The 2024 budget sent to Congress indicates a value of R$1,421, up 7.7% from the current level of R$1,320.
Amendment to the minimum wage proposed by Luiz Inacio Lula da Silva (PT) for 2024 will be its cost 39.4 billion Brazilian reals to the public treasury. The budget sent to Congress on Thursday (August 31, 2023) indicates a value of 1,421 Brazilian reals. It represents a rise SR 101 compared to the current level 1,320 Brazilian reals.
In percentage terms, the difference will be 7.7%. This is because the government considered a new formula To raise the minimum wage:
- economic inflation – cumulative in the 12 months ending in November of the year preceding the adjustment;
- Economic growth – GDP result (Gross Domestic Product) for the previous two years. For 2024, the result for 2022 will be considered.
Minimum wage has an impact on the budget because Every Brazilian Real is 1 Real Indexed increase and expenses (retirement, pension, and other Social Security benefits) An increase of R$ 389.8 millionAccording to the government’s internal forecasts.
There is also an indirect cost to the entire public administration, such as higher expenses with the outsourcing of staff. In the case of states and city councils, the multiplier effect is the same.
According to the government’s assessment, proposing a real increase in the base would mean that average incomes would tend to rise more intensely in the long run.
Before, in the government of Jair Bolsonaro (PL), proposals to readjust the minimum wage merely contemplated inflationary disparity (without a real increase). The rationale at the time was that wage increases were due to increased productivity in the economy – and to saving money.
Most workers earn more than the minimum. The average monthly wage for Brazilian workers was R$2,921 in June. The figure appears in a club (National Continuous Household Sample Survey).
On the other hand, the new formula presents a challenge to Finance Minister Fernando Haddad to reach the goal of closing the gap in public accounts in 2024. Next year’s budget has not even been approved and the government already needs an adjustment of R$168.5 billion on the revenue side. Spending cuts are not expected.
Historical
In 2023, Lula’s first year in the current legislature, there have been two increases to the minimum:
- 1,302 Brazilian reals To those who received the floor in January, February, March and April;
- Brazilian Real 1320 – from May;
In 2022, the value was R$1,212. It jumped 7.4% at the beginning of the year to reach R$1,302. With the decision to raise the minimum wage to R$1,320, the adjustment rate is now 8.9%. Annual cost: R$40.8 billion.
Scroll over the graph below to view the values:
