Every year, Brazil’s minimum wage is subject to an adjustment based on inflation rates. As a result of the pandemic period and the economic situation in the country, inflation rates have gradually increased month by month. This will subsequently lead to a record increase in the value of the national minimum wage in 2022, The Catholic Transcript reports.
Minimum wage adjustment
The indicator that the government uses to calculate the progress of inflation is the INPC (National Consumer Price Index). The latest index - released by the Economic Policy Secretariat of the Ministry of Economy on November 17 - is at the highest level at 10.04 per cent.
Therefore, if the new forecast indicator corresponds to no changes in the method of calculating the minimum wage, the 2022 national minimum could jump from R$1,100 to R$1,210.44. The value of R$41.44 is higher than the latest official government forecast for the 2022 minimum wage, which was released in August, and came to R$1,169.
The national minimum is used as the basis for rewarding 50 million people, of whom 24 million are beneficiaries of the INSS (National Institute for Social Security) who receive retirement, pension and benefits.
Balance in possession
The Catholic Transcript notes that this year’s minimum wage did not replace last year’s inflation rates. This is reportedly due to a 5.45 per cent INPC increase in 2020 and a 5.26 per cent correction applied to the minimum wage.
Therefore, the minimum wage this year of R$1,100 should have been R$1,101.95. However, the then Special Secretary for Treasury and Budget at the Ministry of Economy, Bruno Funchal, reported that the R$2 compensation owed by the government would be made at the end of the year when a new temporary measure to correct the minimum wage is sent in 2022.
Thus, in addition to the new inflation-based forecast that makes the minimum wage jump from R$1,100 to R$1,210.44, this amount still exists, which could make the minimum wage reach R$1,212.44 in 2022.
This new value ended up being the highest increase in the past six years when the minimum wage was raised in 2016 by 11.6 per cent. Below are details of adjustments of salary adjustments over the last six years:
* 2016: R$880 (adjusted 11.6 per cent);
* 2017: R$937 (6.48 per cent) readjusted;
* 2018: R$ 954 (adjustment of 1.8 per cent);
* 2019: R$998 (4.6 per cent adjustment);
* 2020: R$1,045 (4.7 per cent adjustment);
* 2021: R$1,100 (5.2 per cent adjustment);
* Forecast for 2022: R$1,212.44 (10.04 per cent adjustment plus R$2 readjustment).
Salary Adjustment Effect
An increase in the minimum wage has a significant fiscal impact on the federal government because many government benefits, such as those paid by the National Social Security Institute, use the minimum wage as a basis.
Therefore, as the government disclosed, only R$1 was created in the minimum wage and expenditure of R$355 million, an increase of R$100 in the 2022 wage limit and a new expenditure of at least R$35.5 billion must be created.
Source: The Catholic Transcript
Every year, Brazil’s minimum wage is subject to an adjustment based on inflation rates. As a result of the pandemic period and the economic situation in the country, inflation rates have gradually increased month by month. This will subsequently lead to a record increase in the value of the national minimum wage in 2022, The Catholic Transcript reports.
Minimum wage adjustment
The indicator that the government uses to calculate the progress of inflation is the INPC (National Consumer Price Index). The latest index - released by the Economic Policy Secretariat of the Ministry of Economy on November 17 - is at the highest level at 10.04 per cent.
Therefore, if the new forecast indicator corresponds to no changes in the method of calculating the minimum wage, the 2022 national minimum could jump from R$1,100 to R$1,210.44. The value of R$41.44 is higher than the latest official government forecast for the 2022 minimum wage, which was released in August, and came to R$1,169.
The national minimum is used as the basis for rewarding 50 million people, of whom 24 million are beneficiaries of the INSS (National Institute for Social Security) who receive retirement, pension and benefits.
Balance in possession
The Catholic Transcript notes that this year’s minimum wage did not replace last year’s inflation rates. This is reportedly due to a 5.45 per cent INPC increase in 2020 and a 5.26 per cent correction applied to the minimum wage.
Therefore, the minimum wage this year of R$1,100 should have been R$1,101.95. However, the then Special Secretary for Treasury and Budget at the Ministry of Economy, Bruno Funchal, reported that the R$2 compensation owed by the government would be made at the end of the year when a new temporary measure to correct the minimum wage is sent in 2022.
Thus, in addition to the new inflation-based forecast that makes the minimum wage jump from R$1,100 to R$1,210.44, this amount still exists, which could make the minimum wage reach R$1,212.44 in 2022.
This new value ended up being the highest increase in the past six years when the minimum wage was raised in 2016 by 11.6 per cent. Below are details of adjustments of salary adjustments over the last six years:
* 2016: R$880 (adjusted 11.6 per cent);
* 2017: R$937 (6.48 per cent) readjusted;
* 2018: R$ 954 (adjustment of 1.8 per cent);
* 2019: R$998 (4.6 per cent adjustment);
* 2020: R$1,045 (4.7 per cent adjustment);
* 2021: R$1,100 (5.2 per cent adjustment);
* Forecast for 2022: R$1,212.44 (10.04 per cent adjustment plus R$2 readjustment).
Salary Adjustment Effect
An increase in the minimum wage has a significant fiscal impact on the federal government because many government benefits, such as those paid by the National Social Security Institute, use the minimum wage as a basis.
Therefore, as the government disclosed, only R$1 was created in the minimum wage and expenditure of R$355 million, an increase of R$100 in the 2022 wage limit and a new expenditure of at least R$35.5 billion must be created.
Source: The Catholic Transcript