Brazil’s economy minister Guedes says salaries can be increased

BRASILIA (Reuters) – Brazilian Economy Minister Paulo Guedes said on Tuesday that efficiency gains by the government will allow for salaries to be increased after years of no meaningful hike in minimum wages and a salary freeze for public servants.

Speaking virtually at an event hosted by the Brazilian Association of Supermarkets (Abras), Guedes highlighted efficiency gains with the digitization of public services, and noted that the current administration has not replaced many retired public servants.

“We will be able to give moderate salary increases and based on prospective inflation from now on. From now on, we will maintain purchasing power or even increase the purchasing power of salaries,” he said.

The government of President Jair Bolsonaro, who seeks reelection in October but trails former leftist President Luiz Inacio Lula da Silva in opinion polls, set aside 14.2 billion reais ($2.76 billion) to finance higher wages for public servants in the 2023 budget bill sent to Congress.

The proposal did not specify the adjustment percentage or which public servants and professions were being considered for wage increases. The government has been under intense pressure by public servants for a wage increase as inflation eroded their purchasing power in Latin America’s largest economy.

The budget bill projected no gains on minimum wages beyond inflation.

During the event, Guedes also said Bolsonaro’s government this year intends to privatize Santos Port – the largest in Latin America – after setting the minimum price of 3.015 billion reais ($586.32 million) for the privatization auction on Tuesday.

($1 = 5.1425 reais)

(Reporting by Marcela Ayres; Editing by Leslie Adler)