Brazilian President, Luiz Inácio Lula da Silva, has approved a law ensuring a permanent increase in the minimum wage starting from 2024 and extending the income tax exemption for individuals.
The progressive leader presided over a ceremony at the Planalto presidential palace in Brasilia, attended by several ministers, where he signed the bill previously endorsed by Congress.
During the event, Labor Minister Luiz Marinho stated that the new minimum wage policy would directly affect approximately 25 million people, including workers and pensioners, and stimulate the country’s economic activity.
Currently, the minimum wage in Brazil is 1,320 reais (equivalent to US$270 or €250) per month.
Under the new regulations, the minimum wage increase will be recalculated as it was until 2015, adjusting based on annual inflation and the positive variation of the gross domestic product (GDP).
This way, the government aims to preserve Brazilians’ purchasing power, which has suffered real losses in recent years, exacerbated by the COVID-19 pandemic, and potentially increase it if the economy is expanding.
However, if Brazil’s GDP is negative, the minimum wage will only increase based on the consumer price index.
Finance Minister Fernando Haddad acknowledged that this year’s increase is “small,” but it sends a “clear” and “important” signal that the “worker is at the center of the government’s attention.”
The approved law also fulfills one of Lula’s significant election promises: permanently exempting income tax, starting this year, for those earning up to 2,112 reais (US$433) per month.
Previously, the monthly exemption threshold was 1,904 reais (US$390).