Brazil’s Government Proposes Minimum Wage of R$1,039 in 2020

RIO DE JANEIRO, BRAZIL – The minimum wage proposed by the federal government for next year is R$1,039 (US$250).

The amount is included in the Budget Bill (PLOA) for 2020, which was sent on Friday, August 30th, for analysis by the National Congress, along with the text of the bill establishing the federal government’s Multi-Year Plan (PPA) for the period of 2020 to 2023.

“This value is exactly that of 2019, corrected by the INPC. It is not our minimum wage policy. We have until the end of the year to establish our minimum wage policy,” said the special secretary of the Treasury, Waldery Rodrigues, during the collective presentation of the 2020 Budget.

Until last year, the minimum wage adjustment policy approved by law provided for a correction for inflation plus the variation of the Gross Domestic Product (GDP, the sum of goods and services produced in the country).

This model was in force between 2011 and 2019. However, there was not always a real increase in this period because the country’s GDP, in 2015 and 2017, registered a retraction with a seven percent drop in the accumulated GDP during both these years.

The forecast value is now below the latest projection that was announced in April, indicating a minimum wage of R$1,040. The downward revision is related to the correction of the minimum wage for 2020 to be corrected by this year’s inflation, measured by the National Consumer Price Index (INPC), which fell in recent months (from 4.19 percent to 4.09 percent).

Each increase of at least R$ 1 will have an impact of approximately R$ 298.2 million in the 2020 Budget. Most of this effect comes from the Social Security benefits of the minimum wage.

Even with the slight reduction, next year’s minimum wage will exceed R$1,000 for the first time in history. The readjustment represents an increase of a little more than four percent in relation to the current value (R$998).