacle to economic growth.

In debt and forced to fund itself from national savings, the Brazilian State has pushed up the cost of internal credit impeding growth. This stagnation became more serious with the Asian crisis, which has forced through further increases in interest rates since November.

In this situation, the aims announced by Lula are “fantasies,” according to Cardoso’s campaign co-ordinator, former deputy Euclides Scalco. The proposals of the current president are more modest, but “viable,” he said.

It will all be possible with economic growth of six percent per year, which would demand reductions of interest rates, the main cause of growth in the fiscal deficit, argued Guido Mantega, head of the team of economists behind Lula’s government plan.

Furthermore, Lula proposes using most of the public resources raised from taxes and social contributions in activities and sectors which generate most jobs, like small businesses, microcredit, agrarian reform – to settle a million families – and construction.

There are doubts over the feasibility of the wider aims, even amongst left-wing economists, like Marcio Pochmann, labour expert in the University of Campinas.

Generating a lot of jobs depends on various combined actions by the government, including tax reforms to achieve better income distribution, a measure hard to get past parliament, he said.

The electoral campaign raised debate of the social problems which have been wearing down Brazilians for a long time. The increasingly serious situation in Asia could, however, push back to the top of the agenda macroeconomic concerns – like devaluation and a less liberalised market – which had apparently been overcome.