Brazil: The minimum wage as a response to the crisis

The Brazilian minimum wage sets the floor for wages and serves as an important benchmark for the evolution of national earnings and also for pensions and various social benefi ts. The minimum wage is an effective policy for stimulating domestic consumption and, in times of crisis, can help mitigate the effects of recession. In response to the economic crisis, the Brazilian government decided put into effect a minimum wage increase of 12% (6% in real terms) in February 2009 that had originally been scheduled for April 2009. The new minimum wage boosts the Brazilian economy by R$ 21 billion, equivalent to 0.7% of GDP. In Brazil, an increase of the minimum wage implies a rise in income not only for wage earners, but also for pensioners and the unemployed, whose benefi ts are linked to the minimum wage. In recent years, the minimum wage has contributed to reducing income inequality between men and women, and between white and black workers.