Minimum Wage in Brazil
The minimum wage is of extreme importance in Brazil, as over 48 million people have their wage calculated on the value of the minimum wage. In this article, we will learn more about the minimum wage in Brazil, as well as different values for it in some states.
Overview of the Minimum Wage in Brazil
The minimum wage, or Salário Mínimo, as it is known in Brazil, is the minimum amount set by the government for the salary of regular workers in Brazil. In other words, it is the lowest salary an employer can legally pay to their employees for a full time job and also the lowest price a person can legally sell its workforce.
The minimum wage was created by former president Getúlio Vargas in 1936 and was instituted effectively in 1940. The minimum wage at the time had 14 different values and was based on the economy of the region for which it was valid. The first adjustment of the minimum wage came only in 1943. Adjustments are regularly made to the value of the minimum wage in order to re-establish the purchasing power of workers.
The CLT, which is the Consolidation of Labor Laws in Brazil, was also established in 1943 and with it came the definition of the minimum wage. It is the value needed for filling the basic needs of a worker, covering basic expenses such as:
- Housing
- Food
- Education
- Health
- Leisure
- Clothing
- Hygiene
- Transportation
- Social security
Calculating the Minimum Wage in Brazil
DIEESE, the Intersindical Department of Statistics and Socioeconomic Studies, calculates the minimum salary needed for a Brazilian worker to fulfill all its needs.
However, it is not DIEESE that implements the minimum wage in Brazil but the Federal Government, who set it every year. According to a Federal Decree in 2011, the minimum wage will follow these guidelines:
- A base minimum wage of BLR 545 for 2011
- A yearly adjustment that is to be made to the minimum wage every January 1st
The yearly adjustment of the minimum wage depends on the variation of the GDP of the year before last, plus the inflation of the previous year, as measured by INPC, which is the Consumer Price Index.
Unfortunately, the minimum wage set by the government is much smaller than DIEESE’s calculated minimum wage. This is the difference between the Nominal Minimum Wage and the Necessary Minimum Wage.
Minimum Wage in 2015
The Nominal Minimum Wage for 2015 was set on January 1st 2015 and is BRL 788,06 with the minimum daily value being BRL 26,27 and the hourly value being BRL 3,58. However, DIEESE’s Necessary Minimum Wage for the month of April 2015 - as DIEESE adjusts it every month due to the INPC - is BRL 3.251,61.
Minimum Wage and Wage Floor
While the minimum wage is instituted at a federal level, each state is allowed to set wage floors that differ from the federal minimum wage. These wage floors, Piso Salarial in Portuguese, cannot be less than the federal minimum wage and are specific to the state in question.
There are only set wage floors in five different states in Brazil, with all the other states complying with the federal minimum wage:
- Paraná - wage floor of BRL 1.070,33 or BRL 4,87 per hour
- Rio de Janeiro - wage floor of BRL 953,47 or BRL 4,34 per hour
- Rio Grande do Sul - wage floor of BRL 1.006,88 or BRL 4,58 per hour
- Santa Catarina - wage floor of BRL 908,00 or BRL 4,13 per hour
- São Paulo - wage floor of BRL 905,00 or BRL 4,11 per hour
- All other states - minimum salary of BRL 788,06 or BRL 3,59 per hour