Brazil & Southern Cone - August 2013 (ISSN 1741-4431)

New minimum wage proposal: On 29 July President Piñera unveiled his new minimum wage proposal, which would increase the current monthly rate of Ch$193,000 (US$381) to C$210,000 (US$411). This is the second minimum wage proposal put forward by the Piñera government this year, after congress rejected its previous offer of an increase to C$205,000 (US$401).

Piñera’s latest offer, which he noted represented a nominal readjustment of 8.8%, or 7.9% in real terms (based on annual inflation in the 12 months to May 2013), was approved in general by the lower chamber on 5 August and is currently being discussed in the senate. The government’s latest offer is still far below the C$250,000 (US$489) demanded by the country’s main union, Central Unitaria de Trabajadores (CUT).

Alluding to the CUT’s demand, President Piñera claimed that there had been an average 4% real increase in salaries since he took office in March 2010, noting that if this “rhythm of nominal readjustment is maintained, we could reach the figure of C$250,000 by 2015”.

Growth: On 5 August Chile’s central bank reported that the country’s economic activity index, Indicador Mensual de Actividad Económica (Imacec), rose 4.2% year-on-year in June. According to the bank’s press release, on a seasonally adjusted basis the Imacec rose 1% from the previous month, and was up 4.6% year-on-year. This was above the 3.5%-4.0% increase forecast by local analysts. The Imacec is considered a proxy for the country's GDP, as it includes 91% of the goods and services used to determine GDP growth. In July, the central bank cut its real annual GDP forecast by half a percentage point to 4%-5 after Chile’s copper commission (Cochilco) reduced its forecast for the international average price of copper, Chile’s main export commodity, from US$3.57 per pound (lb) to US$3.27/lb. The bank said it would issue another new growth forecast on 19 August.