Government proposes a minimum wage of R$ 1,302 in 2023, with no real increase for the 4th year in a row


The government of President Jair Bolsonaro (PL) sent to the National Congress this Wednesday (31) a Budget proposal that provides for a minimum wage of R$ 1,302 for 2023, without a real increase for the fourth year in a row.

The last time the national floor was readjusted above inflation was in early 2019, in a decree signed by Bolsonaro, following the valuation policy approved by law during the Dilma Rousseff (PT) government.

The validity of this policy ended in 2019. Since then, the current government has chosen to only restore the variation of the INPC (National Consumer Price Index), an adjustment that is mandatory to ensure the maintenance of workers’ purchasing power.

The value proposed by the government represents R$ 90 more in relation to the current floor, set at R$ 1,212.

The figure was also BRL 8 above the BRL 1,294 estimated in April, when the government presented the LDO (Budget Guidelines Law).

Between the sending of the LDO and the setting of new parameters to prepare the Budget, the projections for the variation of the INPC this year increased. In early July, the Ministry of Economy estimated a rise of 7.41% in the index – the value used in the budget forecast.

In recent weeks, however, financial market projections for inflation have cooled, in the wake of the reduction of taxes on fuel.

If this trend continues, the readjustment may eventually be smaller. The effective value of the minimum wage in 2023 will only be known at the end of the year, when the president edits the MP (provisional measure) with the new floor.

It is also at the end of the year that the government adjusts the so-called residual, any differences between the projection and the effective inflation. This is because the government sets the national floor before the IBGE (Brazilian Institute of Geography and Statistics) publishes the official result for the INPC, which takes place in early January.

This year, for example, the minimum wage should be BRL 1,212.70 — or BRL 1,213 with the usual rounding. But the government had a lower forecast for inflation and ended up setting the floor at R$ 1,212, R$ 1 below what was necessary.

The adjustment of this difference is not incorporated in the forecast sent with the Budget, but is made at the time of editing the MP that stipulates the new minimum wage.

In addition to inflation variations, the value of the minimum wage may be influenced by the results of the polls in October.

Leader in the voting intention polls, former president Luiz Inácio Lula da Silva (PT) promises to resume the valorization policy, with real gains for workers.

In a list of proposals included on the campaign’s official website, the PT cites the search for “adjustments above inflation to increase the purchasing power of families”.

When he was president, Lula started a policy of granting increases in the minimum wage above inflation. Her successor, Dilma Rousseff, formalized the practice with a formula that was in force between 2011 and 2019: readjustment by the INPC plus GDP growth from two years earlier.

The Bolsonaro government, through the team of Minister Paulo Guedes (Economy), chose in recent years to discontinue this policy, due to the cascading effect of the readjustment of the minimum wage on other public expenditures.

Social security benefits, assistance and expenses such as salary bonus (kind of 14th salary paid to formal workers who earn up to two minimum wages) and unemployment insurance are linked to the value of the national minimum wage.

In the LDO 2023, the technicians calculated that each BRL 1 increase in the value of the minimum wage increases total government spending by BRL 389.8 million. In practice, the readjustment of the minimum wage for inflation would have an impact of R$ 35.1 billion next year.

Under the spending cap, which provides for an inflation-adjusted spending cap, any granting of a real increase would lead to the need to cut spending in other areas to avoid breaking the rule.

The choice of the current government, however, is constantly criticized by entities that represent workers. This year, the amount paid was not enough to buy even two basic food baskets a month in the city of São Paulo in January, according to Dieese (Inter-Union Department of Statistics and Socioeconomic Studies).

In May of this year, the current value of R$ 1,212 was approved by Congress under criticism even from government lawmakers.

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