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O povo em primeiro lugar

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Average earnings of domestic workers grow 5% per year between 2003 and 2013

Domestic workers were one of the groups whose income grew more in the 2003-2013 period. Average income of the group increased 5.0% per year. The comparison between wages at December 2013 with the same month of 2012 shows a further escalation in the income category, according to the IBGE’s Monthly Employment Survey of the six largest metropolitan areas: an increase of 8.2 %, with an income increase to R$ 843.00. In the same comparison, the overall average income in the country rose 3.2%.

Social inclusion increases purchasing power and everyone wins

Reducing inequality is good for all social classes. With the inclusion of millions of Brazilians in the formal labor market and the increase in purchasing power, all sectors of society are winners. The poor earned more; after all, per capita household income of the poorest 20% grew 5.1% annually between 2001 and 2011. Meanwhile, the richest 20% saw an increase of 0.7 in the same period, according to data from National Sample Survey (PNAD) conducted by the IBGE. That was exactly the opposite of what happened the last time inequality had declined, in the 1980s. At that time, the economic recession made everyone lose.

Record employment, strong minimum wage and Bolsa Família drive improvement of income of the poorest

The heated up labor market and the rise in the value of the minimum wage are responsible for much of the reduction of social inequality over the last decade. The real wage gains (above inflation) for formal workers in more than 90% of collective bargaining agreements with employers explains the increase in the weight of wages as a percentage of the country's GDP — that is, of all the wealth Brazil produced during the year, which now exceeds 50%.

Expanding job market and real wage gains have raised the share of salaries as a percentage of GDP each year. Photo: André Gomes de Melo 
A minimum wage of R$ 724.00 for 2014 shows real gains of 72.35% since 2002. To understand concretely what this means, or how the changes in of the minimum wage affected the worker’s pocketbook, think of it this way: the purchasing power of the net minimum wage, according to the Inter-Union Department of Statistics and Socioeconomic Studies (Dieese), was the equivalent of 1.42 basic food baskets in 2002, rising to 2.07 in 2013 and, in January of 2014, it had the equivalent purchasing power of 2.28 basic food baskets.

The adjustment of the minimum wage also directly benefits about 21 million recipients of Social Security benefits that, together, will receive throughout the year of 2014, approximately R$ 11.5 billion from the INSS than in the 2013.

The Bolsa Família program also played an important role in reducing the social inequality of the last decade. No less than 36 million Brazilians emerged from extreme poverty through the income transfer program of the federal government, an average value of R$ 167.00. Among the social groups most benefited are Northeasterners (51%), women (93% of the owner’s of the program’s Benefits cards are women) and mixed race and Afro-Brazilians (73% of the 13.8 million families assisted), according to the Ministry of Social Development and Ipea.

To get an idea of the strength of public policies and how they serve as a basis for further development of the income of the lower income classes, suffice it to say that 63.8% of rural microcredit, and 44% of urban microcredit disbursed by Banco do Nordeste in recent years, reaching 1.2 million people, were granted to Bolsa Família beneficiaries.

The decline in regional inequality

It was inevitable that a consequence of policies that resulted in reducing the gap between rich and poor would be a decrease in disparities between Brazilian regions. After all, it is in the Northeast, North and Center-West where most of the poor population of the country lives. However, that was not the only reason that, since 2002, these regions have achieved a greater share in the Brazilian economy. Investments in infrastructure were also decisive for the states in these regions to boost their share of GDP and income inequality fell in 80% of Brazilian municipalities between 2000 and 2010.

• Learn more about the fall of income inequality in 80% of Brazilian municipalities

Proof of this is that the growth of per capita household income — which includes all sources of income, including transfers — occurred throughout the country; but it was more intense precisely in the lower income regions. In the Northeast, this increase was 2.9% per year, 65% higher than the national average.

This reduction of regional inequalities is also observed when considering only the work-related sources. In the Northeast, labor income expanded on average 3.3% per year, up from 2.1% recorded in Brazil.