Government proposes minimum wage of R$ 1,389 in 2024, without real increase

The readjustment follows the projection of 5.16% for the National Consumer Price Index (INPC) for this year. The estimate is also included in the PLDO.

The project also presented forecasts of R$ 1,435 for the minimum wage in 2025 and R$ 1,481 for 2026. The projections are preliminary and will be reviewed in the PLDO for the coming years.

Until 2019, the minimum wage was readjusted according to a formula that predicted the growth of the Gross Domestic Product (GDP, sum of the wealth produced in the country) of two previous years plus the official inflation of the previous year.

In recent years, the readjustment began to follow only the replacement of the INPC, because of the Constitution, which determines the maintenance of the purchasing power of the minimum wage. The new government is discussing a new policy of real appreciation (above inflation) of the minimum wage.

“Eventual new readjustment rules, which provide for real increases in the minimum wage, will be opportunely incorporated into the fiscal scenario when the annual budget law is drawn up”, disclosed in a note the Ministry of Planning.

According to Planning, each R$1 increase in the minimum wage has an impact of approximately R$368.5 million on the budget. This is because Social Security benefits, salary bonuses, unemployment insurance, the Continuous Cash Benefit (BPC) and various expenses are linked to the minimum variation. The account considers an increase of R$ 374.8 billion in expenses and gains of R$ 6.3 billion in Social Security collection.

The value of the minimum wage for next year may still be changed, depending on the effective value of the INPC this year and the new readjustment policy. By law, the President of the Republic is obliged to publish a provisional measure by the last day of the year with the minimum amount for the following year.

In 2023, the minimum wage is at R$1,304, with a real gain of 1.41%. With the readjustment to R$1,320, scheduled for May 1, the valuation will rise to 2.8% above 2022 inflation.

The original LDO bill was sent to Congress with the spending cap still in effect. The text, however, provides permission for the 2024 Annual Budget Bill (PLOA) to provide for primary spending in excess of the spending ceiling, subject to the approval of the new fiscal framework by the National Congress.