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The Ministry of Economy has set a new minimum wage 2021 of a primary deficit target for 2021 of R $ 247.1 billion, by advancing an update of the proposed Budget Guidelines Law (LDO).
In April, when delivering the first version of the proposal (PLN 9/20), the Ministry of Economy suggested a flexible fiscal target. The amount would vary throughout the year according to the evolution of income before the spending ceiling, already set at R $ 1,486 billion.
At the time, the government argued that the coronavirus pandemic had created difficulties in assessing the future economic scenario. Already in the presentation of the LDO proposal, the need for adjustments to the text, now formalized, was alerted.
In addition, the Federal Court of Accounts (TCU) questioned the hypothesis of a flexible target, an innovation in the practice of public accounts. In addition to being unconstitutional, for TCU this idea is contrary to the Fiscal Responsibility Law (LRF), which would require a fixed objective.
Comparative data
The new primary result, income less expenses before interest payments, is equivalent to 3.16% of the Gross Domestic Product (GDP) projected for 2021, of R $ 7.81 trillion. It also exceeds the R $ 233.6 billion mentioned in the budget proposal (PLN 28/20).
This fiscal goal considers the central government – National Treasury, Central Bank and Social Security. This year, due to Covid-19 spending, the central government’s primary deficit is expected to reach R $ 844.6 billion (11.7% of GDP).
For the third consecutive year, the Executive has included a device to circumvent the so-called “golden rule”. The Constitution prohibits the carrying out of credit operations (issuance of government bonds) that exceed capital expenditures (investments and amortizations).
Minimum salary 2021
In the new version of the LDO project, the minimum wage in January is expected to go from the current R $ 1,045 to R $ 1,088. This correction considers the accumulated inflation estimated this year according to the INPC, of 4.1%.
According to the original text of the LDO project, each additional R $ 1 in the minimum wage increases net expenses by R $ 304.9 million in the year. The increase of 0.1 percentage point in the INPC generates a net impact of R $ 720.8 million.
The forecast of other economic parameters for 2021 has been corrected in relation to April:
– the growth rate of real GDP fluctuated from 3.3% to 3.2%;
– Inflation measured by the National Extended Consumer Price Index (IPCA) and accumulated in the year decreased from 3.6% to 3.2%;
– a Selic rate, in annual average, it went from 4.4% to 2.1%; and
– The average exchange rate for the year, before R $ 4.30 per dollar, rose to R $ 5.30.
The update carried out by the economic team brings up two other issues: requirements for the transition of state companies from the Fiscal and Social Security Budgets, in which they appear dependent on public money, to the Investment Budget, which includes Petrobras and others; and details to characterize the “server replacement” in the case of temporary contract or outsourcing.
Summary rite
An unprecedented fact, the LDO proposal will be analyzed this year directly by the National Congress, without an opinion from the Joint Budget Committee (CMO). The remote sessions will bring together deputies and senators separately, in accordance with the summary rite in the pandemic.
Based on the annual rotation between the House and Senate, this year the report of the LDO proposal belongs to one senator. The PSD, based on previous party agreements, indicated Senator Irajá (TO). He said months ago that he had already submitted his opinion.
Governing law
Effective annually, LDO guides the preparation of the Budget and the subsequent execution, already in the following year. According to the Constitution, the Executive must present the proposal before April 15 and Congress must approve it before July 17 (which did not happen in 2020).
In addition to the fiscal goal, the LDO defines rules on priority actions regarding the transfer of federal resources to the states and the private sector and for the supervision of works carried out with Union resources, among others.
No actual increase
In 2019, the government ended the policy of real adjustment of the minimum wage. Therefore, now the value of the salary is limited to following the determination of the Constitution, which speaks of preserving the purchasing power of the worker.
The real gain of the minimum wage was implemented by Fernando Henrique Cardoso (PSDB) informally in 1994, shortly after the adoption of the Real Plan. The PT administrations made the measure official.
Without a real gain in the minimum wage, the government achieves financial relief, as the increase in the minimum wage automatically adjusts welfare and social security benefits. For each increase of R $ 1 in the minimum amount, the government increases expenses by approximately R $ 355 million per year.
Unchanged purchasing power
The readjustment of the minimum wage varies according to the increase in prices, registered as a function of inflation rates. That is, workers will receive purchasing power that will be adjusted according to the inflation index (general increase in the price level).
Dieese’s calculations show that more than 49 million Brazilians live on a minimum wage. Currently, the monthly remuneration must be more than R $ 4 thousand reais per month and not R $ 1,045.00.
To calculate the minimum wage, the government considers the growth of the Gross Domestic Product (GDP) and the inflation of the previous year.
See also: Minimum wage for 2021 increases and changes PIS, unemployment insurance and BPC
