Brazil raises minimum wage in economic crisis

Rio de Janeiro (AFP) –


Brazil's crisis-hit government said Wednesday it will raise the minimum wage by more than the rate of inflation in the new year, despite the delicate state of its public accounts.

The office of leftist President Dilma Rousseff said in a statement the minimum wage would rise by 11.67 percent to 880 reais a month -- still equivalent to only about $227.

That was higher than this year's forecast inflation rate of 10.57 percent, which is aggravating hardship in the world's seventh-biggest economy.

"The federal government is continuing its policy of valuing the minimum wage, which will have a direct impact on nearly 40 million workers and pensioners," the presidency said.

The hike however puts further pressure on Brazil's troubled public finances. The government has calculated it will weigh on the budget to the tune of about $743 million.

Figures released on Tuesday showed the government accounts headed deeper into the red last month.

The country posted a primary budget deficit of about $5 billion in November, up sharply from $3 billion in October, the central bank said.

Brazil is struggling through a deep recession and a political crisis that has sparked impeachment proceedings against Rousseff.

The government expects the economy to contract 3.1 percent this year and 1.9 percent next year.

Congress authorized a budget deficit of up to two percent of GDP this year to try to kick-start the economy.

But it has set a target of a 0.5-percent surplus for next year, after a political battle that led to the resignation of finance minister Joaquim Levy this month.