Good morning! No real gains to the minimum wage. Petrobras continues divestments (but is now under investigation). Brazilians are regaining trust in democratic institutions.
Minimum changes to the minimum wage
Congress’ Budget Committee approved the Budget Directives Law (LDO) yesterday, raising the minimum wage in Brazil from BRL 998 per month to BRL 1,040. The slight bump only manages to cover inflation, without bringing any real gain to the minimum wage. This is expected to continue for the next two years, officially breaking with the policy of raising the minimum wage to match inflation and the previous year’s GDP expansion.
Why it matters. The minimum wage is the reference for at least 45m Brazilians, and is considered by experts as a highly effective tool to promote improvements in the quality of life of poorer populations—and stimulate consumption. Between 2004 and 2019, the minimum wage rose 74% above inflation—which is one of the reasons so many Brazilians were lifted out of extreme poverty. However, pensions and benefits are indexed to the minimum wage, which creates a heavy load for the cash-strapped government. Economy Minister Paulo Guedes says that every additional BRL 1 has an impact of BRL 300m for the federal...