巴西拟分轨调整最低工资与福利涨幅，在巴中资需关注财政信号

Tiago Sbardelotto Wenderson Araujo/Valor Members of the federal government’s current economic team favor discussing, under a possible new administration, different formulas for raising the minimum wage for workers and pension and welfare benefits tied to it, Valor has learned. Government economists have run simulations that would preserve above-inflation gains for both groups, but at different rates. Workers would remain under the current rule, which allows a real increase of up to 2.5%, while retirees and other beneficiaries would receive a smaller increase. Brazil debt profile worsens as R$1.8tn maturity wall looms Brazil sees social security spending rising 8% in 2027 Such a change could ease pressure from mandatory spending. No decision has been made, however, and any proposal would require President Luiz Inácio Lula da Silva’s approval if he is reelected. Economists see fiscal merit in the idea but warn that it could face a constitutional obstacle because it involves a provision that some legal experts consider unamendable. Indexation split The proposal is part of studies for the fiscal agenda of a possible fourth Lula administration. At the same time, members of the economic team believe fiscal triggers approved by Congress last week, which are expected to save about R$10 billion in 2027, could also be made permanent. Under the approved rules, the restrictions would take effect the following fiscal year only if the bimonthly revenue and expenditure assessment released before the budget proposal is submitted to Congress indicates a central government deficit. Government officials and members of Lula’s team have been meeting with market representatives to hear their views and convey the message that a possible fourth Lula government would pursue gradual fiscal adjustment without abandoning efforts to fight poverty. The message is that fiscal consolidation would continue, with attention to the impact of fiscal policy on interest rates, while preserving the administration’s social priorities. Market participants, however, argue that a more forceful adjustment is needed to reverse the upward trajectory of public debt. Members of the economic team believe the currently strong labor market provides room to maintain real minimum-wage gains for workers, including under the existing formula, which allows increases of as much as 2.5% above inflation each year. Brazil’s next government faces growing urgency to tackle fiscal woes Brazilian assets reflect ‘hybrid world that doesn’t exist,’ Galapagos says The idea would be to use the favorable labor backdrop to give stronger wage gains to people who are still working, particularly as Brazil debates productivity growth, the advance of artificial intelligence and shorter working hours, including proposals to end the six-days-on, one-day-off work schedule known as the 6x1 system. For pensions and welfare benefits linked to the minimum wage, the increase could be set below 2.5%, while still exceeding inflation. No specific rate has been defined, but keeping some real increase is seen as important politically because it could reduce resistance to the change. People familiar with the discussions told Valor that the impact on mandatory spending could ultimately be more significant than the savings expected from the fiscal triggers Congress approved last week. A change in benefit indexation would have a cumulative effect on expenditures over time. Fiscal debate Economists have discussed the issue for some time, and market participants have advocated it as an important signal of fiscal adjustment. One argument is that real gains granted to active workers do not necessarily need to be replicated at the same rate for pension beneficiaries who are no longer in the labor market. Questions have also been raised about applying the same minimum-wage increase formula to non-contributory pension and welfare programs, such as the Continuous Cash Benefit, or BPC, which provides minimum-wage-linked payments to eligible low-income elderly and disabled people. At the start of Lula’s current term, the government restored a policy of raising the minimum wage by the INPC consumer inflation index plus GDP growth from two years earlier. At the end of 2024, however, the formula was changed to cap the real increase at 2.5%, the ceiling established under the fiscal framework for expenditure growth. A separate increase rule for active workers and retirees or pensioners has never advanced, although some members of the economic team have previously viewed such a change as necessary. The discussion could return under a possible fourth Lula administration. Benefit pressures For members of the economic team, the main concern is no longer limited to spending under Brazil’s general social security system, known as the RGPS, which has been declining as a share of GDP. The growth of other benefits, including the BPC, has also become a source of concern, one person familiar with the discussions said. In the case of the welfare benefit, part of the increase reflects a rise in court-ordered awards, but the restoration of the real minimum-wage increase policy has also contributed. Beyond changing indexation, the government has been discussing other mechanisms to comply with fiscal rules without allowing mandatory expenditure growth to squeeze investment and other discretionary spending, a source said. Options include sublimits for specific expenditures, controls on spending flows and fiscal triggers, including permanent ones. Economists consider it important to make some of the fiscal framework’s triggers permanent. As currently designed, the restrictions would be lifted once the government achieves a primary surplus, allowing the expenditures they constrain to start putting pressure on the public accounts again, since a spending ceiling is set separately for each year. Policy separation Arnaldo Lima, an economist at Polo Capital, said it is important to separate the adjustment rule for active workers from that applied to retirees and other beneficiaries. “This is not about taking purchasing power away from retirees, but about separating two public policies of different kinds: pension protection, which would continue to be protected against inflation, and the policy of raising the minimum wage for active workers,” he said. “A still more consistent rule, separating pension dynamics from wage policy without nominally reducing benefits or allowing inflation to erode them, could make a decisive contribution to halting the upward trajectory of debt and reducing the risk premium demanded on Brazilian assets,” Lima added. Lima, a social security specialist, cautioned that the proposal would require careful legal analysis. Brazil’s Constitution states that no benefit replacing income from work, including pensions, may be lower than the minimum wage. Some legal scholars interpret that provision as an entrenched constitutional clause that cannot be amended. Legal hurdle Tiago Sbardelotto, an economist at XP, said the proposal is not new and represents a variation on earlier discussions about breaking the link between the minimum wage and pension and welfare benefits. Similar proposals were studied under previous administrations but failed to advance, mainly because of political hurdles. Sbardelotto also agreed that any change would require legal caution because of the constitutional provision involved. Even so, he estimates that a one-percentage-point gap between gains—for example, a 2.5% real increase for active workers and 1.5% for pension and welfare benefits—would generate savings of R$7 billion to R$8 billion in the first year. “It may not look like much, but you have to consider that these savings tend to accumulate, because year after year I would have a lower base when comparing the two minimum wages. That tends to produce substantial savings after three or four years and could, in fact, make a difference,” he said. Spending impact Sbardelotto cautioned, however, that the measure would not necessarily translate into an improvement in the primary budget balance. Because the government would still be able to spend up to the ceiling set by the fiscal framework, slower growth in mandatory expenditures would create more room for discretionary spending and help preserve the fiscal rule for longer. “It is a necessary condition, but not sufficient on its own to improve the primary balance over time,” he said. The proposal would also not, by itself, resolve the structural pressure on pension and welfare spending, particularly as Brazil’s population ages, Sbardelotto said, nor would it eliminate the need for another pension reform in the future.