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In 2025, the minimum wage will have a real increase, but the ceiling of the new rule generated a reduction in the expected value, saving billions for the government and frustrating 59,3 million Brazilians who depend on the minimum wage.
Brazil's economic scenario takes on new contours with the announcement of the minimum wage adjustment for 2025.
While many Brazilians were expecting a more significant increase to face economic challenges, the government's recent announcement brought somewhat bitter news.
The frustration of millions of workers and retirees is mixed with the timid relief of a readjustment that, although positive, fell below expectations.
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Correction smaller than expected
The president Luiz Inácio Lula da Silva (PT) will publish, in the next few days, a decree that will correct the value of the minimum wage to R$1.518 in 2025, according to federal government sources.
Currently set at R$1.412, the new value will bring an increase of R$106, equivalent to 7,5%.
This percentage includes a real gain, that is, above inflation.
However, the correction fell short of what many expected, especially after the application of the new calculation rule approved this year as part of the fiscal package to contain expenses.
Understand the new calculation formula
The current formula for adjusting the minimum wage considers two main factors: the accumulated inflation in the 12 months up to November, measured by the National Consumer Price Index (INPC), which was 4,84%, and the growth of the Gross Domestic Product (GDP) from two years ago, set at 3,2%.
However, a ceiling of 2,5% was established to limit the impact of GDP variation.
If the previous rule, without the ceiling, was still in force, the adjustment could have raised the minimum wage to R$1.528.
With this change, Brazilians will lose around R$10 in their monthly income. This change has already been highlighted as essential to limit public spending, but it has a direct impact on family income.
Savings for the public coffers with the limitation of the minimum wage
The impact of the new calculation rule is reflected in savings for the government.
As the minimum wage serves as the basis for paying retirement, pensions and social benefits, a more modest increase reduces public spending.
According to official calculations, each additional real in the minimum wage increases government spending by R$392 million.
It is estimated that, in 2025, the total savings with the most limited adjustment will be R$4 billion.
For the coming years, control over the growth of the minimum wage will also be maintained, generating an accumulated reduction of R$110 billion in social security and welfare benefits by 2030.
The impact on the lives of Brazilians with the value of the minimum wage
Currently, the minimum wage is a reference for around 59,3 million Brazilians, including workers, retirees and beneficiaries of social programs such as the Continuous Benefit Payment (BPC).
Furthermore, the correction affects families’ purchasing power, directly influencing consumption and the economy’s performance.
According to the Inter-Union Department of Statistics and Socioeconomic Studies (Dieese), the restriction on the real increase in the minimum wage can generate negative effects on domestic consumption.
Families with lower purchasing power tend to reduce spending, impacting important sectors of the economy, such as commerce and services.
Spending cuts and economic effects
The fiscal package approved by the government brought significant changes, with direct and indirect impacts on the economy.
For the government, the measure is essential to achieve fiscal balance and ensure sustainability in public accounts in the long term.
On the other hand, experts warn of possible losses in the short term.
Dieese highlighted that the reduction in the pace of increase in the minimum wage can be seen in the GDP results.
Data from the third quarter of 2024 already show a slowdown in household consumption, the main driver of the Brazilian economy.
For many economists, control of public spending must not sacrifice the income of the most vulnerable population, under penalty of compromising economic recovery.
Conclusion and perspective
Although the adjustment of the minimum wage to R$1.518 in 2025 is an improvement over the current level, the application of the 2,5% ceiling has caused frustration among Brazilians.
The measure reflects the need for fiscal control, but also raises concerns about the impact on income, consumption and economic growth.
The big question remains: Will the cuts in the minimum wage adjustment really compensate for the possible damage to the economy and the quality of life of Brazilians in the coming years?
