Bolsonaro confirms minimum wage adjustment to R$1,212 as of January

President Jair Bolsonaro confirmed this Thursday (31) that the government will readjust the minimum wage to R$1,212 as of January 2022. The current value of the floor is R$1,100 per month.

“As of January 1, the new minimum wage: R$1,212,” said Bolsonaro, in his weekly live.

The correction of the minimum wage that has been prepared by the government should compensate for this year’s inflation, but without a real increase (above inflation).

The 2022 Budget, approved last week by Congress, already provided for the increase in the salary floor to R$1,212. Therefore, the calculation of expenses for next year already considers this adjustment.

This means that the correction of the value should not require a cut in expenses so that the Budget stays within the spending ceiling – a rule that prevents expenses from growing above inflation.

An MP (provisional measure) must be published by this Friday (31), raising the value of the minimum wage to R$ 1,212.

This increase is estimated by government technicians based on two variables: inflation (around 10%) and an amount of approximately R$ 2 referring to a retroactive adjustment.

This delayed increase of R$ 2 is due to an acceleration of inflation last year – used to calculate the minimum wage for 2021. The increase in prices was above government expectations, but President Jair Bolsonaro (PL) decided to postpone this adjustment in value.

The minimum wage is adjusted by the INPC (National Consumer Price Index). When announcing, in December of last year, the readjustment to R$ 1,100, the economic team considered the official inflation from January to November 2020, added to the estimate for the index in December.

But the official inflation index, released only in January 2021, was higher than expected by the Ministry of Economy.

The Constitution determines that the minimum must guarantee the maintenance of the worker’s purchasing power. Therefore, the value of the minimum wage should have been R$1,102 in 2021.

Compensation comes in the form of a retroactive adjustment in the approximate amount of R$2.

The readjustment of the national floor has an impact on public accounts because it is linked to pensions and other benefits, such as the BPC (social assistance for the elderly and needy people with disabilities). For every BRL 1 readjustment in 2022, the cost to public coffers is increased by BRL 328 million.

The increase from R$1,110 to R$1,212, therefore, causes a direct increase in federal government spending in the amount of R$36.7 billion.

In view of the expenditure control policy promoted by Minister Paulo Guedes (Economy), the government of Bolsonaro has not yet granted an adjustment above inflation for the minimum wage.

The real increase in the minimum wage was informally implemented in 1994 by Fernando Henrique Cardoso (PSDB), shortly after the adoption of the Real Plan.

The PT administrations made the measure official.

The government of Luiz Inácio Lula da Silva (PT) established the adjustment formula for inflation measured by the INPC plus the GDP (Gross Domestic Product) variation of two years earlier.

Dilma Rousseff (PT) turned the rule into law effective for the years 2015 to 2019 —Temer, who ruled during the recession, has not changed the legislation.

Bolsonaro has not yet approved a new readjustment policy and has followed the minimum required by the Constitution, which is the readjustment for inflation.