Government Expects to Cut R$ 1 Billion Through Voluntary Retirement of Public Servants

07/25/2017 - 10h43

As part of its efforts to cut expenses to meet its deficit target, President Michel Temer's government announced a Voluntary Retirement Program (known by its Portuguese acronym as PDV) on Monday (the 24th), in an attempt to reduce payroll expenses of public servants of the Executive Branch by about R$ 1 billion (US$ 303 million) per year.

The plan also includes an option which doesn't involve complete retirement, but in a reduction in work hours with a proportional cut in salary - from 8 hours per day to 6 or 4. In this case, an extra payment for 30 minutes per day would be included.

According to the Planning Minister, the details will be spelled out in a provisional decree that will be sent to Congress yet this week.

Today, entities related to the Executive Branch employ around 500,000 public servants and in order to incentivize participation, the government is planning to pay out 1,25 monthly salaries for each year already worked.

Annual spending on salaries is around R$ 284 billion (US$ 86 billion) and is second only to retirement spending, which accounts for about R$560 billion (US$ 170 billion) of the Federal Budget.

The savings from salary reduction will only start to count next year. The government should be including an estimate on the reduction in these expenses in the 2018 Budgetary proposal that it will be sending to Congress at the end of August.

The program is another step that the economic team is taking in order to ensure that the government meets the deficit target of R$ 139 billion (US$ 42 billion). As part of this effort, the government announced the freezing of R$5.9 billion (US$ 1.8 billion) in expense spending last week.

Translated by LLOYD HARDER

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