Brazilians Wait for Lula to Deliver

SAO PAULO, Brazil -- This was supposed to be the year for South America's largest economy to take a turn for the better, with economic growth that would start producing millions of new jobs that Brazil's working-class president promised for the masses. But only weeks after exuberant investors sent Brazilian stocks to record highs, financial markets pulled back amid concerns the outlook may not be so rosy.

The vast ranks of Brazil's unemployed are increasingly frustrated -- wondering when they will benefit from the pledges made by President Luiz Inacio Lula da Silva before he took office in January 2003.

Thousands gather every morning at dawn in lines outside employment agencies in downtown Sao Paulo, Brazil's financial and industrial hub of 18 million people. The government estimates the jobless rate in the world's second-largest metropolitan area after Tokyo is 12 percent, but labor unions put the figure at 20 percent.

Among those waiting hours to drop off resumes in the hope of receiving a phone call from an employer was Ruben Souza, a security guard laid off six months ago when his company lost a contract with a bank and shed 300 workers.

Souza gets confused when he sees Silva's top ministers on television, touting 2004 as the year Brazil will emerge from its economic doldrums and head on a path toward slow, sustainable growth and a reprieve from inflation, which hit 9.3 percent higher last year.

"They say this will be the year for growth, and inflation is under control, but I don't see it," said Souza, who is 35 and has two more months of 640 reals ($220) unemployment checks to support his wife and small children before his income stops completely. "Jobs are tough to find, my phone bill just went up like crazy and everything in the supermarket is more expensive."

Brazil slipped into recession last year after Silva, a former lathe operator and union leader, took office promising to deliver 10 million new jobs in four years -- a pledge few now believe he can fulfill. Instead, Silva was forced to hike interest rates to control double-digit inflation and stabilize an economy many feared was on the brink of an Argentina-style implosion.

Investors applauded the move, sending the benchmark Brazilian Ibovespa stock index up 97 percent in 2003 on speculation of better times ahead in 2004. And the local currency, the real, soared 22 percent against the dollar. The Ibovespa roared even higher in January, hitting an all-time record of 24,359 on Jan. 26.

But bad news sent the Ibovespa tumbling 10 percent from the recent high to 21,968 on Friday. The real has lost 2 percent of its value this year and is flirting with the psychologically important 3-to-1 level against the greenback for the first time in months.

Investors got spooked after Brazil's central bank suggested renewed signs of inflation may prevent it from lowering the 16.5 percent benchmark interest rate for months, making it more difficult for companies to expand and hire workers. Then they bailed from the market again amid prospects for better economic conditions in the U.S., raising fears that Brazil's recovery could fizzle if foreign investors decide they can get better returns in the U.S. than in Brazil.

While most economists still think Brazil will grow between 3 percent and 4 percent this year, some say the country could be headed for a near-jobless recovery that would hurt Silva, popularly known as Lula, and his drive to win more power for his Workers Party in fall municipal elections.

Brazil's government sought to contain the damage last week.

In a television interview, Development Minister Luis Fernando Furlan predicted exports will increase to $80 billion in 2004 from $73.1 billion last year, helping the country's employment prospects.

"The export surge alone will be enough to create a million new jobs," he said. But Furlan's comments didn't give much comfort to the legions of unemployed waiting in the rain outside Sao Paulo's employment agencies.

"I don't believe it because I don't see anything opening up," said Esdras Lopes de Holanda, who hasn't had work since the garage door factory he worked for closed last year.

"The economy's worse now because there just aren't enough jobs."