With inflation, real starting wages have fallen by almost 9% in six months

The actual starting wage in the formal labor market fell nearly 9% between April and October 2021, according to Novo Caged. Photo: Ricardo Marajó / FAS

Affected by rising inflation, the real starting wage in formal jobs has fallen by almost 9%, on average, in just six months. The information comes from the New General Register of Employees and Unemployed (Novo Caged), the Ministry of Labor and Social Security.

In inflation-adjusted terms (INPC), the average admission salary in Brazil was around R $ 1,877 in October of last year. It was relatively stable over the next four months and increased more sharply in March and April 2021, when it hit R $ 1,964. Since then, there have been six straight cuts in the average wage, which ended October at R $ 1,795, according to Novo Caged data released on Tuesday (30). The value is 8.6% lower than in April and 4.4% lower than in October 2020.

The fall in wages for new hires coincides with the sharp rise in inflation and a slowdown in formal job creation.

According to the INPC (the index most used in wage negotiations), the inflation accumulated in 12 months has not stopped increasing since June of last year. Since then, the annual index has fallen from 2.35% to 11.08%, according to the most recent data, as of October.

Higher prices reduce the purchasing power of employees. In October, for example, 70% of collective bargaining resulted in a wage readjustment below inflation, according to the Foundation of the Institute for Economic Research (Fipe).

Novo Caged says the formal contract balance is still quite positive, but in October it fell for the second month in a row, and the number of jobs created for the month (253,000) was the lowest since April.

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