Rightsizing Brazil's Public-Sector Wage Bill

25 Pages Posted: 15 Nov 2018

See all articles by Izabela Karpowicz

Izabela Karpowicz

International Monetary Fund (IMF)

Mauricio Soto

International Monetary Fund (IMF)

Date Written: October 2018

Abstract

Brazil's public-sector wage bill is comparatively high. It grows inertially and competeswith other spending. Rightsizing the wage bill could stimulate administrative efficiencyand bring more equity into a system where public employees earn more than private incomparable professions. Most importantly, however, a reform is necessary to comply withthe Federal government expenditure ceiling and the subnational fiscal responsibility rules.A reform should thus encompass all government levels, and all careers, and should aim toachieve a real decrease in salaries and lower employment. In the medium term, a reviewof the compensation structure should rationalize the multitude if wage grids, mergeallowances into the base wage, and align public sector compensation to private wages inlow-skilled professions.

Keywords: Brazil, Wage bill, Fiscal rules, Employee compensation, Western Hemisphere, public spending, General, State and Local Government: Other Expenditure Categories

JEL Classification: H50, H76, J31, J33

Suggested Citation

Karpowicz, Izabela and Soto, Mauricio, Rightsizing Brazil's Public-Sector Wage Bill (October 2018). IMF Working Paper No. 18/225, Available at SSRN: https://ssrn.com/abstract=3285223

Izabela Karpowicz (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Mauricio Soto

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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