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Brazil minimum wage - 2004

Added June.25th.2004
It was not so easy as Lula expected. The new minimum wage was defined by means of a
Provisional Measure, which should be turned into law by both Houses of the Parliament.
In the Chamber of Deputies, aproval was easy. The problem was the in Senate, where the opposition managed to increase the wage to R$ 275. In such cases, the law must return to the Chamber, which could restore the original value (and this would be final, the Provisional Measure would then become law) or keep the value revised by the Senate (in such case, the law would have to be sanctioned - or vetoed - by the President of the Republic; Lula said that he would use his veto power, which would cause the wage to return to R$ 240, last year´s value).
The government used all their persuading power, including the release of
budgetary amendments, and managed to have the Chamber to restore the R$ 260, minimum wage until May 2005.

President Lula defined the proposal of the Executive for the minimum wage of Brazilian workers in 2004 (effective as of May 1st 2004, valid until April 30th 2005): R$ 260 (two hundred and sixty reais), equivalent to a bit more than US$ 90 (the dollar closed April 30th at R$ 2.95, but, because of talks about a rise in the US interest rates, there is a trend of devaluation of the real, meaning that the wage will loose value in dollars).

During the Presidential campaign, Lula had promised to double the purchase power of the minimum wage; the promise seems very unlikely to be fulfilled, for, in two years of Lula government, the wage had a nominal increase of only 30% (from R$200 in 2002 to R$240 in 2003 to R$260 in 2004) and a real increase (discounted the inflation) of only about 4%. The table below shows the historic of the minimum wage from 1995 (first year of the government of
Fernando Henrique Cardoso) until 2004.

Year Amount Nominal increase Real increase
1995 R$ 100 42.86 % 22.60 %
1996 R$ 112 12.00 % (-5.25) %
1997 R$ 120 7.14 % (-0.98) %
1998 R$ 130 8.33 % 4.04 %
1999 R$ 136 4.62 % 0.71 %
2000 R$ 151 11.03 % 5.39 %
2001 R$ 180 19.20 % 12.17 %
2002 R$ 200 11.11 % 1.42 %
2003 R$ 240 20.00 % 1.23 %
2004 R$ 260 8.33 % 2.50 %

Lula announced also a raise in the salary-family, from R$ 13.48 to R$ 20.00; the salary-family is paid to formally registered employees (people in the vast Brazilian informal market are not benefited) who have young children (the value is per child, with a limit of three children per family) whose salary is lower than one and a half minimum wage.

As it had been the case with Fernando Henrique, the main restraint to higher raises is the public sector: the retired and those under official welfare have their paychecks adjusted by the same index as the minimum wage; higher increases would impact the budgets of all Treasuries, from Federal government to several States to thousands of small municipalities.

The wage proposed by Lula may still be changed by the Congress, provided that Representatives and Senators cut other expenses of the budget and redirect the resources to pay the minimum wage.

Read also:
Historic of minimum wages in Brazil

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