Brazilian workers' earnings in 2023 saw the highest jump since the Real Plan, when the sharp decline in inflation from mid-1994 through 1995 led to a significant increase in purchasing power in the country.
While GDP (Gross Domestic Product) grew by 2.9% in 2023, there was a real increase, above inflation, of 11.7% in the total labor income. This is nearly double the 2022 calculation (6.6%) and the best result since 1995 (12.9%), according to calculations by Marcos Hecksher from the Institute of Applied Economic Research.
Other data from Marcelo Neri, director of FGV Social, shows that real household income per capita jumped by 12.5% last year. The calculation considers the income of families divided by the total number of members. Both results are based on the Continuous National Household Sample Survey by IBGE.
In the 12 months leading up to the launch of the Real Plan on July 1, 1994, inflation reached 4,922% — and would end that year at 916%. In 1995, it plummeted to 22%, boosting workers' purchasing power. This time, the help from inflation on income was marginal: it dropped from 5.79% in 2022 to 4.62% last year.
However, from the second half of 2022 and throughout 2023, Brazil experienced an explosion in public spending, seemingly with multiplier effects on the economy.