BY HILDA CUZCO
Thousands of auto workers demonstrated in Sao Paulo, Brazil, December 11, protesting threats of layoffs if they do not accept wage cuts and reduced working hours. When the effects of the currency turmoil in Asia shook the Brazilian economy in late October, the government of President Fernando Henrique Cardoso launched a massive austerity plan in hopes of avoiding a currency devaluation there.

One of the government's measures was to almost double interest rates, which led to a rapid drop in auto sales. Volkswagen AG, the largest automaker in Brazil, announced that in order to avoid layoffs of 10,000 workers, the trade unionists must accept a 20 percent cut in the workweek and their pay, as well as reductions in bonuses, profit sharing, and paid vacations.

Some 10,000 auto workers overwhelmingly rejected this concession scheme at a December 3 a meeting called by the metalworkers union ABC at the entrance of the Volkswagen plant in Sao Bernardo do Campo, a suburb of Sao Paulo. The company, which employs 31,000 workers, said its sales fell 42 percent in November alone. Ford Motor Co., Brazil's fourth-largest carmaker, has also announced that it will reduce production for the next year.

Meanwhile, the lower house of Congress approved the long- awaited Cardoso plan to "reform" the social security system, which has been the main target for cuts in public spending. This comes on top of the austerity package already in place, which includes $18 billion in budget cuts and an accelerated sell-off of state enterprises. In his recent visit to London, Cardoso promised to the investors that his government will proceed and "accelerate" the economic reforms. "The cost and the pace and advance may be affected by external circumstances but you may be certain there will be no deviations and no U- turns," Cardoso told executives from the confederation of British Industry December 2.

While Cardoso was assuring investors of his commitment to austerity, hundreds of workers, among them activists in the Movement of the Landless Peasants, marched in Sao Paulo December 5 against the government's economic policy, in a demonstration called by the Central Confederation of Workers (CUT).  
 
 
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