Rio de Janeiro - Brazilian President Dilma Rousseff signed an executive decree on Tuesday that extends through 2019 the formula for calculation of minimum wage adjustments.
The formula, based on the previous year’s inflation plus gross domestic product growth from two years prior, had been scheduled to expire this year. The same adjustment will apply to retirees earning minimum wage, while policy for other retirees is still in discussion. Rousseff thanked lawmakers from her coalition for support of the decree, which is effective immediately.
“I thank the deputies and senators, because this is part of our agreement,” Rousseff said at the event, according to a copy of her speech. “We need to have a partnership to build a path so Brazil gets out of this situation as quickly as possible,” she said, after referring to the “very large fall” in government revenue.
Brazil’s government is seeking to shore up its fiscal accounts, the deterioration of which has helped drag its sovereign credit rating down to the brink of junk. Since Rousseff began her second term in January, her attempts to push economic measures through Congress have faced obstacles as her approval rating fell and more than 1 million people marched in opposition to the government earlier this month.
“It’s a small victory, a small sign and an important one, that there is still some room for negotiation and Congress is still receptive to some of the government’s measures,” said Joao Augusto de Castro Neves, a political analyst from Eurasia Group. “It’s not an outright battle. They’re not rejecting everything the government does.”
The decree eliminates an uncertainty going forward, as Rousseff would otherwise have faced pressure each year from Congress over how to adjust the minimum wage, De Castro Neves said.
Her approval rating fell to a record low 13 percent in March, according to a Datafolha poll published on Folha de Sao Paulo’s website. The poll of 2 842 people conducted March 16-17 has a margin of error of two percentage points.
* With assistance from Raymond Colitt in Brasilia
Bloomberg