Brazil’s Lula Hikes Minimum Wage in Nod to Social Agenda

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(Bloomberg) -- President Luiz Inacio Lula da Silva announced an increase in Brazil’s monthly minimum wage, as his administration seeks to balance a campaign pledge of higher social spending with keeping the growth of public debt under control.

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Lula signed a provisional measure adjusting the country’s minimum wage to 1,320 reais ($265) per month, up from the 1,302 reais that had been set by former President Jair Bolsonaro at the end of last year. It becomes effective on May 1 and will likely be formally approved by Brazil’s Congress in up to 120 days.

“A bill will be sent to Congress so that the minimum wage is adjusted every year above inflation,” Lula said in televised remarks on Sunday, on the eve of the nation’s Labor Day holiday.

Lula also said the minimum threshold for Brazilians to pay personal income tax will be increased to 2,640 reais per month from around 1,903 reais. The amount is expected to be further raised to 5,000 reais by the end of his administration in 2026, he said.

The government will take both inflation and the country’s economic growth into account when calculating the minimum wage, Lula said in February. Last month, his economic team unveiled a fiscal proposal to rein in public expenditure that was cautiously welcomed by investors.

The wage hike follows a batch of positive economic data in the South American nation. A proxy for Brazil’s gross domestic product came in well above expectations in February, while inflation slowed to the lowest since 2020.

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