Lula’s government reverses the decision regarding the value of the minimum wage

The year 2023 brings big news for Brazilian workers. One of them is the adjustment that the minimum wage will receive in 2024. Currently, at R$1,320, the new minimum wage must be at least R$1,412, with the new amount to be paid in February next year.

This increase represents a minimum increase of R$92 and, surprisingly, was less than R$1,421 that the government estimated in this year’s budget proposal, a significant amount with a significant impact on the Brazilian consumer’s pocket.

How does Lula determine the value of the minimum wage?

The calculation of the value of the minimum wage is based on the new permanent evaluation policy implemented by the government of President Luiz Inacio Lula da Silva and already approved by the National Congress. Under this new law, the adjustment corresponds to the sum of two indicators, namely inflation measured by the National Index of Consumer Prices (INPC) in the 12-month period until November, in addition to the real growth index of the gross domestic product (GDP) in the past two years.

When will the new minimum wage take effect?

The new minimum wage goes into effect on the first day of 2024, with the first payment already due in February. The federal government has until the end of this year to issue a decree amending the value of the minimum wage. This means that, at the President’s discretion, a higher than expected adjustment may be granted, depending on the economic and political conditions of the country.

The law that established the new rules for estimating the minimum, in addition to setting the amendment formula, specified that the new value be applied by presidential decree.

Without Lula’s modification, what would the value be?

In a hypothetical case where there is no adjustment formula established by law, the government would still be constitutionally obligated to adjust the minimum wage on the basis of inflation for this period. If we take into account the twelve months accumulated until November, the minimum wage will rise to R$1,371. Thus, although the final value is slightly lower than the first estimates, the new minimum wage policy ensures that workers do not lose their purchasing power due to inflation and may receive a raise based on the growth of the country’s GDP.