By Leo Byrne, Contributing Reporter
RIO DE JANEIRO, BRAZIL – Chairman of the joint committee of fiscal plans and public monitoring, Senator Romero Jucá, announced an increase in the proposed minimum wage on Monday. Coming as part of the final report on the 2013 budget, Jucá said that there will be an additional increase of R$4 to R$674.96 per month (from the R$622 rate in 2012).
The announcement was more than the original government forecast made in November due to higher than expected figure for the Consumer Price Index (INCP). Brazil’s INPC grew by 5.65 percent as opposed to the predicted five percent, meaning that a compensatory minimum wage adjustment was necessary.
Mr. Jucá said that the increase would cost the government purse an additional R$1.36 billion. He also added that investment across government sectors would increase to R$21 billion.
Minister Jucá continued by outlining that the proposed increase to public sector workers’ salaries would remain unchanged, with an increase of five percent next year, growing to 15.8 percent by 2015.
The minister also went one step further and revised cuts to numerous social programs. The Minha Casa, Minha Vida (My Home My Life) is an initiative between the federal and local governments that aims to build two million houses by 2014. Mr. Jucá blocked a proposed cut to the program and instead earmarked it for R$900 million.
Further programs that will not see diminished funding include public transport, which can expect a further investment of R$150 million in 2013.
Although it has suffered from sluggish economic performance recently, the minimum wage announcement comes amid a long period of growth for Brazil that has seen living standards increase dramatically over the last decade.
A recent study in September undertaken by the Strategic Affairs Secretariat (SAE), said that for the first time half of the population were now considered “middle class” in Brazil. The report was hailed as a sign that Brazil was beginning to win its battle with long entrenched inequality.
The SAE defines those in the middle class as people who live in households with a per capita monthly income of between R$291 (US$145) and R$1,019 (US$500) and have a low probability of becoming poor in the near future.
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