Brazil & Southern Cone - September 2012 (ISSN 1741-4431)

Despite the government’s best efforts, latest forecasts are for real GDP growth of just 1.6% year-on-year in 2012.  Barring the 2009 recession (-0.6%), that would be the worst result since the left leaning Partido dos Trabalhadores (PT) first came to power under Lula da Silva in 2003 , when annual growth was a paltry 1.2%.

The executive delivered the 2013 budget to congress on schedule ahead of the 31 August deadline. The plan is set at R$2.14trn (US$1.07trn), up 7% in annual terms, and is based on projected real GDP growth of 4.5% year-on-year in 2013, revised down from a previous 5.5%, with annual inflation of 4.5% and an exchange rate of R$2.0/US$. The minimum wage will rise an inflation-busting 7% annually to R$670.95/month (US$335/mth).

The bill proposes federal government expenditure of R$943.4bn (US$460bn), with a reserve of R$15.2bn available for tax incentives, explained Finance Minister Guido Mantega. The primary surplus is set at 3.1% of GDP. Planning Minister Miriam Belchior identified four main spending and investment priorities for 2013: education, health, anti-poverty social programs and infrastructure. Some US$54bn (R$110.6bn) will be invested in state companies, including US$43.6bn (R$89.3bn) in the state oil firm, Petrobras, and US$5bn (R$10.1bn) in the state electricity company, Eletrobras.

Federal workers abandon the picket lines

On 28 August the secretary for labour relations at the planning ministry, Sérgio Mendonça, announced that the National Confederation of Public Sector Workers (Condsef) had agreed to accept the government’s final pay deal ahead of the 31 August deadline to amend the 2013 draft budget. Mendonça noted that an overwhelming majority (90%) of federal public sector workers, grouped in 30 of the 35 sectors on strike, had accepted the proposed 15.8% increase, which will be staggered in three increments over 2012-2015.

The Condsef said it was a victory for federal workers, who began striking in May, though given the fact that the Condsef had been looking for a 45% pay increase at the outset, it appears as though President Rousseff was the one that got her way.

The agreed increase will add at least R$20bn (US$9.8bn) to the cost of the federal wage bill to 2015 and comes on top of an earlier deal with university staff worth R$11bn (US$5.4bn). The total federal wage bill already comes to a steep R$150bn (US$74bn) a year and the Rousseff government is struggling to hold it down so as to free up scarce resources for capital expenditure.

Federal police officers, tax revenue officers and workers from the national institute of colonisation and agrarian reform (Incra) continue to reject the deal, meaning continued delays to border trade and travel in and out of the country. The national guard is on alert to fill some of the gaps. The national federation of federal police (Fenapef) convened an assembly for 30 August to agree a new strike timetable. The Fenapef wants not just an above inflation pay increase but also a reform of police careers.

Postal workers from the state run Empresa Brasileira de Correios e Telégrafos (ECT) affiliated to four dissident unions were threatening to go on an indefinite national strike as we went to press in mid September. The workers, grouped under the national federation of postal workers (Fentect, which groups 120,000 workers in 31 of the 35 postal unions in the country) want a 43.7% pay increase, among other demands including a base salary rate of R$2,500/month (US$1,200/mth), meal tickets worth R$35/day (US$17/day)  and an end to contract labour. The ECT has offered a pay increase of just 3.0%.

The four unions represent some 40,000 workers based in the states of São Paulo and Rio de Janeiro, Tocantins and Bauru (a micro region in São Paulo). The president of the ECT Wagner Pinheiro de Oliveira and the communications minister Paulo Bernardo (of the ruling Partido dos Trabalhadores) met with union leaders on 3 September to avert a strike. The unions agreed to delay but complained that they had had 12 unfruitful meetings with the ECT since July.

• Brazil joins ‘50 most competitive’

Brazil has (finally) joined the World Economic Forum (WEF)’s list of the top 50 most competitive nations in the world for the first time. It rose to 48th position (of 144 countries) in the WEFs latest (2012) Global Competitiveness Report, up from 53^rd in 2011. It was the only one of the BRICS group of emerging markets (Brazil, Russia, India, China & South Africa) to improve its position this year, thanks to a jump in its macroeconomic conditions sub ranking to 62, from 115 previously (on better banking spreads, increased mobile phone and internet penetration/usage and private business sector confidence that the Brazilian government is working to solve structural problems).