The rise in food prices and the years without any real and relevant readjustment in minimum wages have leaded up workers’ lives, particularly the poorest ones living in big cities, to more and more difficulties. Because of these factors, a worker whose salary is R$ 1212 (U$239) and who lives in a big city has to work about half a month only to afford the necessary food.
This calculus is by the Inter-union Department of Statistics and Socioeconomic Studies (Dieese, in Portuguese), which each year surveys the price of basic-needs grocery packages in 17 Brazilian capital cities based on the salary range decree. The composition and price of the basic-needs grocery packages vary depending on the city. São Paulo, Brazil’s most populous city, has the most expensive basic-needs grocery package: R$ 803 (U$ 159) in April this year.
Specifically in São Paulo, a worker whose salary is the minimum wage works 66% of his monthly journey only to pay a basic-needs grocery package. It is more than 145 worked hours of a total of 220 monthly hours provided for in the labor legislation. According to a recent Dieese survey, the cheapest package (or the less expensive one) is found in the city of Aracaju: R$ 551 (U$ 109), in other words, 49.19% of the minimum wage – almost half of it.
Brazilian workers had not spent so much work time to buy a basic-needs grocery package since January 2005. In January 2012, for instance, it took 101 worked hours to buy a package in São Paulo – less than half of the monthly journey. However, since the end of 2018, during the government of former President Michel Temer (Brazilian Democratic Movement), this number of hours has been increasing. It grew even more abruptly from 2020, during Bolsonaro’s government (Liberal Party), precisely because food prices skyrocketed and the minimum wage went down.
Since the end of 2016, after the impeachment of former President Dilma Rousseff (Workers Party) up to today, the minimum wage increased from R$ 880 (U$174) to R$ 1212 (U$239), a rise of 37.7%. In its turn, the package cost in São Paulo jumped from R$ 438 (U$ 86) to R$ 804 (U$159), a rise of 83%, more than twice the accumulated percentage of readjustments of the salary range granted by Temer and Bolsonaro.
No effective salary increase
During Temer’s and Bolsonaro’s governments, in fact, the minimum wage almost had no real increase, that is, it was readjusted based solely on the inflation rate.
According to calculations by the consulting company Tullet Prebon Brasil released last week, during Temer’s administration (from September 2013 to December 2018), the minimum wage increased by 3.28% more than the National Consumer Price Index (INPC, in Portuguese). From January 2019 to December 2022, during the Bolsonaro government, the total readjustment may be 1.77% lower than inflation, considering the forecasts released by Brazil’s Central Bank.
If the forecast is confirmed, Bolsonaro will be the first Brazilian president since 1994 to end his term without giving a real rise in the minimum wage.
During the two terms of Fernando Henrique Cardoso (Brazilian Social Democracy Party), the minimum wage rose by 50.9% above inflation; in eight years of the government of Luiz Inácio Lula da Silva, it had rose by 57.8%; in almost six years of Dilma's government, 12.67%. The calculations are by Tullett Prebon Brasil consulting company.
“The lack of a policy to increase the minimum wage is dramatic because it does not increase the earnings of those who already get little and who spend most of their salary on food, which has risen more than inflation”, says economist and agronomist José Giacomo Baccarin, the federal government’s Secretary of Food and Nutrition Security between 2003 and 2005, during Lula's administration.
Soaring food prices
Baccarin said that food prices in Brazil increased from 2020 onwards, with the beginning of the pandemic. According to him, food prices have increased on the international market. Brazilian producers, thus, decided to prioritize exportation, which reduces supply on the domestic market and causes prices to rise for the Brazilian population.
Economist and Dieese research supervisor Patrícia Costa corroborates this scenario of skyrocketing prices due to the international situation and exportations. According to her, the war between Russia and Ukraine pressures even more prices in Brazil because it affects wheat and oil prices internationally.
The price of oil influences the costs of fuel, which is part of the cost of transportation. That's why the latter also has to do with the final price of food products.
The inflation preview for April calculated by the Brazilian Institute of Geography and Statistics (IBGE, in Portuguese), released on April 27, indicates the biggest increase in prices for this month since 1995. Comparing prices surveyed in February/March to those of March/April, an average increase of 1.73% was recorded in 30 days.
This percentage, however, is an average of several product categories. Food and beverage items rose 2.25%, more than the average.
In a year, ground coffee increased more than 60%; sugar, more than 40%; soybean oil, more than 20%. All these items are part of the basic-needs grocery packages. Their price rise affects mainly the poorest people, explains Juliane Furno, the chief economist of the Institute for Reform of State-Business Relations (IREE, in Portuguese).
"The problem is particularly acute for the poorest people because a much higher percentage of their wages are spent on food”, said Furno. “Since the minimum wage is not even adjusted for inflation, it gets worse".
To value minimum wage and create food stocks
Patrícia Costa, from Dieese, said that one of the ways to control the rise of food prices in Brazil would be the creation of public stocks of certain products. Baccarin also defends the measure.
He says that the government needs to increase the support it gives to those farmers aimed to produce food for internal consumption, not to exportation. It tends to reduce the pressure of the international market on food prices in the country.
Baccarin and Costa also defend a policy of valuing the minimum wage. According to Baccarin, this was done during Lula’s and Dilma’s administrations, which improved the population's living conditions and also served as an engine of economic growth.
Edited by: Felipe Mendes