Rise in Wages Will Result in a US$ 11.2 billion Extra Cost

08/10/2018 - 13h37

The salary raise for the Brazilian Judiciary system, as approved by the Supreme Court, is bound to throw more gasoline in the federal budget bonfire.

After adding the justices' wage increase, salary raise for other government employees, and the minimum wage adjustment to inflation - which serves as a baseline to increase pensions, retirement funds and other entitlements, the new Brazilian president will have to pick up a tab of extra R$ 42.1 billion (US$ 11.2 billion).

This amount is equivalent to 70 percent of the R$ 59.3 billion (US$ 15.7 billion) allocated in the federal budget for 2019 as additional expenses.

That would leave R$ 17.2 billion (US$ 4.6 billion) for all other government expenses - from health and education to public infrastructure. In other words, the budget for next year is already compromised with salaries alone.

The wage portion includes the Supreme Court raise and its trickle down effect in all Judiciary: R$ 1.4 billion (US$ 370 million), in case the proposal is approved by Congress.

On Wednesday (8), the Supreme Court approved a 16.38% raise - which means a net salary raise of two digits, after inflation adjustments - which will bring the justices' monthly salaries to R$ 39,300 (US$ 10,500).

The Legislative reaction to the Court's decision hints that Congress approval to this raise won't be swift or painless.

Senate president Eunício Oliveira (MDB-CE) said that the proposal has no due date in the house, which means it might be put to vote after the October elections.

Translated by NATASHA MADOV

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