Lula government intends to keep the minimum wage at R$1,302 and give up on an additional increase

The government of Luiz Inácio Lula da Silva (PT) must hold the additional readjustment of the minimum wage to avoid the extra cost of up to R$ 7.7 billion, which would need to be accommodated through cuts in other areas. With that, the floor should be maintained at R$ 1,302.

In the transition, assistants to the president indicated the possibility of the minimum being readjusted again, to R$ 1,320. An amount of R$ 6.8 billion was reserved in the Budget for this purpose.

At the end of 2022, however, there was a significant increase in the number of INSS (National Social Security Institute) beneficiaries, whose payments are linked to the minimum wage.

SOF (Federal Budget Secretariat) technicians issued a warning that, in this new context, the additional readjustment would have an impact of over R$ 7.7 billion in addition to the amount already reserved, as revealed by the Sheet.

The group in favor of maintaining the current value argues that the minimum of R$ 1,302, still set in the Jair Bolsonaro (PL) government, already represents a real increase compared to last year. Therefore, the promise of appreciation is considered fulfilled by this wing.

The 1.5% gain was even mentioned in a speech by Vice President Geraldo Alckmin (PSB), also Minister of Development, Industry, Commerce and Services, at the ministerial meeting last Friday (6).

The political counterpart suggested by Lula’s team is to speed up discussions on a permanent policy to increase the minimum wage, which takes into account GDP (Gross Domestic Product) growth, in addition to inflation. Interlocutors say that “2024 is around the corner” and the intention is to guarantee the real increase again.

The proposal should be discussed at negotiation tables with trade union centrals to be announced in the first semester. The announcement of the start of these conversations will be made next week by the Minister of Labor, Luiz Marinho (PT).

The agreement was made with the Minister of Finance, Fernando Haddad (PT), although he should not participate because he will travel to the World Economic Forum in Davos, Switzerland, which takes place next week.

One of the ideas is to ensure a real readjustment based on average GDP growth over the last five years. This proposal, however, has not yet been finalized and will be discussed with workers’ representatives.

As with other measures debated in the early stages of the government, the issue of the minimum wage opposes members of Lula’s political wing and economic team.

The first team considers the new increase in 2023 to be an important business card from the president to his electoral base, given that the minimum wage was a topic that was widely explored during the campaign. Lula promises to resume the valuation policy adopted in PT governments, with readjustments above inflation.

During the campaign, a supplementary increase on Labor Day, on May 1, was even considered, an idea taken up more recently by the political wing.

The economic group, in turn, defends caution with decisions that have a considerable impact on public accounts. The preliminary assessment is that it is prudent to wait for more solid data on the base of INSS beneficiaries in order to have greater clarity of the numbers.

There are those who see the extra cost projection as high, with room for reduction, but even this wing understands that it is too risky to make any decision at this time. In addition, even leaving the door open for an extra increase throughout the year, technicians consider it more likely that the minimum will remain at R$ 1,302 until the end of the year.

The matter was taken to Lula. The president still needs to hit the hammer, but members of both groups report that, so far, he has signaled agreement with the arguments of the economic team.

There are those who remember that Lula never publicly committed to the amount of R$ 1,320, verbalized by Wellington Dias (PT) during the negotiations of the PEC (proposed amendment to the Constitution) that authorized the increase in expenses in 2023. Today, Dias is a minister Development and Social Assistance, a portfolio that does not participate directly in discussions on the national floor.

In internal discussions, ministers opposed to the additional readjustment still in 2023 argue that an assessment of the cost-benefit ratio recommends maintaining the minimum wage at R$ 1302.

According to a member of the first echelon, the increase of only R$ 18 would give Lula a limited political bonus.

On the other hand, the fiscal impact would certainly have negative effects on investor confidence and, consequently, on the recovery of the economy —especially at a time when the economic team is still trying to convince the market that it will adopt measures to reduce the BRL 231 deficit. .5 billion contracted for the year.

The minimum wage policy affects not only the labor market, as it is the minimum remuneration for employees, but also public accounts. A number of benefits are linked to the floor.

Two thirds of retirements and pensions pay a minimum wage. The value also serves as a reference for salary bonuses, unemployment insurance and the BPC (Continued Provision Benefit), paid to the elderly and low-income people with disabilities.