The role of unions and the state in wage inequality what lessons can be learned by comparing Europe with Brazil?

Wage inequality is related to levels of statutory minimum wages, coordination and coverage of collective bargaining, unions’ memberships and representation, and proportions of informal work. From this perspective, the European Directive on Adequate Minimum Wages (Directive 2022/2041/EU) presses the right policy buttons through raising minimum wages and strengthening collective bargaining. Wide variations in collective bargaining regimes and unions’ power resources across the EU countries predict wide variations in the impact of the intended reduction of wage inequality across the European countries (wages being especially low in Eastern European countries). In Brazil, wage inequality indicators are higher than in all European countries, and Brazilian unions have limited influence because of the very high proportion of informal work and high fragmentation in collective bargaining in the country. The increase of the statutory minimum wage in Brazil between 2006-2018 led to a reduction of wage inequality, but this state policy has stagnated over the last eight years because of changed political contexts. The neo-liberal labor market reforms in 2017 in Brazil intensified worker vulnerability and also limited unions’ representational rights. Unions in Europe and Brazil share the challenge of organizing the growing numbers of precarious workers with non-regular labor contracts.