Why is the minimum wage so low in Brazil?
why is the minimum wage so low in our country? How is the minimum wage defined?
Announcements
Why is the minimum wage so low in Brazil?
For three consecutive years, there has been no real increase in the minimum wage. In other words, the adjustment was made in accordance with the accumulated annual inflation (measured by the INPC, the National Consumer Price Index).
As of January 2022, the new minimum wage is R$ 1,212.
Despite being a relatively simple topic in the media, many people do not know the reason for this and what the law says about minimum wage.
To help you better understand this topic, continue reading.
What is minimum wage?
The minimum wage, as the name suggests, is the lowest amount a company can pay an employee.
The value is reviewed annually, based on an assessment of the Brazilian population's spending.
Established by law, its creation was based on the minimum amount that an individual spends to guarantee survival.
Its value tends to increase, whether in real or nominal terms.
When was the minimum wage established in Brazil?
The minimum wage emerged in the 20th century, in the 1930s, after the enactment of Law No. 185.
However, it was only instituted in 1940 DECREE-LAW Nº 2.162.
On May 1st, Getúlio Vargas, president of Brazil during the period, set the minimum wage values
His initial objective remains to this day: to at least stabilize the purchasing power of Brazilians, through possible price increases on important items.
The minimum wage in Brazil is among the lowest in the world
In the list of countries of the Organization for Economic Cooperation and Development (OECD), Brazil is the second country with the lowest minimum wage, with an average of US$$ 2.2 per hour of work.
This value is higher only than that recorded in Mexico.
For the third consecutive year, the minimum wage for Brazilians has undergone changes based solely on what is required by the Constitution: adjustment in accordance with the accumulated inflation for the year.
Therefore, those who receive a minimum wage have not had a real increase in their purchasing power. In fact, in a scenario of high inflation, Brazilians, in fact, are losing purchasing stability.
Furthermore, this value was even lower than the country's inflation. The calculation made by the government, based on estimates drawn up in December, was based on an index lower than the final INPC result.
For this reason, the minimum wage adjustment was 0.14% below inflation.
Minimum wage is almost 5 times lower than necessary
The minimum wage was created to guarantee survival and a minimum of dignity for workers and their families, thus covering expenses considered essential.
These essential expenses are food, housing, transportation, hygiene, among others.
In fact, according to the Inter-Union Department of Statistics and Socioeconomic Studies (Dieese), In Brazil, the minimum wage is practically 5 times lower than it should be to support a family.
Furthermore, in a context of high inflation, this amount is not sufficient to meet the needs of citizens.
In 2022, for example, the minimum wage is set at R$ 1,212. However, according to the Dieese study, the value should be R$ 6,012.18.
Why is the minimum wage so low?
When the minimum wage was established, it was used as an instrument for income distribution.
Throughout history, due to inflation, the conclusion was that people earned more and consumed more, that is, that there was demand inflation (related to the demand for products and services).
To stabilize inflation, the government reduced the population's income.
Therefore, wages began to be adjusted below inflation (characterized by price increases), causing the population, especially those on low incomes, to lose their purchasing power.
38% of Brazilian workers earn a maximum of R$ 1,212
In Brazil, 38% of Brazilians earn at most the minimum wage.
The number of workers in the country, whether with a signed employment contract or not, who received up to a minimum wage in the first quarter of the year, reached 38,22%, according to data from a survey carried out by economist Lucas Assis.
As the amount set in 2022 does not represent a real increase for the country's workers, the amount is the target of criticism even among government supporters.
Will the minimum wage rise in 2023?
Until 2019, the value of the minimum wage in Brazil was being adjusted with a real gain, that is, when the increase exceeds inflation in the previous period.
However, after 2020, the formula for calculating the minimum wage changed, with only the INPC being used as a reference for adjustment.
Thus, for two years, there has been no correction in the real sense for Brazilian workers.
In April 2023, the federal government sent the Budget Guidelines Bill (PLDO) to the National Congress, defining the value of the new minimum wage for the coming year.
The government's expectation was that inflation would accumulate a rise of 6.7% in 2022.
This means that this percentage would be used as a reference for the adjustment of the minimum wage next year. In other words, the minimum wage would jump from R$1,212 (current value) to R$1,294 next year.
However, on May 19, the Economic Policy Secretariat of the Ministry of Economy released a new forecast for inflation measured by the INPC, which indicates a forecast increase of 8.1%.
Therefore, if the inflation forecast remains at 8.1%, the minimum wage in 2023 will be R$ 1,310.17.
It is important to remember that despite these predictions, it will be necessary to wait until the end of 2022 to measure inflation and define the minimum wage for the next year.
Conclusion
According to Dieese, the minimum wage in Brazil needed to support a family would need to be more than R$1,000,400.
Another reason that worsens the situation is the inflation scenario, which is eroding the purchasing power of Brazilians and which affects the low-income population even more.
