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Brazil Salaries Have Lost 1/3 of Purchasing Power

Brazil’s Inter-Union Department of Statistics and Socio-Economic Studies (Dieese) dismisses the possibility that last year’s salary increases may be contributing to inflation.

Clemente Ganz Lúcio, technical director of the Dieese, points out that since the inception of the Real Plan, in 1994, workers’ income has lost a third of its real purchasing power, that is, after discounting the effects of inflation.


Yesterday, the Dieese issued its annual report on union salary negotiations. The report showed that in 80.9% of the 658 negotiations that were examined, salary increases were greater than or equal to the IBGE’s (Brazilian Institute of Geography and Statistics) INPC (National Consumer Price Index) for the 12-month period prior to each category’s reference month for salary readjustments.


Ganz Lúcio’s explanation is that workers’ income has not increased, despite the drop in unemployment and the good readjustments obtained last year.


He refers to data from the Ministry of Labor and Employment’s Annual Social Information Report, which, according to Ganz Lúcio, indicates that the mass of workers’ income fell 0.3%, despite the addition of 1.5 million new formal job posts.


In his analysis, “what is of interest in terms of inflation is this income mass, the earnings total, and this remains low.” Without a growth in income, there would be no growth in demand or consumption, which is what influences inflation.


He cites the state of São Paulo as an example: “In the state of São Paulo, where the economy is more organized, there is a 30% turnover in the labor force each year. And workers always start off earning less,” he explains.


The average salary in the São Paulo Metropolitan Area declined to US$ 375.90 (R$ 1,006.00) in January, the lowest level in the past 20 years, according to research carried out by the Dieese in partnership with the State Data Analysis and Statistics System Foundation (Seade).


Translation: David Silberstein


Agência Brasil

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