After five years of decline, the number of servers grows with Lula

After five years of decline, the number of civil servants in the federal government grew again after the inauguration of Luiz Inácio Lula da Silva (PT).

The contingent, which was 565 thousand employees at the end of Jair Bolsonaro’s (PL) government, in December 2022, increased to 572 thousand a year later and has now reached 573 thousand, according to August data from the Union’s Personnel Statistical Panel .

The increase is discreet, and there were months in which the total number even dropped a little, due to retirements. The tendency is for the staff to increase as the Executive incorporates employees approved in competitions already held and others to come.

As in previous administrations, Lula follows the recipe of expanding civil service, based on the idea of ​​a strong and centralizing State.

It is the opposite path to that adopted during the administration of Jair Bolsonaro (PL), when the Minister of Economy, Paulo Guedes, led a strategy to reduce personnel expenses that he called “silent administrative reform”. It involved freezing wages, partly due to legislation to combat the Covid-19 pandemic; the non-replacement of retired civil servants; and the digitalization of federal government services.

The reduction in staff had begun during the government of Michel Temer (MDB), which between 2017 and 2018 reduced the contingent by just over 3.5 thousand people. When Bolsonaro took office, in January 2019, the federal Executive had just under 631 thousand civil servants. By the end of his term, this number had decreased by almost 66 thousand, a drop of approximately 10%.

During the PT administrations from 2003 to 2016, the workforce had increased by 28%, from 493 thousand to 632 thousand employees. In other words, in 13 years almost 140 thousand vacancies were filled.

The increase in the number of public servants implies an increase in government expenses, which has been happening since the beginning of Lula’s third term. And the tendency is for expenses to grow even more, with hiring, salary adjustments, career progression plans and access to benefits.

Lucas Constantino, director of GCB Capital, states that fiscal dynamics remain very challenging for the government. “Even with the strong level of federal revenue observed recently, public accounts and Brazilian debt continue to deteriorate, which has increased market distrust regarding the fiscal framework. Therefore, the government would immediately need to deal with the impact of these increases of primary expenditure on the fiscal deficit, which is already in a critical state”, he stated.

Lula government foresees R$49.5 billion more in personnel expenses in 2025

According to the information from the Budget, Inspection and Control Consultancy of the National Congress from September this year, the forecast for personnel expenses approved in the reprogrammed federal budget for 2024 is R$373.8 billion. The value represents an increase of R$10.1 billion compared to 2023.

For next year, the Budget sent by the government to Congress foresees an additional R$49.5 billion in spending on civil servants, for a total of R$413.2 billion, which corresponds to an increase of 10.5% in relation to the amount this year.

The increase in the amount allocated to personnel expenses has two justifications: the creation of new vacancies, with the holding of public competitions this year and next, and salary adjustments that have been negotiated with each category. To date, 45 of them have already reached an agreement with the federal government.

Part of the increase in spending was seen as inevitable from a political point of view, as most categories had out-of-date salaries since 2019. That year, the last installment of an adjustment that had been negotiated during Dilma Rousseff’s government was applied. (PT).

In the first seven months of the year, the government accumulated a primary deficit of almost R$78 billion. Revenue grew 9% in real terms, little more than expenses (8%), which was not enough to bring the accounts out of the red.

The government estimates that it will close the year with a negative balance of approximately R$28 billion, at the lower limit of the fiscal target – which is zero deficit, but with a tolerance of up to 0.25% of GDP.

This account does not include expenses with the floods in Rio Grande in the South or with fighting fires. But they will affect public debt, which has been growing at a rapid pace since the government began. It has already reached 78.5% of GDP, an increase of almost 7 percentage points since January 2023.

Constantino highlights that mandatory government spending represents more than 90% of the budget, with the majority going towards paying Social Security benefits and salaries. “In other words, any increase in mandatory expenses means less space for investments in important areas such as health, education and infrastructure”, says the manager.

“Without a structural and robust fiscal adjustment, there is a relevant risk that the growth of these expenses will transform public accounts into an even more unsustainable problem, with increasing and recurring expenses and adjustments”, he adds.

He argues that the path to balancing public accounts involves structural reforms, spending cuts and reevaluation of government investments and programs.

Guedes’ “silent reform” reduced expenditure to the lowest level in the historical series

The “silent reform” carried out by minister Paulo Guedes had a relevant impact on the government’s accounts. Between the beginning and end of Bolsonaro’s mandate, the Union’s spending on personnel and charges fell from the equivalent of 4.3% of GDP to 3.4% of GDP, the lowest level in the Treasury’s historical series, which began in 2017. The fall was interrupted in 2023, when the index remained at 3.4% of GDP.

Due to the Covid-19 pandemic and the increase in federal transfers to states and municipalities, adjustments for public employees in 2020 and 2021 were suspended by Complementary Law 173/2020.

Paulo Guedes even stated that “the salary freeze gave us more than any administrative reform would”. At the time, R$43 billion in savings were projected.

The legislation prohibits the dismissal of civil servants, except in very specific cases, such as a final court decision or administrative disciplinary proceedings. A reduction in staff therefore occurs due to the non-replacement of employees who retire or die.

Thus, the way Guedes found to restrict the increase in expenses for public servants was precisely to contain adjustments and, gradually, opt for not replacing staff.

Even so, faced with the discontent of civil servants, in 2022 Bolsonaro announced on more than one occasion that he would give a 1% increase to everyone. Then, he even talked about a 5% adjustment. However, no adjustment was applied.

Lula gave a general adjustment to the servers in 2023, followed by negotiations with each category

In February last year, the Lula government proposed to civil servants a linear adjustment of 7.8% from March of that year, in addition to an increase of 46.6%, or around R$200, in food vouchers.

The salary index, however, was considered insufficient by some unions, who calculated that the losses in purchasing power for public employees in previous years reached 27%. Still in February, a civil servant forum responded to the government’s proposal asking for a 13.5% increase.

In March, Lula agreed on a general increase of 9% for all civil servants, through an increase of R$11.6 billion in this item approved for that year’s Budget. In addition, it also promoted a 43.6% increase in food assistance, which was R$458 and went to R$658.

In 2024, the government promoted a further increase in food tickets, by 52%, bringing the value to R$1,000. In addition, it promoted a 51.1% increase in healthcare assistance and also in daycare assistance, which went from R$321 to R$485.

In 2024 there was no general increase, but rather negotiations with several categories to close salary adjustment agreements for 2025 and 2026. According to the Ministry of Management and Innovation, the career readjustments and restructuring agreed with federal government employees approved or in Negotiations covered 98.2% of Executive employees.

The ministry also stated that, in addition to the 9% increase granted in 2023, some categories may have adjustments that reach 28% by 2026. Also according to the ministry, for 2025 the Budget proposed by the government reserves R$ 2.1 billion for new vacancies in the federal public administration.

Furthermore, it predicts that the budgetary impact of the agreements signed in 2024 on next year’s budget will be R$16 billion, totaling R$18.1 billion. When questioned, the ministry did not explain the reason for the difference between these R$18.1 billion and the R$49.5 billion in additional spending on civil servants foreseen in the 2025 Budget.

Even if they have already been signed, the agreements need to be approved through bills in the Legislature to come into force.

Virgínia Machado, professor of Public Law at Uniarnaldo Centro Universitário, in Belo Horizonte, welcomes the new hires. She states that the “new arrivals of civil servants to the public administration generate a positive effect on the public service that is provided”.

Even so, she argues that the government must bear in mind that it is necessary to carry out an analysis beyond hiring, which considers the impacts within the system’s own financial and actuarial balance system, including considering the future pensions of these employees.