LABOUR-BRAZIL: Public Employees Face the Chop

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Jan 12 1996 (IPS) - Nearly 10,000 public employees could lose their jobs in Rio de Janeiro states over the next few days, as cuts in public spending take a grip, worsening an already tense social situation.

Governor of Rio, Marcello Alencar, proposed reducing the total number of workers by 20 percent, shedding 68,000 people through early retirement or dismissal.

An indeterminate strike was immediately declared by 4,500 civil servants in Rio de Janeiro State University, and other sectors of state administration held urgent meetings to discuss the threat of unemployment.

The crisis was provoked by an excessive growth in expenditure, with high salaries and interest rates carving deeper into the public deficit, in most of the states of Brazil.

Rio de Janeiro state currently spends 81 percent of its budget on salaries. A new national law, approved last year, put a 60 percent limit on all governments, giving them three-years to achieve this.

“I was elected to administer a state of 14 million people,” said the governor, claiming that he could not reduce his role to merely managing the salaries and pensions of to the 488,000 state employees and pensioners.

The Santa Catarina state government, in southern Brazil, took another line: it suspended 15 percent of all salaries, as from this month, until the percentage of budget spent on this sector falls from 80 to 65 percent.

Governor Paulo Afonso Vieira justified the measure, as it fulfils the constitutional disposition and may even recover some investment capacity for his administration. He said that the difference will be made up in time, when salary payments are within the legal limits.

But this decision is illegal, said labour lawyer Amauri Mascaro, because the same Constitution quoted by Vieira prohibits the reduction of salaries of public employees, including the army.

When the three digit inflation which afflicted Brazil for more than 15 years ended in July 1994, the governments lost their “inflation earnings,” as did the banks. The stable currency meant that salaries recovered their values, while the salary mechanisms benefitting government employees continued to up their wages.

Brazilian State salary payments doubled in little over two years, reaching nearly 40 billion dollars at present. The “vegitative” growth left over from the period of high inflation is therefore an explosive element.

Moreover, the state governments, and some municipal councils, are deeply in dept, and interest rates of more than 30 percent per year has made the cost unbearable.

The massive dismissal of personnel is the “easy way out,” but will not solve the problem, according to deputy Miro Teixeira. Deep administrative reform is needed, eliminating tens of thousands of high-salary posts of political responsibility within the governments.

Teixeiro said that the reform proposed by central government will only affect the lowest ranks of state government, and not the political employees who drain the State.

The expected approval of the consitutional amendment will worsen the wave of redundancies, and Minister of Administration Luiz Bresser Pereira said this may well affect some 30 percent of the public workforce – around a million people.

Central government also needs to reduce its deficit through salary control. It will therefore not be awarding the traditional annual increase of at least 10.84 percent, usually given in January.

They may also freeze the minimum salary at 100 reales (103) dollars, to prevent deficits in the social security system from getting out of hand.

Meanwhile, the unemployment issue is worrying the Unions and society in general, though Clemente Ganz, of the Inter Union Department of Socioeconomic Studies and Statistics said the state governments were unlikely to carry out the massive dismissals.

Ganz explained there will be municipal elections in October, and politicians will not want to worsen a social situation already blighted by job losses from industrial and financial restructuring and cuts in agricultural output and jobs.