The expected adjustment of the minimum wage will only cover this year's inflationary loss and will not bring real gain based on GDP variation

Brazilian Ministry of Economy raised the inflation projection for the year 2021 to 10.04%. The information was released by the Ministry's Economic Policy Secretariat and corresponds to the value projected for the INCP (National Consumer Price Index) accumulated for this year. The index reflects the increase in prices for lower-income families, and used to readjust the value of the minimum wage.
 
If confirmed the projection, the minimum wage next year will be R$1,210.44 (about US$ 240). The value of the new minimum wage will be above that provided for in the Budget Guidelines Law (LDO), approved this year, and which was prepared with a lower inflation forecast. About 50 million wage earners and social security beneficiaries in the Brazil receive a minimum wage, according to DIEESE (Inter-Union Department of Statistics and Socioeconomic Studies, in Portuguese).
 
The expected adjustment of the minimum wage will only cover this year's inflationary loss and will not bring real gain based on GDP variation, as occurred between 2015 and 2019. The increase in the minimum wage value based on GDP growth in the two years previous years was discontinued in 2020.
 
Inflation of more than ten percent forecast for 2021 is mainly due to rising prices for fuel, food and electricity. The price increases of these items have been the main reason for the dissatisfaction of large sectors of the population with the country's economic situation, in addition to the unemployment problem, aggravated by the economic closure promoted by governors during the pandemic.

*Free translation and adaptation of the article published in Crítica Nacional
 

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