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It can be expensive: cuts in public spending must be careful, says economist

by Ace Damon
It can be expensive: cuts in public spending must be careful, says economist

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21:37 16.10.2019 (updated 21:43 16.10.2019) Short URL

Faced with the possibility of administrative reform in the public sector, a World Bank study presented proposals for the Brazilian government. Sputnik Brazil listened to an economist about the institution's suggestions.

The study published by the World Bank suggests changes that would have an impact on the economy of $ 389 billion by 2030. Among the measures would be a cap on the starting salary of civil servants in the amount of $ 5,000 and a three-year wage freeze with readjustment. inflation for a decade.

Economist João Prates Romero, a professor at the Federal University of Minas Gerais (UFMG), believes that this kind of weighting on public spending is important.

"The rationalization of spending is always welcome. Choosing where to spend and how to spend the most efficiently is always positive," says the teacher in an interview with Sputnik Brazil.

Although he also sees distortions in the Brazilian public service, the economist ponders on how the study addresses the issue.

"I think the most problematic of the report is perhaps how to do it (the adjustments). It does not take into account some specifics that they themselves indicate in the data they present," he explains.

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                    Folhapress / Pedro Ladeira / Folhapress

President Jair Bolsonaro and Economy Minister Paulo Guedes, after meeting at the ministry's headquarters in Brasilia on May 6, 2019.

The economist refers to the general adjustments suggested by the World Bank, such as the standardization of the entry salary in all public careers.

"In the case of health it is possible to consider whether there would be a greater demand for health professionals. That is, reducing the replacement rate of health workers is positive? We need to look at the specifics and look where there is excess and where there is a demand that is not being met ", he argues.

Romero also mentions that careers such as those in the judiciary have a higher average starting salary than others, such as teachers and doctors.

"Applying a general rule without taking into account these specificities is quite problematic," he says.

Suggested savings only come with drastic measures

The UFMG economist, João Prates Romero, points out that the possible reduction in personnel expenses cited in the study would only come from a kind of administrative shock.

"This savings of $ 400 billion they mention, the total savings that could be achieved, is with very drastic measures," he says.

Romero explains that looking closely at suggestions he considers "unwise." One of these would be the reduction of federal career entry salaries.

"It's a big economy, but a $ 5,000 entry salary to a federal level is unreasonable. Federal employees often have a high level of qualification because they are participating in complex decision-making, they need to have a high qualification. So , such a reduction does not seem feasible to me, "he says.

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                    Folhapress / Pedro Ladeira / Folhapress

The Minister of Economy, Paulo Guedes, speaks during a seminar on the MP for Economic Freedom, at the STJ, in Brasilia, on August 12, 2019.

Despite the criticism, the economist also welcomes some suggestions, such as the reduction and matching of public careers, and the reduction of benefits, as in the case of the judiciary.

"You often have different careers that are performing similar jobs with similar education levels, but there is a big pay gap between them. So that would be good to get rid of," he says.

The study itself points out that salaries in the public sector are often higher than in the private sector to attract qualified staff. For the economist, this situation is one of the impediments of the study's suggestions.

"A very drastic reduction in wages I think is problematic and would hardly be feasible," he says.

The economist also warns that you need to be careful about certain cuts not to generate future spending.

"In some cases, there is an economy that is a nut economy. (…) There are some cuts that are counterproductive. We could think of other examples, the health service is perhaps the clearest case of this. It is an economy today that will generate more spending in the future, "he concludes.

Opinions expressed in this regard may not necessarily coincide with those of Sputnik's editorial office.

. (tagsToTranslate) Administrative Reform in Brazil (t) World Bank Study

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