Guedes denies changing the minimum wage and talks about political manipulation

Minister Paulo Guedes (Economy) said this Thursday (20), in Rio de Janeiro, that the Jair Bolsonaro (PL) government will not change the rule for correcting the minimum wage and pensions at this time.

Guedes, however, left the door open to discuss changes to the Brazilian tax framework.

The minister called the information “fake news”, revealed by Sheeton government studies that assess the possibility of paying the minimum wage and pensions without correction for past inflation.

“In relation to this, there is a rule that says that the minimum wage will rise according to inflation, at least that of last year, and [dizem que] they [governo] want to change. Fake news,” she said.

“You don’t change the rules of the game during the game. The game is running”, added the minister in an interview at the headquarters of the CNC (National Confederation of Trade in Goods, Services and Tourism).

Despite rejecting changes now, the minister once again defended one of the banners of his administration, the so-called “3D rule”, which aims to de-index, unlink and release the Budget.

“We need to put more intelligence into budgets, and more policy into budgets, rather than simply following a binding rule that may be inappropriate,” he said.

“These studies have always been carried out. Then the election time will come: ‘Oh, they want to cut wages’. This is political manipulation. If this is to be done, it is not hidden. It has to be publicly debated, open. Of course, we will not do that, come and change the rule to harm the worker,” he added.

as showed the Sheet, Guedes is working on a plan to recast legislation on the country’s public accounts. The minister treats the matter as a legacy of his administration, but the proposal should only be made official if Bolsonaro wins on October 30th. In that case, a PEC (Proposed Amendment to the Constitution) would be presented the day after the election.

One of the main measures under study is the possibility of changing the way in which the minimum wage and social security benefits are readjusted.

Today, they are corrected by the INPC (National Consumer Price Index) of the previous year. The INPC is an inflation indicator calculated by the IBGE (Brazilian Institute of Geography and Statistics).

Excerpts from the proposal obtained by the Sheet state that “the minimum wage is no longer linked to past inflation”. In the new rule, the floor “considers the inflation expectation and is corrected, at least, by the inflation target”. Spending on social security benefits “is also no longer linked to past inflation.”

In practice, there is the possibility of a correction below inflation in social security benefits, which have expenses projected at R$ 859.9 billion for next year, and the minimum wage. The national floor also affects spending on unemployment insurance.

Another discussion is to change the index used for the IPCA (Broad Consumer Price Index), which measures the price variation felt by families with an income of up to 40 minimum wages — and which is usually lower than the INPC.

To get an idea of ​​the scale of the change, the 2021 INPC rose by 10.16%, a percentage used to update the minimum wage to R$1,212. If only the 2022 inflation target were applied, the increase would be 3.5%. If the option were for the expectation at the beginning of the year for the IPCA in 2022, the readjustment would be 5.03%. The details are still under discussion and are not final.

Previous attempts to unlink pension benefits or the minimum wage have faced resistance from Bolsonaro, who has even threatened with a “red card” a secretary at the Ministry of Economy who was a spokesman for a similar proposal in 2020.

Guedes also defended on Thursday the taxation of profits and dividends for the maintenance of the Auxílio Brasil of R$ 600 in 2023.

According to the minister, a PEC (proposed amendment to the Constitution) is “right” on the matter and will need to move forward “as soon as possible” after the second round of elections.

“There is an agreed PEC of taxes on profits and dividends to guarantee Auxílio Brasil”, he said.

Before the interview this Thursday, Guedes participated in a meeting with businessmen at CNC. He returned to give a speech in a campaign tone.

The minister defended measures adopted by his management in the economic area and contested criticisms that point to the fiscal populism of the Bolsonaro government in this election year.

“Don’t believe the false narratives. They fought their own country, they sabotaged their own country, but Brazil is stronger than that,” he said.

The press did not have access to the meeting space, which was broadcast on social media.

The minister also indicated that Brazil is accelerating, while other countries are experiencing turmoil. In this sense, he highlighted points such as the recent lull in inflation and unemployment.

Guedes also said that Latin America is “falling apart”, in a reference to neighbors ruled by left-wing politicians.

The minister embarked for good on Bolsonaro’s campaign on the eve of the elections. He took on the role of electoral corporal for the president, who was five points behind former president Luiz Inácio Lula da Silva (PT) in the first round.

On Wednesday (19), Guedes contested Lula’s “picanha and beer” speech, without mentioning the former president’s name. According to the minister, the “colorful version” of the past is “beer and picanha”.

“The distance from Brazil to the rest of the world has increased, Brazil has become impoverished. They are now talking about picanha and beer, they have no idea what happened, last place in Pisa [Programa Internacional de Avaliação de Estudantes] of education, zero growth”, he said.