Brazil celebrated the 500th anniversary of the arrival of Portuguese explorer Pedro Alvares Cabral on its shores with all the country’s superlatives intact. It is the world’s fifth largest nation in territory and the eighth in terms of industrial output. It is the leading producer of many agricultural commodities, such as coffee and sugar, and the source of 90 percent of the world’s gems. Its Amazon forests are the world’s largest single biological reserve.
Yet much remains to be done to improve social equity, mass education, and human welfare, according to Vilmar Faria, a senior advisor to Brazilian President Fernando Henrique Cardoso. He listed some of these social challenges at a recent seminar at the IDB’s Washington, D.C., headquarters: 32.7 percent of Brazil’s population lives below the poverty line, income distribution is among the most unequal in the world, and the average person has only five to six years of schooling.
Making matters more complicated are “enormous regional differences,” Faria explained. In the rural Northeast, for instance, the poverty rate is 73 percent, but in the urbanized south, it is 19.9 percent.
On the positive side of the ledger, macroeconomic stability has been achieved in recent years, reform of the state is in full swing, and inflation has been tamed, according to Faria. Infant mortality dropped from 179.4 per thousand in 1960 to 36.1 per thousand in 1998. In 1981 child labor affected 19.3 percent of minors, but by 1998 the figure had dropped to 12.3 percent.
While Brazil invests 20.9 percent of its gross domestic product in social programs—about the same percentage as Costa Rica—the well-off get a disproportionate share of the benefits, Faria said. He estimates that Brazilians in the bottom 20 percent of the income scale get only 15 to 16 percent of the social benefits, while the richest 20 percent of the population receives 37 to 38 percent.
Roberto Martins, president of the Institute of Applied Research, said targeted investments will be needed in job training and education to break the poverty cycle that is transmitted from generation to generation. He noted that from 1977 to 1998—despite variations in per capita income, differing growth rates, and extreme volatility in inflation levels—there was one glaring constant: inequality. During that 21-year period, 10 percent of Brazilians held 50 percent of the wealth, whereas 50 percent of the population received only 10 percent of the wealth.
One of the most dramatic distortions was highlighted by Eduardo Jorge, congressional deputy and representative of the opposition Workers Party. Addressing the issue of social security reform, he complained that some individuals in the public sector, including judges and retired congressmen, receive pensions of up to $25,000 a month. His party is proposing a cap on public sector pensions at the level of the salary of the president of the republic, some $4,500 per month. A low-income pensioner presently receives between $42 and $65 per month.
Vinicius Carvalho Pinheiro, Brazil’s secretary of social security, said several steps to reform social security have already been taken to put the system on a more equitable and sustainable basis.
The private sector pension system has been reformed and is now sustainable, he said. What remains to be completed is pension reform for the public sector, which he expects to take place gradually over the course of a year. Government figures show that pensions cost the country the equivalent of 6 percent of its gross domestic product, but revenues to support the system amount to only 5 percent of the gdp. This deficit will become more pronounced unless additional reforms are carried out.
Referring to the controversial issue of land ownership, Raul Jungmann, Brazil’s minister of agrarian development, described government efforts to provide land for 872,866 families between 1995 and 1999. But Congressman Francisco Graziano of the Brazilian Social Democratic Party expressed serious doubts about the effectiveness of the program. While recognizing that the country had completed “the largest agrarian reform in the contemporary world,” he cautioned that follow-up and technical assistance was inadequate. A large number of families had been settled on unproductive land, creating “rural favelas.” He suggested that more attention be paid to rural education and creating rural family units with greater potential for economic sustainability.
Professor Aécia Gomes de Mattos of the Federal University of Pernambuco recognized the need to increase the agricultural productivity of families resettled under the land reform program. But past deficiencies, he cautioned, “should not be a cause for abandoning the program.”