New minimum wage of R$1,412 comes into force this Monday (1)

Measure approved

Payments will be made in February; value is 6.97% higher than the previous one

From this Monday (1), the official minimum wage will be R$1,412. The amount, which will be paid from February onwards for the January payroll, is 6.97% higher than the salary of R$1,320, which was in effect from May to December 2023.

Approved in the 2024 General Budget of the Union, the value of R$ 1,412 corresponds to inflation by the National Consumer Price Index (INPC) accumulated in the 12 months ending in November, which totaled 3.85%, plus the 3% growth in Gross Domestic Product (GDP) in 2022. Sent by the government in May, the provisional measure with the new policy of increasing the minimum wage was approved by the Chamber of Deputies and the Senate in August.

According to the Inter-Union Department of Statistics and Socioeconomic Studies (Dieese), the minimum wage adjustment will benefit 59.3 million workers and will result in an increase in annual income in the amount of R$69.9 billion. The entity estimates that the government – ​​Union, states and municipalities – will raise R$37.7 billion more due to the increase in consumption linked to the higher minimum wage.

Real gain

When discounting inflation by INPC, the minimum wage will have a real gain of 5.77% compared to May 2023, when the minimum wage of R$1,320 came into force. If you consider the minimum wage of R$1,302, which was in effect from January to April, the gain would be lower, at 4.69%. This is because the INPC, an index that measures inflation for lower-income families (up to five minimum wages), was higher at the beginning of 2023.

From 2007 to 2019, a policy similar to the current one was in force, in which the minimum wage was corrected by the INPC of the previous year plus the growth of the Gross Domestic Product (GDP) of two years before. If GDP shrinks, it would only be replaced by inflation. From 2020 to 2022, the minimum wage started to be adjusted only by the INPC, without real gains.

Last year, there were two increases. From January to May, the minimum wage was adjusted to R$1,302, with a real gain of 1.41%. As of May, when the government issued the provisional measure resuming the previous salary policy, the salary increased to R$1,320, with a real increase of 2.8% in relation to the 2022 minimum.

Budget

The 2024 Budget bill estimated a minimum wage of R$1,421. However, with the drop in the INPC throughout the second half of the year, the final value was R$1,412, according to the budget law approved by the National Congress on December 22nd.

Because of the Social Security benefits linked to the minimum wage, the new value of R$1,412 will increase the Union’s spending by R$35 billion this year. According to the Budget Guidelines Law (LDO), each R$1 increase in the minimum wage increases government expenses by R$389 million. The calculations, however, do not consider the revenue gains resulting from increased consumption.

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