Confirmed: minimum wage rises to BRL 1,320 in May – 02/14/2023 – Market

The government of Luiz Inácio Lula da Silva (PT) decided to grant an additional readjustment to the minimum wage in 2023. With that, the national floor should be raised from the current R$ 1,302 to R$ 1,320 as of May 1st —a symbolic date for be Labor Day.

The possibility of an extra increase in the minimum wage had already been admitted by members of the Ministry of Finance in recent weeks. This Tuesday (14), Minister Fernando Haddad was questioned by journalists about the new readjustment, but said only that “the president will announce it”.

According to interlocutors interviewed by Sheetthe new value is already aligned between Lula and government ministers.

The extra increase had been under discussion since the transition period, as Lula’s team wanted to make their mark at the beginning of the first year of the mandate and grant a greater readjustment than originally proposed by former President Jair Bolsonaro (PL).

It was even Bolsonaro who signed the MP (provisional measure) that set the current value of the minimum wage, at R$ 1,302, which ended up having a real adjustment of 1.4% due to lower inflation than initially projected in 2022.

Haddad’s team preferred to keep the minimum wage unchanged in 2023, to avoid a greater impact on the accounts at a time when it seeks to improve the country’s fiscal situation. The main argument of this wing is that the value, in force since January 1, already represents a real increase compared to last year.

“In the first place, President Lula’s commitment during the campaign is a real increase in the minimum wage, which has already happened,” said Haddad on January 12. “The current minimum wage is 1.4% higher than the accumulated inflation from the last readjustment.”

Defenders of the new readjustment, on the other hand, consider that the measure is an important business card from the president to his electoral base, given that the minimum wage was a theme that was widely explored during the campaign. Lula promises to resume the valuation policy adopted in PT governments, with readjustments above inflation.

The maximum cost of the measure was initially calculated at BRL 5.6 billion, considering a scenario of greater number of retirement grants in the year. The number was estimated based on parameters of the year 2022.

The value is lower than the R$ 7.7 billion initially calculated because the increase would only be applied in eight months of the year, in addition to the 13th.

Technicians claim that the impact may be even smaller after the review of the main headings of the 2023 Budget, which is expected to take place in March, when the first bimonthly report evaluating revenues and expenses will be released.

At the time, the government hopes to already have a more accurate thermometer on the pace of granting benefits. There is an expectation that the impact on the accounts will be milder.

The additional cost will need to be accommodated within the spending cap, which limits inflation-advance spending. Although the Lula government intends to change the rules that govern public spending, including the cap, it is still in effect and needs to be respected by the current administration.

Interlocutors claim that this warning has been made by Haddad in conversations on the subject.

Some measures, in turn, may help offset the increase in expenses caused by the revision of the minimum wage. The government expects to cut about R$ 10 billion with the revision of the Bolsa Família program registration, for example.

The Budget today reserves R$ 175 billion for the program. During the transition, however, Lula’s team was already drawing attention to possible irregularities in the proliferation of single-person families receiving the social benefit.

The government plans to start paying an additional R$ 150 per child up to six years old who is in school.

As there was no payment in January and there is no forecast for February, at least R$ 3 billion have already been saved. The government’s forecast is to start transferring this installment in March.

Mapping possible spaces is necessary because the R$ 6.8 billion originally reserved for the additional minimum wage adjustment from January were consumed by the acceleration in granting pensions at the end of 2022, reducing the INSS queue.