December 10, 2019

Brazil Seethes Over Public Officials’ ‘Super Salaries’

While civil servants in Europe and the United States have had their pay slashed or jobs eliminated altogether, some public employees in Brazil are pulling down salaries and benefits that put their counterparts in developed countries to shame.

One clerk at a court in Brasília, the capital, earned $226,000 in a year — more than the chief justice of the nation’s Supreme Court. Likewise, São Paulo’s highway department paid one of its engineers $263,000 a year, more than the nation’s president.

Then there were the 168 public employees in São Paulo’s auditing court who received monthly salaries of at least $12,000, and sometimes as much as $25,000 — more than the mayor of the city, Brazil’s largest, was earning. Indeed, the mayor at the time joked that he planned to apply for a job in the parking garage of the City Council building when his term ended in December after the São Paulo legislature revealed that one parking valet earned $11,500 a month.

As Brazil’s once-booming economy stalls, these “super salaries,” as they have become known here, are feeding newfound resentment over inequality in the nation’s unwieldy bureaucracies. Powerful unions for certain classes of civil servants, strong legal protections for government workers, a swelling public sector that has created many new well-paying jobs, and generous benefits that can be exploited by insiders have all made Brazil’s public sector a coveted bastion of privilege.

But the spoils are not distributed equally. While thousands of public employees have exceeded constitutional limits on their pay, many more are scraping to get by. Across the country, schoolteachers and police officers generally earn little more than $1,000 a month, and sometimes less, exacerbating the country’s pressing security concerns and long-faltering education system.

“The salary distortions in our public bureaucracy have reached a point where they are an utter and absolute disgrace,” said Gil Castello Branco, director of Contas Abertas, a watchdog group that scrutinizes government budgets.

Privileged public employees, once called maharajahs in a nod to the opulence of India’s old nobility, have long existed in Brazil. But as Brazil nourishes ambitions of climbing into the ranks of developed nations, a new freedom of information law requires public institutions to reveal the wages of their employees, from rank-and-file civil servants like clerks to cabinet ministers.

Though some officials are resisting the new rules, new disclosures at public institutions have revealed case after case of public employees earning more than Supreme Court justices, who made about $13,360 a month in 2012, an amount established in the Constitution as the highest salary that public employees can receive. In the Senate and Chamber of Deputies alone, more than 1,500 employees earned more than the constitutional limit, according to Congresso em Foco, a watchdog group.

State judges can do even better. One in São Paulo recently pulled down $361,500 in a month. That is not a typo: some judges in Brazil are paid more in a single month than their counterparts in high-income countries earn in an entire year. (The top annual salaries for judges in New York State are climbing to around $198,600.)

The recent revelations, including of an auditor in Minas Gerais State who earned $81,000 in one month and a librarian who got $24,000 in another, have spurred a strong reaction in some quarters. Joaquim Barbosa, the chief justice of the Supreme Court, revoked the super-salaries of the 168 employees in São Paulo’s auditing court in December. Another fed-up federal judge issued an injunction in October suspending payments to 11 cabinet ministers, but the attorney general said he would seek to overturn the ruling.

Some historians blame Portugal, the former colonial ruler, for creating a powerful public bureaucracy in which mandarins wield great influence and earn outsize salaries. Brazil’s byzantine judicial system also provides ways for certain senior civil servants to circumvent constitutional pay limits. Some collect pensions from previous stints in government — often their full salary at the time of retirement — after shifting into another high-paying public job.

Then there are the extra allowances for housing and food, the generous reimbursement rates for distance driven on the job and, of course, the loopholes. One provision dating to 1955 enables some public employees to take a three-month leave every five years. But those who forgo the leave, now intended to encourage workers to take postgraduate courses, can seek to collect extra money instead.

Some high-ranking members of the governing Workers Party, including Finance Minister Guido Mantega, have been able to get around the constitutional limit by receiving an extra $8,000 a month for serving on the boards of state enterprises, and many legislators are entitled to annual bonuses of more than $26,000 so they can purchase attire like business suits.

Still, in the developing world, Brazil’s Civil Service is envied in some aspects for its professionalism. Rigorous exams for an array of coveted government jobs generally weed out unprepared applicants. Pockets of excellence, like some public research organizations, have won acclaim in areas like tropical agriculture.

Lis Horta Moriconi and Taylor Barnes contributed reporting from Rio de Janeiro.

Article source:

Off the Charts: Car Sales Continue to Fall in Many Developed Countries

The Federal Reserve Board reported this week that its industrial production index climbed 2.2 percent in 2012. That represents a slowing of the growth rate from 2010 and 2011, but still left the index slightly above the 2006 average.

That index peaked in December 2007, just as the recession began, and remains below that peak. There have been only two periods since 1921 in which it took longer for production to recover fully. One, lasting just over six years, came after production peaked during World War II. The other, lasting more than seven years, came during the Great Depression.

The accompanying charts show the trends in the two indicators in the largest developed countries. The constant, if slow, increases shown in the United States since the economy hit bottom in 2009 have not been matched in any of the other countries. German industrial production is above where it was in 2006, but has been declining for more than a year.

In much of Europe, the idea that there has been a recovery at all seems doubtful. Car sales did spike higher in 2009, but that was largely because of temporary government-financed incentives that provided money to buyers who traded in older cars for new, presumably more fuel-efficient vehicles.

Britain also announced a tax increase that could be avoided if car buyers acted quickly, and many did. Sales fell off sharply in most of Europe after the incentives expired, and have continued to decline.

New-car sales can be a particularly sensitive economic indicator because few people really need to buy a new car, and thus tend not to do so when they feel uncertain about their economic prospects. Even if a car purchase can no longer be delayed, a used car is an alternative.

The charts show car sales over 12-month periods, compared with the figures in each country for 2006. They exclude light truck sales, a category that includes sport utility vehicles and minivans. Such vehicles are normally included in the United States when counting car sales but excluded in other countries, where they are more likely to be used by businesses than families.

In 2012, car sales in the United States were 7 percent below the level of 2006. Sales in Japan had recovered to within 6 percent of the 2006 total. But in most European countries, sales are well below precrisis levels and are continuing to fall.

A couple of years ago, the periphery of the euro zone appeared to be in a recession, but the core countries of the zone seemed to be doing relatively well. That has changed, and not because the periphery has improved.

Germany reported this week that its economy declined in the final quarter of 2012, and France also seems to be in decline. But in neither of those countries have car sales and industrial production plunged as rapidly as they have in Italy and Spain. Spain’s car sales are now less than half the level of six years ago.

Article source:

Economix Blog: The ‘Mommy Penalty,’ Around the World



Dollars to doughnuts.

Around the developed world, women earn less than men by a sizable margin: as of 2010, about 16 percent less when employed in similar full-time jobs. Women with children, though, experience a far larger wage gap, a phenomenon known as the “mommy penalty.”

Gender pay gap is defined as the difference between male and female median wages divided by male median wages, for full-time workers only. Gender pay gap is defined as the difference between male and female median wages divided by male median wages, for full-time workers only. “Children” defined as aged less than 16 years old. Source: Organization for Economic Cooperation and Development.

That chart is from the Organization for Economic Cooperation and Development’s latest report on the gender gap around the world. It shows that, among members of the O.E.C.D., the median woman without children who works full time earns 7 percent less than the median man working full time, whereas the median female full-time worker with children earns 22 percent less than the median male full-time worker.

The United States is about on trend with developed countries over all: in the United States, the median childless, full-time-working woman of reproductive age earns 7 percent less than the median male full-time worker. For women with children, the wage gap more than triples, to 23 percent. That gap in Japan is even bigger — the median Japanese mother working full time earns 61 percent less than the median Japanese full-time male worker.

And remember, those wage gaps are for full-time workers only. The gap widens if you compare all working mothers, since women are much more likely than men to work part time.

Why do mothers earn so much less than both men and childless women?

In the United States, much of the “mommy penalty” can be explained by the types of jobs mothers versus non-mothers take. In particular, compared with non-mothers, mothers end up in jobs that pay a higher share of their compensation in benefits rather than wages.

Benefits should play less of a role in most other rich countries, which have some form of universal health coverage. Occupational choice still accounts for much of the wage gap, though, as do differences in hours worked even among full-time workers.

Access to child care appears to affect the motherhood penalty as well, the report says. Women are more likely than men to be the primary caregivers for their children, so if affordable child care is not available, women are more likely to take time away from their jobs to care for their children and be penalized with lower wages. Higher enrollment rates in formal child care programs are thus associated with smaller gender wage gaps.

Source: Organization for Economic Cooperation and Development. Source: Organization for Economic Cooperation and Development.

Interestingly, longer periods of maternity and parental leave are associated with a wider wage gap between men and women. The report notes that countries with more generous parental leave policies tend to have lower enrollment in formal child care programs.

Article source:

Dell’s Profit Improves as Sales Miss Expectations

Dell, the maker of personal computers, reported quarterly sales that missed estimates, even as its focus on higher-margin technology helped its profit.

Third-quarter revenue declined to $15.37 billion, Dell said Tuesday in a statement. Analysts had projected $15.7 billion on average, according to Bloomberg data. Net income rose to $893 million, or 49 cents a share, from $822 million, or 42 cents, a year earlier. Excluding some costs, profit was 54 cents a share, topping the 47-cent estimate.

The company is winnowing its line of consumer products and focusing on small and medium-size businesses and government agencies, which account for more than half its sales.

Dell has ceded market share and concentrated on more profitable corporate technology, including servers, services and networking. Dell now ranks behind Hewlett-Packard and Lenovo Group in the PC industry, down from first place in 2006.

Dell also tempered its revenue outlook for the rest of year, citing sluggish sales in the United States and Europe. A shortage of computer disk drives, caused by flooding in Thailand, presents another challenge.

“The revenue did come in a bit lighter than expected,” Brian T. Gladden, its chief financial officer, said in an interview. Consumer sales in developed countries and slow orders from the federal government hurt demand last quarter, he said.

Revenue will increase 1 percent to 5 percent this fiscal year, which ends in January, Dell said. Analysts had predicted sales growth of 2 percent.

Dell’s revenue from selling products to the public sector was down 2 percent from a year ago, to $4.4 billion. That figure included an increase in services revenue of 7 percent. Dell’s sales to consumers fell 6 percent over the same period, to $2.8 billion. Operating income in that segment was $76 million, or 2.7 percent of revenue.

International revenue outside of Canada, Western Europe and Japan rose 11 percent in the third quarter and is up 14 percent for the fiscal year, Dell said.

The company plans to keep making acquisitions to expand in hardware and software for corporate and government data centers, Michael S. Dell, its chief executive, said at a company conference last month. The diversification beyond desktop and laptop computers comes as PC sales ebb. IDC, a market research firm, cut its shipment forecast on Nov. 10, citing the Thailand flooding.

Rising waters have swamped industrial parks where companies like Western Digital and Toshiba make about a quarter of the world’s disk drives. The flood has caused drive prices to increase by $10 to $25, Stephen J. Luczo, the chief of Seagate Technology, said in a interview this month.

While the flooding may result in higher component prices, that could be offset by lower prices for other products, Mr. Gladden said. The company also has loaded up on disk-drive inventory.

“It’s still a pretty fluid situation,” he said.

The flooding may cause disk costs to climb, even if Dell does not have shortages, said Brian Marshall, an analyst at ISI Group in San Francisco. “I don’t think they’re going to have problems getting supply,” he said. “I do think they’ll have problems with pricing.”

While the flooding may result in higher disk-drive costs, lower memory-chip prices are helping PC makers rein in expenses, said Chris Whitmore, an analyst at Deutsche Bank in San Francisco.

“Memory pricing has just been fantastic for the box makers,” said Mr. Whitmore.

Dell fell 13 cents in after-hours trading, after the earnings report came out. Its stock closed up 2 percent at $15.63 in regular trading.

Article source:

Economix: The World Economic Order, Circa 2025

Color China Photo, via Associated Press

With China overtaking Japan as the world’s second-largest economy last year, there can be no doubt that emerging markets are becoming increasingly powerful.

A new report from the World Bank predicts that by 2025, China, along with five other emerging economies — Brazil, India, Indonesia, South Korea and Russia — will account for more than half of all global growth, up from one-third now.

The report, “Global Development Horizons 2011 — Multipolarity: The New Global Economy,” also anticipates that the dollar will be joined by the euro and the renminbi as dominant international currencies. The Chinese government is already easing currency controls and has taken other steps to help the renminbi become a fully convertible reserve currency, which would make it easier for foreign companies to finance projects in China.

Hans Timmer, director of development prospects for the World Bank, said in an interview that despite the current sovereign debt crises roiling Europe, the euro remained a strong and viable currency. “With all the problems they have had in the past 10 years, they have been successful,” Mr. Timmer said. “A big part of global reserves is denominated in euros. There is more borrowing going on in euros. As a reserve currency, dollars are still dominant, but countries are drifting away from the dollar into the euro.”

According to the report, the fast-growing developing countries will continue to outpace those in the developed world — mainly Europe, Japan, Britain and the United States. The emerging economies will grow at an average pace of 4.7 percent a year between now and 2025, while the developed countries will grow at an average of 2.3 percent.

For developing countries to keep up growth rates, the report’s authors write, they will have to innovate their own technologies and improve productivity.

Mansoor Dailami, the lead author of the report, said there was growing evidence that developing countries were beginning to invest in research and development that would lead to new technologies. He pointed to data showing that of the top 1,000 companies investing in research and development in 2009, 114 of them were from emerging economies. He also cited an increasing number of patents and scientific articles generated by researchers in developing countries.

Another key driver of growth for emerging economies, which have grown exponentially by offering cheap labor and low-priced consumer goods to developed countries, will be the ability to get their citizens to spend more on domestically produced goods and services.

Mr. Timmer said the evolution toward domestic consumer spending would come naturally. In China, for example, the demographics of the population is shifting toward older age, which in turn tends to force savings rates — currently high in Asian countries — down.

“Elderly people don’t earn, but they do spend,” Mr. Timmer said. “So from a macroeconomic perspective there is more consumption relative to earnings.” He added that with rising income levels in emerging countries, consumers would naturally begin spending more on domestically produced goods. And maturing economies develop larger service sectors, which tend to be locally staffed and financed.

Mr. Timmer said that the United States needed to view the shift in economic power as an opportunity rather than a threat. “There will be increased future opportunities for the U.S. increasingly to export more advanced products and more luxury products into those new emerging countries,” he said.

He added that it was also a matter of perspective. “There is a lot of cross-border investment between Europe and the U.S. going into Europe and coming out of Europe,” he noted. “And those are win-win solutions for all the companies involved. That is a picture that is very well understood by companies and governments, but when you talk about relationships with emerging economies, suddenly people are afraid.”

Article source: