US embassy cable - 04BRASILIA1533

UNCLAS SECTION 01 OF 02 BRASILIA 001533 
 
SIPDIS 
 
NSC FOR DEMPSEY 
TREASURY FOR SSEGAL 
AID FOR LAC/SAM 
 
E.O. 12958: N/A 
TAGS: SOCI, EAID, PGOV, PHUM, ELAB, ECON, BR, Economic Policy & General Analysis 
SUBJECT:  MAKING ENDS MEET IN BRASILIA 
 
1.  SUMMARY.  Notwithstanding all its ministry buildings, 
rigid urban design and untypical (for Brazil) physical 
separation from slums and shantytowns, Brasilia is 
permeated with low-income earners working on the fringes of 
the formal economy or filling informal jobs.  They are 
endemic at the lively produce market, at the city park, and 
in the small shops of Brazil's more modest commercial 
streets.  It is from this class that current President Lula 
rose and to which, in large part, his election is ascribed. 
Econoff asked several long-standing personal contacts of 
this station to fill out surveys of monthly income and 
spending habits, for insight into the lives and day-to-day 
struggles of these workhorses.  This unscientific survey, 
if anything, attested to a deepened hardship in the lives 
of Brazil's marginal classes under Lula.  End summary. 
 
2.  Econoff presented eight acquaintances with the survey 
form, which asked for basic personal information and 
amounts spent in 17 broad categories including survival 
essentials, consumer goods, rent, transportation, and 
taxes.  Among those surveyed were self-appointed "car 
guards" who stake out their long-term territory on the 
shopping streets and parking lots to guide vehicles into 
parking spaces, wash cars, and watch cars so the vehicles 
will not get vandalized.  Two out of the three car guards 
who were approached with the survey were illiterate, thus 
unable to participate.  Another of the eight to not 
participate was newsstand-owner Fernando.  He said, "I'm 
sorry I will not fill this out, but no one knows what I 
make: not my wife, my children, the government, nor even 
God."  Apart from the car-washer who did fill in the form, 
the five respondents comprised two  micro-business owners, 
a soap saleswoman, and a clothing store clerk. 
 
3.  Ediclea is a single twenty-year-old mother of two who 
has been working as a "car guard" at the city park for 15 
years (sic).  She and her mother work at one of the parking 
lots seven days a week.  Ediclea often brings her infant 
and toddler, who can be expected to be recruited into the 
"family business" in a few years.  For the survey month, 
Ediclea personally made 100R from pocket change for 
watching customers' cars.  Her father is retired from 
working at a bicycle shop and heads the household of eight 
family members. Four of them work, for a total of just over 
900 Reals (one USD = roughly 3.10 Reals) per month, 
yielding a combined family income of 1150R when added to 
the father's 240R minimum-wage pension.  Food, water, and 
utilities consume 35% of the family total income.  The 
family tax bite is 17%, which is most likely INSS (social 
security taxes).  Clothing and household goods accounted 
for 39%, and the balance of 9% was spent on medicine for 
the survey month. 
 
4.  Antonia is a 52-year-old married woman with two 
students in the household.  She and her husband have had an 
exotic juice business at a produce market for 11 years. 
She charges 1R for a cup of juice, 3.50R for a small 
bottle, and 8R for a large container.  The couple grossed 
1500R in the survey month.  The business' net profit has 
declined steadily for the last five years, says Antonia, 
due to increases in Amazon fruit prices, container costs, 
and transportation costs, which they have been unable to 
pass on to consumers.  Taxes consume 20% of their income. 
Even though they are in the food business, their food costs 
are the greatest expense incurred by the family in the 
survey month, at 40% of their income.  Transportation 
accounted for another 20% of expenditures, followed by 
telephone bills (9%), electricity and medicine (both 6%), 
and water (5%).  Antonia was forced to tap into savings for 
120R to meet expenses for the month. 
 
5.  Antonio washes cars for 5R a pop and earns 10R for a 
wash and wax at the same market where Antonia sells juice. 
At thirty-eight, he is the sole supporter of his family of 
five, and made 500R last month.  He is not liable for 
paying any income tax, does not pay social security tax, 
and has no housing expenses, since he lives in a small 
shack which he built himself with scrap materials he 
accumulated.  The lion's share (44%) of his income in the 
survey month went to clothing (100R) and transportation 
(120R).  All other expenditures were 40R or under: food, 
alcohol, cigarettes, a loan repayment of 25R, water, 
electricity, household goods, water, telephone, medicine, 
and presents.  He is one of ten children who assists in 
supporting his mother by giving her 30R per month. 
 
6.  Fifty-three-year-old Angelica sells soap at local fairs 
and reports that she made 200R during the survey month. 
She and her taxi-driver husband have an empty nest.  Some 
of Angelica's living expenses are paid by her sister who 
works for the state government, her manicurist daughter who 
lives in another town, and her husband.  Last month, 
Angelica paid 50R in taxes, 30R for her basic monthly 
telephone charge, and 80R for food.  A chain smoker, she 
also inhaled 40R worth of cigarettes. 
7.  Rosangela, 20, has worked at a clothing store for the 
past five months with a salary (no commission) of 350R per 
month, and studies at a private college.  She lives with 
her family of eight and contributes 150R per month for 
general household living expenses, 50R for household goods, 
and 10R for the monthly phone bill.  She always walks to 
work, but occasionally takes the city bus to other locales 
(1.60R flat fare), and spent roughly 10R for that purpose. 
She has an educational loan with 70R monthly payments, and 
spends 20R per month on fast food.  In an act of discipline 
for someone of this age working in a clothing store, she 
only purchased 35R of clothes.  The balance of her income 
was used to purchase a small gift. 
 
8.  According to a 2002 study conducted by SEBRAE, the 
Brazilian support organization for small business, in 
Brazil's eight major metropolitan areas, including 
Brasilia, there are 1.4 million informal workers with an 
average income of 903 Reals per month.  Three of the four 
people that Econoff surveyed earning a living on Brasilia's 
informal economy earned less than that average.  Formal- 
economy workers earn substantially more: according to the 
Brazilian Institute of Geography and Statistics (IBGE) 
their average income is 1,789 R per month.  Residents of 
Brasilia -- a privileged government town which unlike Rio, 
Sao Paulo, and virtually all other Brazilian urban centers 
does not contain sprawling low-income zones or slums; the 
latters' equivalent are instead located in separate 
'satellite cities' up to an hour away -- enjoy an average 
income of 3,241 R, according to the same IBGE tables. 
 
9.  COMMENT.  This (admittedly unscientific) survey 
contained zero that would attest to any improvement in the 
lives of Brazil's marginal classes under Lula's government 
or for that matter in the later years of Cardoso's since 
1998.  None of these five people reported any income 
increase in the last five years, and the only person with a 
business reported declining profits over the last years. 
No one reported that they saved any portion of their 
remuneration, nor make rental or house payments.  Indeed, 
the main device for these persons of humble station to get 
by seems to be their ability to economize on habitation 
costs.  With the exception of Rosangela, those surveyed 
either live in the satellite cities in hand-built shacks, 
or live with others who have erected these make-shift 
structures.  The extended family is alive and well in 
Brasilia, partially propagated by economic necessity, as 
family members pool their money for day-to-day survival. 
 
HRINAK