Suppose you are the Minister of Labor in Brazil and your government is proposing to raise the minimum wage to raise the income of the poorer workers and thereby offset the effects of other economic policies that man adversely impact them

Others in the cabinet are concerned about the effects of the policy will have on employment and competitiveness. What is your response to them?
What will be an ideal response?

Answer: To raise the minimum wage will boost incomes for the workers who retain their jobs. However, it may cause higher unemployment for unskilled worker who are seeking employment or who may be laid off to cut costs. The impact may make Brazilian industry less competitive. A more serious threat will be to other Brazilian companies who are facing foreign competition, since they will be unable to raise their prices. One way these companies may attempt to lower their costs is to substitute capital for labor, outsourcing offshore, and cuts in the overall workforce.