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Brazil to cut back on cost of labour

Brazil's government is preparing sharp cuts to the country's very high 
labour costs as a way of boosting productivity and growht, Guido Mantega, 
finance minister, has told the Financial Times.

The measures, expected to be announced in coming weeks, include abolishing 
the 25.5 per cent of each employee's gross salary employers must pay into a 
range of welfare funds.
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Brazil's high costs of labor?    Of the 34 countries, the US Bureau of Labor 
Statistics collects compensation per worker data,  Brazil's compensation 
rates for production workers are the third lowest,  bested, or worsted, only 
by the Philippines and Mexico, when rates are converted to and compared on a 
dollar basis.

Brazil's compensation rates, expressed in national currency units did 
increase some 60% 2000-2006, but only 40% on the dollar weighted basis, and 
the finance minister states the cut will be made to "compete on the world 
markets."

Mexico's compensation rates increased 60% on a dollar basis, and 55% on the 
peso basis

The more advanced countries were able to restrain compensation growth rates 
during this same period, particularly on the local currency basis with 
Japans's rates declining, Taiwan's increasing only 11 percent, Canada's 20%, 
France 19%.

The finance minister states, of course, the employer contributions would be 
made with "no loss to the workers" although he did not say how that would be 
done.

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