Brazil's New Minimum Wage Set to Inject R$81.7 Billion into Economy Starting 2024
Brazil's new minimum wage of R$1,621 in 2024 is projected to boost the economy by R$81.7 billion and affect nearly 62 million citizens, with significant social spending impacts.
- • New minimum wage of R$1,621 effective January 1, 2024, with a 6.79% increase.
- • Around 61.9 million Brazilians directly affected, including retirees and workers.
- • Economic injection estimated at R$81.7 billion through income and consumption effects.
- • Social Security expenses to rise by R$39.1 billion by 2026 due to wage adjustment.
Key details
Starting January 1, 2024, Brazil's minimum wage will increase to R$1,621, marking a nominal adjustment of 6.79% over the previous level. The Department of Statistics and Socioeconomic Studies (Dieese) projects that this update will inject approximately R$81.7 billion into the Brazilian economy through enhanced income, consumption, and tax revenues. About 61.9 million Brazilians will be directly impacted, including 29.3 million retirees and pensioners, 17.7 million employees, 10.7 million self-employed workers, 3.9 million domestic workers, and 383 thousand employers.
The minimum wage adjustment is based on a formula combining the National Consumer Price Index (INPC) and GDP growth, outlined in Law 14.663, albeit constrained by the new fiscal framework of Complementary Law 200/2023, which limits real federal spending growth. This increase will have notable fiscal consequences; Social Security expenses are expected to rise by R$39.1 billion through 2026, as nearly 71% of beneficiaries receive benefits linked to the minimum wage. The cost for public accounts is estimated at R$380.5 million for every R$1 increase in the minimum wage.
This wage hike offers a significant boost to lower-income groups and signals continued government efforts to balance income support with fiscal responsibility under current legislative limits.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.
