Brazil Strives for Economic Equality

By Sarah de Sainte Croix, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – As Brazil’s economy has boomed its poverty rates have halved over the last two decades according to some reports. The socialist policies of the current and previous governments have been credited with lifting 28 million people out of extreme poverty and allowing 36 million to enter the middle class, in a country of 190.7 million.

But with the cost of living sky-rocketing, a property market nearing the apex of a spectacular boom, and Brazilian executives earning some of the highest salaries in the world, Brazil is still a country of stark contrasts.

The U.S. Factbook estimates the sixth largest economy in the world had an average per capita GDP of R$20,000 (US$11,600) in 2011, and ranks 100th in the world just ahead of Costa Rica and behind countries like Iran, Romania and Venezuela. Even with a low unemployment rate of 6.1 percent, 26 percent of the population lives below poverty line in Brazil.

A glance at the figures from the IBGE (Brazil’s government statistics bureau,) reveals that 16.2 million people (8.5 percent of the population,) still live on less than R$70 per month – the equivalent of around US$1.30 per person per day – the limit set by President Rousseff as the extreme poverty line.

Of those 16.2 million people, 4.8 million survive on no income at all, and the incomes of the remaining 11.4 million range between R$1 per month and R$70. Furthermore, the minimum wage is just R$622 (US$361) per month, despite an increase of more than fourteen percent decreed at the beginning of the year.

Naercio Menezes, professor of economics at the University of São Paulo, told the BBC, “Brazil is one of the most unequal countries on the planet.”

He explains, “The reduction [of poverty] that has been taking place in the last couple of decades is very minor. If you are born into a poor family it is very difficult for you to eventually become rich.”

In June last year President Rousseff launched a multi-billion dollar social welfare program called “Brazil Without Misery” in response to the IBGE’s poverty figures. Its aim is to eradicate extreme poverty in Brazil by 2014.

At its heart is the Bolsa Familia cash transfer program started by President Lula in 2003, which is similar to a government welfare program found in other countries.

Under the program, low income families receive cash benefits of between R$15 to R$95 per month according to per capita income and the number of children of school age. In exchange, families commit to keeping their children in school and following a basic health and vaccination program.

The Brazil Without Misery program plans to extend the reach of the Bolsa Familia and brings together a host of schemes targeting health, education and infrastructure under one umbrella. Rousseff’s goal is to include a further 320,000 people by the end of 2012.

To this end, the “Busca Ativa” (or “Active Search”) strategy has been implemented to ensure that benefits reach families who may not yet have received them due to geographical isolation, lack of information and administrative shortcomings.

The Minister for Social Development, Tereza Campello, said, “We need to change the mindset that it is up to a poor person to come to the state, and ensure that the state reaches out to the poor person.”

At a meeting with Rousseff at the end of last year, Chile’s former Social Democrat president, Michelle Bachelet, now the head of UN Women, said, “This is not just a question of human rights. It makes a lot of economic sense,” she declared.

“It [the Bolsa Familia] changes local economic dynamics as recipients spend benefit payments locally. You get more demand for goods and services and that means more jobs,” she said.