Guedes gives in to Bolsonaro’s pressure to readjust servers despite legal hurdles

Under pressure from President Jair Bolsonaro, members of the economic team agreed to work for the adjustment of civil servants in an election year. Ministry technicians, however, warn that the measure will require cutting expenses in other areas and point out a series of legal obstacles that should limit this salary increase.

At an event in Bahrain this Tuesday (16), the president said that he intends to use part of the fiscal slack generated by the possible approval of the PEC (proposed amendment to the Constitution) that limits spending on court orders —government debts recognized by the courts— to review the salaries of employees.

“Inflation reached double digits. [ministro da Economia] Paulo Guedes, and in passing the PEC dos Precatórios, there has to be a little space to give some adjustment,” he said.

According to reports, members of the team of Minister Paulo Guedes (Economics) at a meeting with senators on Tuesday did not oppose the idea of ​​granting a raise to civil servants, but stressed that this will require a cut in expenses in another area of ​​the Budget — in this case, in the discretionary expenses (which are not mandatory and which support the functioning of the public machine).

Citizenship Minister João Roma, who is temporarily away, contradicted Bolsonaro’s statement. According to him, the space in the Budget that will be opened with the approval of the PEC of precatório will be entirely allocated to the government’s social area.

“That [aumento para servidores] is not in our cast. The PEC, the resource of this PEC is being destined for the government’s social area,” said Roma, who was in the Senate to ask for speed in the approval of the proposal.

Bolsonaro’s allies in Congress stressed that the government managed to contain the readjustment of federal employees for three years (2019 to 2021). However, the pressure will escalate in 2022, an election year, when governors must grant raises to state employees, which leaves the Palácio do Planalto under tension.

Members of the Ministry of Economy affirm, however, that this debate has not yet been taken to the technical area of ​​the ministry. Preliminary estimates indicate that the budgetary cost generated by each percentage point of adjustment granted to federal employees is approximately R$ 3 billion.

Congress members who work on the preparation of the 2022 Budget also reported that, in none of the scenarios outlined, there was a forecast of salary readjustments for civil servants. Therefore, the measure will require cutting other expenses, since the space to be opened with the PEC dos Precatório is already quite compromised.

Technicians responsible for managing the government’s payroll say that several barriers in the legislation can frustrate the president’s plan, enabling an increase considered negligible. That’s because after three years without release of readjustments, civil servants may end up receiving a salary correction to replace only the inflation measured in the first three months of 2022.

The electoral law prohibits general adjustments in the period of six months before the elections (beginning of April, in the case of next year’s election) until the end of the term.

Furthermore, even if the readjustment is authorized before this deadline, the law prevents the revision from going beyond the inflation measured within the same election year. In other words, in this case, the readjustment would be limited to the accumulated inflation between January and March 2022, without including the price index observed in previous years.

Members of the portfolio affirm that the electoral legislation does not expressly prevent punctual adjustments to specific careers. Bolsonaro, however, said the planned increase will be for all civil service careers.

“[O reajuste é para] all federal employees, without exception,” he said.

The president did not say what the percentage of adjustment studied by the government would be, but he considered that the value could be low.

“It’s not what they [servidores] they deserve it, but it’s what we can give,” he said.

Technicians point out that promoting readjustments within this year’s Budget is also not an option. Last year, when releasing a bailout package for states to face the public calamity of the pandemic, the government inserted into legislation a provision to freeze public servants’ salaries until December 2021.

When promising the readjustment, Bolsonaro cited the PEC for precatório, which has the potential to increase government spending by approximately R$90 billion in an election year.

However, this amount is already expected to pay for other measures announced by the president, such as the expansion of Auxílio Brasil, the payment of financial aid to truck drivers and the feasibility of the gas voucher.

In addition, a portion needs to be set aside to fund the increase in mandatory expenses that are readjusted for inflation, such as retirement and pensions. Due to rising prices in the country, the minimum wage will need to rise more than previously forecast, which also raises mandatory spending, especially on Social Security.

Another factor to be considered by the government is the resistance of the Senate to the PEC. The current trend is for the proposal to be dehydrated by the House. This would further reduce the margin for new spending in 2022.

Despite the nod of increases, Bolsonaro says he will remain very restrictive regarding the release of new public tenders for civil servants.

“Public tender [vamos autorizar] just the essentials, as we did with the PF [Polícia Federal] and PRF [Polícia Rodoviária Federal]”.

With these measures, the president declared, his government’s commitment to fiscal balance is maintained. “In this way, we are showing responsibility,” he said.

Several analysts and economists take the opposite view, however, and fear that the rule to expand the spending ceiling will end up creating instability, scaring off investors and fueling inflation.

Still with regard to civil servants, Bolsonaro reaffirmed that the administrative reform, if approved, will not apply to current employees, but only to those who enter the civil service from now on.

The reform, however, is stuck in Congress, with no realistic prospects of being approved by the end of the current administration.

At the event with Bahrain businessmen, the president again painted a rosy picture of his government’s economic performance, despite high unemployment, rising inflation and the prospect of stagnation ahead.

He said that Brazil was one of the five countries in the world that were least affected by Covid, despite the policies of social isolation, which he called ineffective.

On Wednesday (17), Bolsonaro and his delegation should end their tour of the Middle East by visiting Qatar.

Renato Machado collaborated