The team of President-elect Luiz Inácio Lula da Silva (PT) is considering granting an even higher real increase in the minimum wage in 2023, the first year of the new government, in relation to what was being discussed.
According to preliminary discussions, the value of the national floor could reach R$ 1,319. Today, the budget proposal for next year provides for an adjustment of 7.41%, from the current R$1,212 to R$1,302.
The expense to cover the difference of R$ 17 in the minimum wage expected for 2023 would be approximately R$ 6.4 billion. This amount must be included in the bill of the PEC (Proposed Amendment to the Constitution) of the transition, in negotiation with Congress and which will allow for extra expenses without running into fiscal rules, mainly the spending ceiling – which limits the growth of expenses to the variation of inflation.
The higher readjustment of the minimum wage is a way of resolving a political impasse.
During his campaign, Lula promised several times to resume the policy of valuing the minimum wage. In an interview with Sheetthe former governor of Piauí and senator-elect Wellington Dias (PT-PI) said that the new rule must consider the average growth of the (Gross Domestic Product) of the last five years – which would result, in 2023, in an increase of about 1.3% above inflation.
However, since the budget proposal was sent in August, inflation has slowed. The perspective is that the INPC (National Consumer Price Index), which serves as a reference for the correction of the minimum wage, will close the year closer to 5.8%.
The cooling of inflation would, in practice, make the rule that had been proposed by the PT result in a readjustment lower than the R$ 1,302 proposed by the Jair Bolsonaro (PL) government, which could generate a negative reaction.
The solution under discussion among parliamentarians is, in the first year, to apply the percentage of real increase over the amount already provided for in the Budget proposal. That is, an increase of 1.3% over R$ 1,302.
Congressmen participating in the discussions have already incorporated the discourse that the higher readjustment in 2023 seeks to compensate for part of the period in which the minimum wage was frozen in real terms during the Bolsonaro government.
The last real increase was granted in early 2019, when the president applied the policy of valuing the minimum wage that had been implemented during the Dilma Rousseff (PT) administration. As of 2020, the floor was corrected only for inflation — an update that is guaranteed by the Constitution.
The negotiation of the transition PEC was agreed by Lula’s team with the rapporteur of the 2023 Budget, Senator Marcelo Castro (MDB-PI), in a meeting this Thursday (3).
The PEC is necessary to avoid a social blackout next year, as the budget proposal sent in August by the Bolsonaro government ensures only an average amount of R$405.21 in Auxílio Brasil, in addition to imposing severe cuts in housing programs and also in the Popular Pharmacy.
In addition to the increase in the minimum wage, the proposal will also authorize extra expenses to ensure the continuity of the minimum benefit of R$ 600 from Auxílio Brasil, pay the additional benefit of R$ 150 per child up to six years old, reduce SUS queues ( Unified Health System), expand indigenous health and school lunch actions, in addition to unlocking resources for investments.
The value of this extra invoice will still be defined in technical meetings in the coming days. The intention is to bring Lula a draft of the proposal on Monday (7), with the presentation of the numbers to Castro the following day.
The PEC should only deal with expenses. There is a decision by the party not to include tax measures in the text, such as updating the IRPF (Individual Income Tax) table. During the campaign, Lula promised to readjust the exemption range to R$5,000. Today, it is R$ 1,903.98.
Possible changes in the exemption of federal taxes on fuels will also be left out of the PEC debate, which is currently focused on emergency issues on the expenditure side.
The rapporteur’s amendments, used as a bargaining chip in political negotiations with Congress, will be dealt directly with the presidents of the Senate, Rodrigo Pacheco (PSD-MG), and of the Chamber, Arthur Lira (PP-AL) – who currently control the allocation of these funds.
The 2023 Budget proposal reserves R$ 19.4 billion for the rapporteur’s amendments. Lula was a staunch critic of this instrument during the electoral campaign, as this type of amendment extends Congress’ control over Executive Branch expenditures.
The need to approve a PEC to unlock essential expenses in his first year of government, however, will require the PT team’s ability to articulate and form alliances even before the new president takes office. For this reason, his assistants suggest a cost-benefit assessment of dealing with this issue at a time when the elected government seeks support in Congress.
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