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Brazil - Employment and Earnings

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Brazil - Earnings

Employment and Earnings

There are two constants regarding earnings in Brazil since World War II: the very low wages of unskilled labor and the wide disparity in the wage scale. An indication of the low wage levels for unskilled labor is the minimum wage. In 1961 the monthly minimum wage averaged only US$113.30 (in 1986 dollars). The index of the average real minimum wage exhibits a clear downward trend (see table 8, Appendix). The 1991 real average monthly minimum wage was less than one-third of the already low 1961 minimum wage.

It is interesting to observe the impact of recession and particularly inflation on the real minimum wage. The two periods of swift decline in the real minimum wage were characterized by recession and by a rapidly accelerating inflation. This was true in the 1961-65 period and especially so between 1982 and 1991. The prosperity and comparatively low inflation of the 1970s (notably during the first half of the decade) did not bring about a stronger recovery of the real value of the minimum wage only because of the repressive wage policy adopted by the military regime.

The 1990 household survey revealed that 30.8 percent (some 19.9 million persons) of the employed population earned one minimum wage or less. Even allowing for underestimations of earnings by the household surveys, the numbers living with very low wages in Brazil are indeed large.

Organized labor, which has substantially larger average earnings, has obtained considerable gains since the late 1970s. These gains are reflected in the index of average real wage in São Paulo, the core of the country's modern industrial sector. The index evolved from a level of 100 in 1978 to 125.1 in 1982, declined to 112.9 in 1983, but jumped to 175.9 in prosperous 1986. After this it decreased somewhat, reaching 165.9 in 1990 and 158.4 in 1992.

As for the disparity in the wage scale, according to the 1990 household survey, in September of that year 10.8 percent of the employed work force, or 6.5 million persons, earned one-half of a minimum wage, a monthly average of US$299; 49.2 percent of the employed work force, or 29.8 million persons, received two minimum wages or less. At the other extreme, 7.8 percent of the employed work force received more than ten minimum wages, a monthly average of US$1,941; 3.2 percent, or 1.9 million persons, earned more than twenty minimum wages, or a monthly average of US$4,000. In that year, more than 60 percent of the employed labor force earned less than the average monthly earnings of US$211.

Moreover, data on the distribution of monthly earnings reveal that the distributive disparity has increased over time. In 1960 the poorest 10 percent of the employed labor force with earnings received 1.9 percent of the total earnings, but in 1990 their share was only 0.8 percent. At the other extreme, the richest 10 percent increased their share of total earnings from 39.6 percent in 1960 to 44.1 percent in 1990.



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