Minimum wage: Government provides R$ 1,294 for 2023 – 04/14/2022 – Market

The government predicts that the minimum wage will rise to R$ 1,294 in 2023, an increase of 6.7% compared to 2022. If the value is confirmed, this will be the fourth year in a row without a real increase.

The numbers are in the 2023 PLDO (Budget Guidelines Bill), sent this Thursday (14) to Congress. The forecast is for another year of a hole in public accounts.

The value for the minimum wage covers only the INPC (National Consumer Price Index), aimed at the inflation felt by lower-income Brazilians. The government’s projection is that the index will end 2022 at 6.7%.

“For the purposes of projecting expenses, only the legal framework currently in force is being considered, such as, for example, the constitutional precept of maintaining the purchasing power of the minimum wage”, states the text of the PLDO.

Despite the forecast, the government has until December to define what the minimum wage will actually be applied for 2023. Last year, the definition was made through an MP (Provisional Measure) on December 31.

Until 2019, the rule for the minimum wage provided for the correction for the inflation of the previous year plus the real increase in GDP of two years before (if the latter was positive) – which, for most of the period, provided real readjustments to workers. The rule was instituted in 2011, under Dilma Rousseff (PT).

As of 2020, during the government of Jair Bolsonaro (PL), there was only an increase in the minimum wage by the INPC. This means that, since then, the minimum wage has not seen any real gains.

BRL 389.8 million in federal expenses are demanded for each additional BRL 1 in the minimum wage, which is also used as a basis for calculating the payment of pensions, assistance benefits and unemployment insurance.

Even without a real readjustment at least, public accounts must have another year in the red. The Executive proposed in the PLDO a fiscal target that authorizes a deficit of BRL 66 billion in 2023 for the central government (National Treasury, Social Security and Central Bank), as anticipated by the Sheet.

The scenario outlined shows that the accounts will remain in the negative in 2024 and will only return to the blue in 2025. With this, Brazil will accumulate 11 years of successive holes in the accounts.

Also during the government transition, in 2018, Minister Paulo Guedes (Economy) even said that it was “feasible” to bring the deficit to zero in the first year of Bolsonaro’s administration. The goal was not achieved either before or after the Covid-19 pandemic, which demanded hundreds of billions in public resources.

For states and municipalities, a smaller hole was proposed – of just R$ 100 million. For federal state-owned companies, the suggested target is a negative R$ 3 billion. In total, if the numbers are approved, the consolidated public accounts could have a deficit of up to R$ 69.01 billion.

Indebtedness should remain stable in 2023. Currently, the level of consolidated gross debt represents 79.6% of GDP (Gross Domestic Product). The same value is predicted for 2023. For 2024 and 2025, however, the values ​​would rise to 80.29%.

Inflation is monitored by the government as a pressure factor for the accounts. According to the technicians’ accounts, each 1 percentage point of the INPC generates an increase of R$ 8.8 billion in expenses, especially in social security benefits.

On the other hand, each 1 percentage point of the IPCA (Broad Consumer Price Index) generates an increase of R$ 16.8 billion in the limit of the spending ceiling (which prevents the growth of federal expenses beyond inflation).

The government also foresees in the piece a fiscal risk of R$ 859 billion with probable unfavorable court decisions. Among them, actions linked to Fundef (Fund for the Maintenance and Development of Elementary Education and for the Enhancement of Teaching). States have been able to win in court cases in which they argue that they received less from the fund than they were due.

The defeats of the Union and the consequent obligation to pay more to the states led to a mega operation to change the spending cap rule through a PEC (proposed amendment to the Constitution) last year. In addition to these amounts, the government wanted to include a payment of R$400 to families from Auxílio Brasil (a substitute for Bolsa Família, which had an average payment of R$190), which did not fit within the constitutional limit and led to a change in the rules and the a stampede in the economic team.

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