Thursday, 24 February 2011

Rousseff secures first victory over minimum wage bill

Brazil's President Dilma Rousseff has secured her first victory in a bid to curb government spending when the Senate voted to pass the government's monthly minimum wage bill.

The senators voted to raise the minimum wage by 6.8 per cent to 545 Reals and rejected two opposition proposals to lift the wage to a higher amount. By shunning the other proposals, the lawmakers avoided undermining the government's plan to trim 50 billion Reals from its budged. According to government estimates, more than two thirds of pensions and safety net-payments are indexed to the wage, so every one- Real increase raises annual spending by 300 million Reals.

On Wednesday 16th February, Rousseff's coalition in the lower house rejected opposition proposals to raise the wage to 560 Reals and 600 Reals. The vote sent yields lower, as traders trimmed bets on interest rate increases.

Sources: Bloomberg, Reuters, The Canadian Press

For more news and expert analysis about Brazil, please see Brazil Focus.

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