The value is not yet final, but the minimum wage should accelerate to about EUR 759 next year, nine euros more than the EUR 750 previously envisaged, to avoid a loss of purchasing power for workers as a result of rampant inflation this year. .7%, according to the estimates of the Finance Council. The guarantee is included in the proposal that the government handed over to employers and trade unions yesterday, at the seat of the Standing Committee on Social Dialogue. By 2023, the increase in the guaranteed minimum monthly allowance should provide an additional differential to offset the effects of inflation.
At the end of the meeting with the social partners, Labor Minister Ana Mendes Godinho said that “the aim of the government is that by 2023 there will be no loss of purchasing power for those earning the national minimum wage”. Without materializing values, the official stressed that “the minimum wage is set by the executive after negotiations with the social partners”.
Despite not advancing amounts for the minimum wage update, Ana Mendes Godinho made it clear that “there should be no losses next year” because of the price increases. In addition, the proposal submitted to the social partners mentions an “additional” amount of “1.3 percentage points” for the evolution of remuneration in general. The sum of this increase with the increase of 45 euros, or 6.4% that was foreseen for 2023, gives exactly an increase of 7.7%, in line with the inflation forecast for this year. Given this indicator, the minimum wage should be set at 759 euros, with the government maintaining the target of 900 euros in 2026, at the end of the legislature.
If these calculations are confirmed, UGT should be the only union federation to accept such a wage evolution. “For UGT, the increase in the minimum wage should never be less than inflation”. On the contrary, for the general secretary of the CGTP, Isabel Camarinha, the value is “insufficient” and there should be an “increase to 800 euros”.
On the side of the bosses, António Saraiva, president of CIP – Confederação Empresarial de Portugal, asked the government to “first ensure the sustainability of companies exhausted by the crisis, war and inflation” and only then proceed to the increase of wages. João Vieira Lopes, president of the Confederation of Commerce and Services of Portugal (CCP), warned of “the risks of withdrawal next year” making salary increases difficult. Employers are demanding more measures, namely the reduction of the IRC, which is also envisaged in the proposed medium-term agreement to improve income, wages and competitiveness.
Compensation for employers should be channeled through “selective IRC reductions for companies with dynamic collective bargaining, with higher salaries and narrower salary ranges” and for “companies investing in research and development (R&D), thereby reducing the conditions of the Tax Incentives for Business Research and Development (SIFIDE II) in the direct investment component”.
“The Incentive to Capitalization of Companies (ICE) will also be created, merging the deduction of retained and reinvested profits (DLRR) and the conventional return on equity capital (RCSS), simplifying tax incentives for capitalization and investment by eliminating of redundancies and restrictions inherent in currently existing instruments, as well as improving the Investment Aid Tax Regime (RFAI)”, the board’s proposal reads. The government also proposes a reformulation of the “system of declaration and deduction of tax losses in order to simplify them”.
At the IRS level, the executive commits to a “regular update of the IRS scales to ensure tax neutrality” so that “salary increases are not diluted by the tax burden nor translate into effective losses in disposable income,” according to the proposal. of the executive for an agreement on competitiveness and income. But in the end, the Minister of Labor did not specify how this update will be carried out. In addition to this measure, the government proposes to “approach and, where possible, eliminate the difference between the IRS withholding tax and the tax due”. It also provides for “creating an incentive to return to the labor market, targeting the long-term unemployed”.
Another tax novelty is the “rewording of the operating rules of minimum subsistence,” the level to which income is exempt from IRS. Asked about this change, the Labor Minister said only that “these measures will be detailed later”.
Currently, according to the IRS code, this ceiling is obtained by applying the formula 1.5 x 14 x the value of the Social Support Index (IAS), which is EUR 443.2.
However, the same law says that the minimum subsistence should never be less than the minimum wage times 14 months. Because the minimum pay is higher and has risen more than the IAS, this benchmark is used. For this year, the tax to be paid is related to the income from 2021, the year in which the minimum wage rose to 665 euros. According to the rules, the minimum subsistence by 2022 should be 9310 euros (14 x 665 euros), but the government decided that this ceiling should be higher and set it at 9415 euros. If the current rules are maintained, the minimum subsistence will be 9870 euros (14 x the minimum wage of 705 euros) for income obtained in 2022, with tax settlement in 2023.
The board and partners hope to complete the income agreement in time so that some measures can be included in the proposed government budget for 2023.
With regard to youth employment, the executive is proposing to “establish an annual program to support the permanent recruitment of qualified young people with a salary equal to or higher than EUR 1,268”. However, the document does not describe how this measure could take place.
“The concern about the situation of young people is cross-cutting for all social partners, bearing in mind that the implementation of specific measures for this segment of the active population is of fundamental importance”, according to the introductory note to this chapter dedicated to young people of the Income Agreement . In this sense, the government also proposes the “increase in the annual payment of the IRS Jovem”. Currently, this incentive scheme exempts part of the income of young dependents or self-employed persons for five years, consecutively or interpolated. The measure exempts 30% of income from IRS during the first two years, up to the limit of 7.5 times the value of the Social Support Index (IAS), or 3,324 euros, in 2022; 20% in the next two years, with a limit of five times the value of the IAS (EUR 2,216, in 2022); and 10% in the past year, with a limit of 2.5 times the value of the IAS (1108 euros, in 2022). The increase in the annual benefit may increase the exemption percentage and the income ceiling.
Social partners and the government hope to be able to conclude this income agreement in time so that some measures, such as changes to the IR and IRC, can be incorporated into the proposal for the national budget during the discussion phase in parliament.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
