Analysis: Social Programs Can Reduce Poverty in Brazil by 24 Percent without Extra Spending

RIO DE JANEIRO, BRAZIL – While the federal government is debating the design of Renda Brasil (Brazil Income), a potential broader substitute for the Bolsa Família (Family Grant), experts in basic income are contributing to the debate.

A study coordinated by economists Vinícius Botelho, Fernando Veloso, and Marcos Mendes, at the request of the Center for Public Policy Debates (CDPP), suggests a new configuration of programs that could reduce the country’s current poverty by between 11 and 24 percent without an additional budget expense.

Called the Social Responsibility Program, the minimum income project would reach 95 percent of vulnerable families currently excluded from the social protection framework, economists say. The text is contained in a bill and a Proposal for a Constitutional Amendment (PEC).

The proposal has points in common with the one initially drafted by Minister of Economy Paulo Guedes, and rejected by President Jair Bolsonaro in August: to combine the family allowance, paid to those with children up to 14 years of age or with disabilities, the salary bonus, a type of 14th salary to low-income formal workers, and the closed-season insurance, intended for fishermen in times of fish reproduction. There is evidence that these three programs are hardly capable of reducing poverty and inequality in the country, experts say.

The Social Responsibility Program would include families with income from formal or casual labor, completing the family income up to the level of R$125 (US$25) per capita. In addition, it would reduce the discount on income declared by the family to 80 percent. “Our estimate is that the number of families attended would reach 13.2 million, with an average of R$230 per month,” they say.

A program of this nature would attend a great part of casual workers who are not served by existing benefits because they have a monthly income. The problem is that these people suffer with the fluctuation of such income and have nowhere to turn.

In this regard, to address the volatility of casual workers’ income, family insurance savings would be provided, with monthly deposits equivalent to 15 percent of income from work.

In recent years, a number of federal government initiatives have tried to promote the formalization of these workers as MEIs (individual microentrepreneurs). “However, the degree of protection achieved remains low, as evidenced by the need to create the emergency aid,” they say.

Economists recall that the Bolsa Família was born from the merger of several assistance programs in 2003.

Source: Exame