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Congress may approve a real increase soon

Congress may approve a real increase soon

With the arrival of December, it is also time to start adjusting the Brazilian minimum wage. But expectations for the amount approved for next year are different this year.

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This is because during his election campaign, President-elect Luis Inacio Lola Da Silva (Workers’ Party) promised a real increase in the minimum wage, something that has not happened for years in the country. For this to happen, his transition team intends to approve a PEC (Proposed Amendment to the Constitution) in December that will make the amendment possible.

If that happens, workers, pensioners, and retirees will be able to count on slightly higher purchasing power in 2023.

Why a real increase in the minimum wage?

When he talks about an actual increase, what the president-elect’s transition team means is looking at the data from Gross domestic product (Gross Domestic Product) to calculate the annual adjustment. This, together with inflation, as is currently the case, could once again provide real gains for Brazilians.

According to the text of the proposal, the intention is to add the average GDP of the previous five years into calculating the bottom line, along with inflation. With that, the increase could reach 1.3% or 1.4% next year.

If it is voted on in the coming weeks, the proposal could go into effect from January. With the amendment, the current minimum wage of R$1,212 could rise to R$1,320 in 2023.

How is the minimum wage calculated today?

Today, the minimum wage is adjusted annually based on the previous year’s inflation. Thus, the annual change in value corrects inflation, but does not generate a real increase in workers.

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Prior to 2019, previous governments also used the data referred to in GDP, as mentioned in Lula’s proposal.

The bottom line is discussed a lot because it affects a number of other factors, such as benefits that are based on the minimum wage.

Why is PEC needed?

The president-elect’s transition team is working with the General Election Commission because the amount included in the already approved 2023 budget is an estimate based solely on inflation (R$1,302). And to drive a real increase as promised, the elected government will need a new measure approved.