Loading ...News - Lula Raises Brazil’s Minimum Wage 12% as of February
Jan. 30 (Bloomberg) - Brazilian President Luiz Inacio Lula da Silva raised the minimum wage by 12 percent starting next month, a move the government said will increase incomes of more than 20 percent of the population.
Lula’s provisional order, which Congress must ratify, boosts monthly minimum pay to 465 reais ($201) from 415 reais, Labor Minister Carlos Lupi said. The ministry may also propose to Lula setting up incentives for companies to retain employees. He offered no details of the plan.
“The higher wage will directly and indirectly benefit more than 42 million people,” Lupi told reporters today in Rio de Janeiro. “Brazil is also planning to create an employment insurance system.”
Pushing up wages amid slumping demand may lead employers to make job cuts, said Juan Jensen, partner and economist at Sao Paulo-based economic consulting company Tendencias Consultoria Integrada.
Latin America’s biggest economy lost a record 655,000 jobs in December as companies curbed production to adjust to shrinking consumer demand. Brazil may keep losing jobs in January and February, before recovering in March, Lupi said.
A wage increase will also add to public spending at a time when a slowing economy is eroding tax revenue, Jensen said in a telephone interview.
The government pays 17.2 million citizens social benefits or pensions based on the minimum wage. The social security ministry said today in a statement posted on its Web site that the increase will boost its spending by 7.87 billion reais.
The 12 percent wage increase compares with 6.48 percent inflation last year for Brazilian families earning up to 8 times the minimum wage a month, according to the country’s national statistics agency.
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