Minimum wage of R$ 1,320 takes effect this Monday

The amount of BRL 1,320 was originally foreseen in the General Budget of the Union for 2023. However, it was postponed by four months because the minimum wage in this amount would not allow paying the benefits of the National Institute of Social Security (INSS) throughout the year.

The increase to R$ 1,320 was under discussion because the R$ 6.8 billion allocated by the Constitutional Amendment of the Transition proved to be insufficient to pay for the increase in benefits from the National Institute of Social Security (INSS) linked to the minimum wage. This is because the strong concession of retirements and pensions in the second half of last year created a greater impact than estimated for INSS expenses this year.

According to the Ministry of Finance, in addition to the R$ 6.8 billion, the government would need R$ 7.7 billion to finance the increase in the minimum wage to R$ 1,320 in January. Initially, the economic team wanted to postpone the readjustment to 2024, but the government managed to find resources for the new increase in the minimum. The money came from the re-registration of Bolsa Família, which eliminated 1.2 million beneficiaries in an irregular situation in April alone.

“The (Budget) rapporteur, after the project was forwarded to the federal government, reinforced the Ministry of Social Security’s budget by R$ 6.8 billion. But this resource was consumed by the floor of the INSS queue (reduction of the order queue). From the beginning of the electoral process, the queue began to walk”, said the Minister of Finance, Fernando Haddad, in January.

According to the minister, accelerating the inclusion of retirement and pensions consumed the R$ 6.8 billion. “We asked Social Security to redo the calculations, to pass them on to the negotiation table that will be opened with the unions. The president keeps his word this month and will keep his word this year (about raising the minimum wage above inflation)”, added the minister at the time.

Project

After the two readjustments this year, one in January and the other in May, the government seeks to discuss a policy of permanent appreciation of the minimum wage as of 2024. Last Friday (28), the Minister of Labor and Employment, Luiz Marinho, informed that the government will soon send a bill that resumes the formula that was in force from 2012 to 2019.

Under the previous policy, the minimum wage was corrected for the previous year’s inflation, the National Consumer Price Index (INPC) and the growth of the Gross Domestic Product (GDP) two years earlier. If the GDP shrinks, there will only be replacement by inflation. The Ministry of Finance defended another formula, which would include the GDP variation per capita and would have a smaller impact on the Budget, but was defeated.