The first half of 2023 saw changes in the of salary negotiations in Brazil. After years of readjustments below inflation, employees have returned to real gains in salaries.
The movement was captured by two different polls. Both the bulletin De Olho nas Negociações, from Dieese [the Inter-Union Department of Statistics and Socioeconomic Studies], and the Salariômetro, from Fipe [the Economic Research Institute Foundation], indicate that, since December, the salary agreements signed in the country, on average, guaranteed readjustments above the price increase.
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The improvement for employees started timidly. In May, the last month with analyzes already published, it reached record levels.
The Fipe Salariômetro indicated that 91.9% of collective agreements signed adjustments above inflation in the month – the highest percentage of the historical series started in 2015. The survey also pointed out that the average wage readjustment was 5.3% – that is 1.5 percentage points higher than the accumulated inflation in the 12 months up to May (3.8%, measured by the INPC).
According to Dieese, 88% of the 759 negotiations with a base date in May were closed with real raises to the workers. Since 2018, when the entity started to monitor collective agreements and conventions, only five occasions had this percentage exceeded the 80% mark: in four months in 2018 and one in 2019.
“In fact, throughout this first semester, we observed an improvement in the results of collective wage readjustment negotiations. There is an increase in the percentage of categories that have achieved some kind of real salary increase, a salary increase above inflation”, confirmed Victor Pagani, deputy director of Dieese.
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Inflation and growth
According to Pagani, there are a number of factors that explain this improvement. He recalled that inflation is falling in the country. This makes it easier for negotiated wage adjustments to exceed the price increase index. He also stated that the Brazilian labor market reheated after the end of the pandemic, which tends to raise wages.
Pagani also said that the government of President Luiz Inácio Lula da Silva (Workers' Party) granted an extra increase in the minimum wage in May. This increase pushed the country's wage level upwards, once the readjustment of the national minimum wage serves as a reference.
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Finally, the deputy director of Dieese [Inter-union Department of Statistics and Socioeconomic Studies] explained that workers are mobilized in search of recovering benefits that were suspended in recent years. During the pandemic, workers were forced to accept lower readjustments. Now, however, they want to make up for it.
Hélio Zylberstajn, a senior professor at the Faculty of Economics at the University of São Paulo (USP) and coordinator of Salariômetro, sees the national labor market more heated in Brazil. He pointed out, however, that the wage indicators calculated by Fipe only refer to the formal labor market, which comprises less than 40% of workers.
“The informal worker is the one without a formal contract or who is self-employed. This one has to fight alone”, explained Zylberstajn. “Now, as the formal market balances out, it also ends up benefiting."
Relative improvement
Zylberstajn also said that the recent improvement in the job market is relative. Salaries may have increased, but they are still low. They will only improve significantly if the economy starts to grow again.
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“The average salary of a Brazilian worker is R$3,000 (around US$625). About 70% of them earn up to R$3.5 thousand ($730). Do you think this is good?”, he asks.
Pagani, from Dieese, confirms that there is still a long way to go. “We still live with unemployment rates at very high levels, with very high rates of underutilization of the workforce, with a precariousness of labor relations”, he said.
