Brazil's Social & Economic Policies

Social policy is applicable to many areas of policy which are usually within a political or a governmental setting. The policy can be as well used to refer to the legislation, principles, activities and guidelines that lead to conducive human welfare living conditions During the past decade, the economy of Brazil has undergone a significant transformation, The major changes were experienced at the beginning of 2004 that was seen due to increasing in the per capita Gross Domestic Product (GDP), There was a growth rate of about 2.

5 percent in the GDP per person between year 2003 to year 2014. It was three Limes more than it used to be in the prior government that was between years 1995-2002 where the annual growth rate was 0.8 percent. The increased annual growth rate attracted new trends that contributed to the eradication of poverty and inequality. It resulted in the growth of employment and income, not leaving for the expansion of the government’s social programs and spending.

The primary change that caused a reduction in inequality and poverty in the Brazil’s country was the increased economic growth, Poverty has been reducing rapidly by over 55 percent, which is from 358% to 159% of the population in 2012 It was after swearing in of President Lula with Worker’s Party in 2003. My essay will address the social policy and the Brazil’s economy It will be achieved by looking at the macroeconomic policy, industrial policy, the Central Bank‘s responses to monetary policy, labor market and social security. In 2000, the Brazil’s macroeconomic policy was being deeply rooted in about three principles.

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The first principle entitled inflation targets that were put by the Central Bank. The second one was a regime of corrupt floating exchange rate. The third was the target that was set into a significant surplus of the primary budget.

The three principles tied up the country such that it was not able to grow economically, It was after 2004 when the Central Bank allowed an appreciation of the exchange rate as required hence, lowering the export and import prices. Since the inflation of Brazil’s is not demand-driven. Use of the policy interest rates by the Central Bank did not contribute to the controlling of inflation as by the standard economic theory. However, in Brazil the increase in the interest rate tend to lower inflation by raising the net capital inflows and on the hand appreciating the real, It tends to reduce the export and import prices. Currently, the Brazil‘s fiscal policy is the one which acts as the indicator. It recognizes that, as far as the policy is concerned, the size of the surpluses does not matter, but what matters a lot is whether the surpluses are growing larger or smaller. For the politics of Brazil, the fiscal impulse tends to be positive during those moments of slow growth and is negative or neutral during those times of high growth.

The industrial policy goes by the concept in which growth is not adversely affected by government budget balance aggregate changes. What matters a lot is the particular kind of spending. During the first term of President Lula in power, there was a reactivation of Brazil‘s industrial policy which was used as a tool for growth encouragement in priority industries Under an IMF-imposed program of austerity in 1983, the industrial policy was abandoned. It was revived currently in the year 2004 where the dominating neoliberal policies were suppressed The government of Brazil tend to mobilize industrial policy resources through a bank of public development known as Banco Nacional of de Desenvolvimento and Economico e Social (BNDES). About 80% of BNDES’S disbursements for Brazil’s industrial policy were received between the year 2006 and 2012 (Ricardo 46) In the year 2014, there was a disbursement by the BNDES of about 28.5 billion Reais, which was a 35% increase as compared to the year 2013.

The Brazil Central Bank’s responses to monetary policy are based putting its target to an inflation rate that is publicly announced. The inflation rates by the Central Bank has been constant since 2004 despite the fluctuations experienced in Gross Domestic Product growth the primary tool used for monetary policy by Brazilian Central Bank is the Selic rate. In response taken towards the liquidity and domestic growth, a global recession consequences the Selic rate was being lowered. Interest was to be maintained at 13.75% after a meeting that was held in December, 2008 by the Central Bank of Brazil Council that is concerned with the Monetary Policy. Lowering of the Selic rate occurred later in January, 2009 to 875 percent due in seven months. The Selic rate was then increased to 125 percent in 2011 when the economy growth slowed, At the beginning of year 2012, the GDP was lower, and then increase in the second quarter reaching 6.6 percent annualized rate.

As was noted by the government officials, during that time the fiscal policies and monetary policies were being tightened which happened in 2013 third quarter: These resulted in a negative growth and a recession during the first two quarters of 2014. According to the politics of Brazil, it is worth noting that sometimes the Central Bank has been so much willing to sacrifice the economic growth in response to pushing down inflation that usually arise from external sources. These in the recent years has done very little in reducing the inflation. In the recession period that started in the 2014 first quarter, the Selic rate has been raised to three times The labor market has been another primary factor in the reduction of inequality and poverty. In the field of the labor market is where crucial transformations have been observed In 1990, there was an increase in both the informality and unemployment rates.

The trend was being reversed in 2003 for the unemployment and 2005 for the informality The unemployment rate was observed to rise reaching 13 percent in 2003, and later start a trend downward that lasted for over ten years. It briefly increased at the beginning of 2006 and 2008. On the other hand, the rate of informality start falling rapidly from 22.5 percent that was there in December, 2003 to 13.3 percent in 2014, August. The rate measures the non-registered workers percentage that acts as the total of the population employed. One of the primary imperative parts of the labor markets is its commitment to minimum wage increase. The minimum wage has been rising due to the Brazil economy stabilization after 2005. Due to the global recession in 2009, there was the growth in the minimum wage rate Between the years 2003 to 2014, there was a 76.2 percent increase in real minimum wage rate in Brazil.

The effect of increasing the rate of minimum wage rate is applicable to all workers in Brazilt For example, the unemployment insurance, welfare and public pension benefits since all of them are tied to the minimum wage level. Even with the slow growth rate in Brazil, unemployment has continually been declining Unemployment increased 8.4 percent in Brazil during the period of the global recession. The rate of unemployment steadily fell during the recovery process and in the 2012, end and beginning of 2013 it was observed to have rose slightly. In 2014, it just resumed its downward trend, averaging 4.9 percent (Janine 9). One reason as to why the unemployment rate has remained lower is because of the labor force participation decline that occurred during the past two years The education for those between the age of 18-24 has doubled and even more from 9.1 to 18.7. It was experienced between the year 2000-2010 According to politics of the Brazilian’s the recent growth wage rate, has been a threat to Brazil economy. It is because it is the primary source of much inflationary pressures.

The Brazilian Social Security was put into functioning in 1960 when Brazil became a wholly state—run where it adopted the Constitution of 1988. The policy has two branches in which, one is for the civil servants, and the other is for the private sector workers Expansion of the private sector has been considerable particularly by creating the Rural Social Security, which constitutes poor rural workers and small farmers. It has led to formal jobs creation that has contributed so much to Social Security enlargement, Among the 90% of the population that was in the social security group, over 65 percent has got the security benefit, and these lowered the poverty levels in 2009 (Queiroz 102). Conversely, the Civil Servants’ branch just covers a minuscule fraction of the whole population in Brazil.

These are the people who cause income inequality since they receive large pay-cheques. According to the evaluations, did, and politics of Brazil, the Civil Servant’s branch may end up giving the economy of Brazil positive CODSqulEflCES in some few years (0 come In conclusion, Social Policy in the economy of Brazil’s is affected by various factors. The factors include the macroeconomic policy, industrial policy, Central Bank’s responses to monetary policy, labor market and social security. The factors have been in the Brazil’s progress on inequality and poverty social indicators as from 2003, However, the pronounced economic growth increase and reduction in the unemployment rates, have been observed to appear due to significant policy changes that have caused the transformation of Brazil economy.

The changes experienced include the increase of targeted programs and social spending, macroeconomic policy positive changes, minimum wage significant real increases, labor market changes that have led to increased bargaining of labor power. Majority of the changes are durable and will have the effect on the Brazil‘s economy in the years to come. If the fiscal policies and monetary policies are properly adjusted for continued public investment and industrial policy progress to increase productivity. Then, maintenance of the Brazilian economy will be possible, and there will be expected increases in the economic growth rates. It will further lead to the reduction of inequality and poverty in the Brazilian economy.