Government denies raises while boosting public service numbers

Management Minister Esther Dweck. Photo: Fabio Rodrigues-Pozzebom/ Agência Brasil

Management Minister Esther Dweck reiterated today during an interview for the federal government’s broadcast network that there is no planned pay raise for public service workers in 2024, as the 9 percent across-the-board increase from 2023 already has a “big impact” on this year’s budget.

A day prior, Finance Minister Fernando Haddad also said that the 2024 budget “was closed,” suggesting it would be impossible to make room for new spending. Extending an olive branch to disgruntled government workers, Ms. Dweck said that an overall pay increase of almost 19 percent is planned for the entirety of President Luiz Inácio Lula da Silva’s third term — a flat 4.5 percent increase for all public servants is planned for 2025 and 2026.

The words of both cabinet ministers could fan the flames of protest among civil servants, with a risk of federal workers going on strike imminently. Civil servants at the Central Bank, Environment Ministry, sanitary inspection agencies, and customs offices are among those more inclined to new stoppages.

Federal civil servants demand a pay rise of between 22 and 34 percent, depending on the government body or agency, to be paid in installments between 2024 and 2026. The government’s counter proposal was a maximum 19 percent increase by 2026, but with no change in pay this year.

While denying higher salaries to current servants, the Lula government is committed to expanding public service numbers. The country has recently launched the biggest-ever civil servant entrance exam with 6,640 new positions up for grabs.

Weeks after launching the hiring process, it also announced the creation of 100 new federal technical education institutes in the country, which implies opening thousands of new vacancies for federal employees in the coming years. It is as if Lula was trying to reverse the “invisible public service reform” effectively enacted by the previous Jair Bolsonaro administration.

When Mr. Bolsonaro left the presidency at the turn of the year, the federal government had fewer public servants than in 2010, when Lula ended his first two terms as president.

Lula’s latest move to expand the public service could have an unintended effect in Congress, reviving discussions around an administrative reform bill. In 2020, former President Bolsonaro introduced a proposal to reform Brazil’s civil service by ending the ironclad job security enjoyed by public sector employees and tethering job posts to regular performance evaluations, something polls show 88 percent of Brazilians support. While a special House committee approved the proposal in 2021, it has since lain dormant. House Speaker Arthur Lira, however, has put the bill among the legislative priorities for 2024 and has been pressuring the government to pick up discussions.

Brazil spends 13 percent of its GDP on public-sector salaries and pensions, the 15th highest among 142 countries analyzed by the World Bank. And federal employees earn an average of 96 percent more than private workers.

Fabiane Ziolla Menezes

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.