By Bernardo Caram
BRASILIA (Reuters) -The Brazilian government plans an across-the-board 5% salary increase for public servants starting in July in an attempt to end protests and strikes affecting public services, three Economy Ministry sources said on Wednesday.
According to two of the sources, who requested anonymity to discuss private deliberations, the increase will cost the federal government around 6 billion reais ($1.28 billion) this year.
Brazil has a constitutional spending cap so the government will have to cut other expenses to increase salaries, as Congress approved the 2022 budget with only 1.7 billion reais for such raises. The government had also analyzed options within that limit, including boosting meal vouchers by 400 reais ($85) for all employees, a possibility that they largely rejected.
Another alternative was to favor a few categories of civil servant, including those at the central bank and public revenue service, which were leading noisy protests after President Jair Bolsonaro said earlier this year that only civil servants providing public security would be allowed to receive raises.
Behind the scenes, Economy Ministry officials strongly opposed that idea, arguing that privileging a few could set off a wave of new protests demanding more costly raises.
"The biggest problem was giving raises to one category and not others," said one of the sources familiar with discussions.
Many public employees have not seen their wages rise in five years and protests have taken place as double-digit inflation erodes purchasing power in Latin America's largest economy.
A strike by central bank employees is delaying the release of economic data, while protesting tax auditors have delayed the processing of goods arriving in Brazil.
($1 = 4.6899 reais)