Retirements, Empowering Work and Unemployment Insurance: What will they look like after the announcement of the 45% increase in the minimum wage

Entrepreneurs and unions defined this Wednesday that the new minimum wage will be $47,850 by the end of the year. The stipulated increase will be 45% in four tranches, according to the Ministry of Labour, which acted as mediator in the salary council convened this Wednesday. This increase will affect some social plans and criteria for access to official assistance programs.

The increase will be effective as follows: 18% in April, 10% in June, 10% in August, and 7% in December and the parties will be able to request a new meeting for review from August, they reported. The vote was unanimous, with 31 affirmative votes and one abstention.

According to the Government itself, the establishment of a new minimum wage pattern has less impact on private collective labour agreements - the vast majority of which are already above the minimum wage - and within the State itself. This happens because there are a number of social programs that are updated according to the readjustment of the income floor.

-Empower Work:

In the case of the Empower Work program, which is under the Ministry of Social Development, its amounts are updated with the same percentages as the minimum wage. The program involves a half-day workload (four hours) in jobs in different areas, and receives an amount equal to 50% of the minimum wage.

After the first 18% update scheduled for April on the formal remuneration floor, the amount received by beneficiaries will rise to $19,470 from the current $16,500. Following the tranche scheme planned in June, Empowering Work will remunerate its beneficiaries with $21,210, with $22,770 since August after another 10% increase and, by December, with a final figure for 2022 of $23,925.

-Retirements:

A change in the minimum wage also impacts part of the pension system. This is the case of retirements of people who complete 30 years of contributions: their assets must be at least equal to 82% of the minimum, vital and mobile wage.

The schedule of incremental increases indicates that by April, when the first 18% increase takes place, the holding floor for those who have 30 years of contributions should be at least $31,930. Since June, when the second increase installment is integrated, that floor would be $34,636, in August it would be set at $37,342, while the 82% retirement of the SMVM for December would remain at $39,237.

-Becas Progresar:

In this case, the impact is indirect. For this salary aid aimed at university students, the minimum living and mobile wage functions as a ceiling for the award of the study grant. The beneficiary, under the age of 24, charges it if his family earns less than three minimum wages.

From now on, this ceiling is moved in relation to the monthly increases that the SMVM will have between April and December, during the signed tranches. When the term of this agreement between unions and entrepreneurs ends, the family income limit to enter would be $143,550 by December.

-Unemployment insurance:

The benefit granted by Anses for unemployment replicates the same rate of increase as agreed for the remuneration floor. In this way, the currently paid range of $9,167 to $15,278 will end the year in a range of $13,292 to $22,153 with the minimum wage agreement initialled this Wednesday.

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