2023-04-28 20:55:37
© Reuters. Lula and her Minister for Indigenous Peoples, Sonia Guajajara 04/28/2023 REUTERS / Ueslei Marcelino
By Bernardo Caram
BRASILIA (Reuters) – Adjustments announced by President Luiz Inácio Lula da Silva to the minimum wage are expected to cost the federal government 18 billion reais in 2023 and 2024, which will require a greater effort from the economic team to zero out the deficit. public accounts as promised.
The estimate considers parameters that guide federal spending, since increases in the minimum wage raise expenses such as retirement, salary bonuses, unemployment insurance and the Continuous Cash Benefit (BPC).
On Thursday, the government confirmed that the national minimum wage will rise from 1,302 reais to 1,320 reais in May and announced that it will propose the resumption of the permanent policy of real readjustment of the minimum wage in the country from 2024.
This year, according to Budget data, each real increase in the minimum wage generates a net cost to the government of 366.4 million reais in 12 months. Therefore, the approximate impact of this additional readjustment of 18 reais over eight months (May to December) is estimated at 4.4 billion reais.
For increases made from 2024, the government announced that it will send a bill to Congress to resume the policy of permanent appreciation, which was interrupted by the management of former President Jair Bolsonaro. The rule provides that the minimum wage will be readjusted considering the inflation of the previous year and the GDP variation of two years before.
With the increase in GDP in 2022, of 2.9%, and the government’s projection for the National Consumer Price Index (INPC) this year, of 5.16%, the minimum wage would have an adjustment of 8.06% in January next year. The value would go from 1,320 reais to 1,427 reais.
In the 2024 budget guidelines, the government predicted a lower level, of 1,389 reais, considering only the inflation correction, but informed that the level would be adjusted after the announcement of the real gains policy.
In 2024, government accounts indicate that the cost of each readjustment real will be 368.5 million reais. As a result, the 38 reais additional minimum wage gain above inflation forecast for next year would generate an impact of 14 billion reais.
The 2024 floor will depend on the approval of the project by Congress and may still fluctuate until the end of this year. If inflation in the 12 months up to December is higher than the government’s current projection, for example, the readjustment of the minimum will be stronger, expanding public spending.
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The new values will need to be incorporated into the government’s accounts and will generate negative pressure on the fiscal result in the midst of an effort by the Minister of Finance, Fernando Haddad, to promote adjustment measures to recover the Budget.
According to a source that follows the matter, the Ministry of Finance defended in government meetings a policy of more modest real readjustments to the minimum wage, which would reduce the budgetary impact.
The Treasury suggested not using the GDP result as a reference, but per capita GDP, which tends to have a lower percentage. The portfolio ended up losing in the negotiation, prevailing the calculation with the full GDP, which was defended by the Ministry of Labor.
The government’s most recent projection for this year’s accounts, which still considered the minimum wage of 1,302 reais, pointed to a primary deficit of 107.6 billion reais at the end of 2023.
The government has been announcing new measures to increase collections and has informed that it will seek to improve this balance by the end of the year. It will be necessary, however, to consider this additional expense of 4.4 billion reais in the next official assessment of the accounts, in May.
The estimated impact of 14 billion reais for 2024, in turn, would need to be incorporated into next year’s Budget, which will still have a long process to be discussed in Congress. This amount will have to be offset by cutting expenses or gaining revenue so that the economic team’s forecast of zeroing the deficit next year is maintained.
The policy of valuing the minimum wage was instituted in 2007, during Lula’s second term, and turned into law in 2011. Interrupted by Bolsonaro, the return of the mechanism was a campaign promise for the petista.
(Edited by Flávia Marreiro)
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