The case for reform of the administration

Reform of the administration ranks high in Brazil`s efforts towards sustainable fiscal balance. A long awaited proposal of constitutional reform aimed at streamlining the country’s civil service is among the casualties of the Covid-19 pandemia, for the time being at least. The health crisis set in as this proposal was about to be sent to Congress, and the discussion now awaits more convenient times.

Paradoxically, the health crisis has also shed vivid light on the distortions and inequality that characterize civil service in Brazil, and hence on the pressing need for reform. While workers in the private sector and in the so-called informal economy have born the full blow of the pandemia, as have businesses and government accounts, civil servants from the three branches of government, in federal as in local levels, have been spared financial hardship. (One noteworthy exception were the legislators of the State of São Paulo, who reduced their own salaries in 30%). Some careers actually received significant payrises; the town hall in Brazil`s Federal District, where the capital city Brasilia is located, passed a law granting a 25% increase to police forces.

Pay-related expenses of civil servants in Brazil amount to roughly 14% of GDP, average pays are substantially higher those in the private sector, and perks are preposterous in some instances. At approximately $2.2 bn, the annual budget of the Brazilian Congress is second only to that of the US Congress.

No surprise, therefore, that suggestions aimed at curtailing pays in Congress and in the Judiciary through popular initiative have emerged. Under Brazil`s Constitution, popular initiatives are a fast track for approving legislation which can be set in motion by citizens representing one per cent or more of the country`s voters. While used rarely, this manifestation of direct democracy led in the past to high-impact changes, most notably the 2010 Clean Record Act (Lei da Ficha Limpa), which prohibits individuals who were criminally convicted under proceedings which still await appeal from running for office. Only, under Brazil`s Federal Constitution only the President can propose legislation affecting the structure of the administration, which means initiatives currently under discussion in Whatsapp groups and other social media are bound to fail.

Brazilians like to evoke all-encompassing definitions of their own country. God is Brazilian is a classical one, if presumptuous, while the country of the future lost attraction because it remains unfulfilled more than 80 years after it was coined by Austrian writer Stefan Zweig. Perhaps more appropriate is Belindia – a country where Belgian wealth lives side by side with Indian poverty. Social inequality, to which this 45-year old expression created by economist Edmar Bacha refers, is indeed a core attribute of Brazilian society, as the country’s civil service illustrates forcefully.

The draft reform of the administration which the Bolsonaro government presented in late February includes an aggressive streamlining of careers in the civil service, from 300 to 30; and the reduction in the amount of initial salaries, which are substantially higher than those in the private sector. Other measures could be contemplated. Each of the 513 lower house representatives is entitled to 25 legislative assistants; for the 81 senators, there is no cap on the number of taxpayer-funded aides. Congressmen are entitled to reimbursement of expenses of various sorts, the cap being equivalent to roughly 6 times their monthly pay.

As was the case with reform of the pension system, gradualism in its implementation will probably be necessary if reform of the administration is to overcome the resistance of vested interests and lobbies in Congress. That said, the Covid-19 crisis may provide the last necessary push to finally make it happen. 

L&S Authors

Bolívar Moura Rocha

Bolívar Moura Rocha

Partner
Fernando Hamú

Fernando Hamú

Isabella Tanuy

Isabella Tanuy

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