Institute for Development Research Riinvest
This policy brief aims at contributing to a founded debate on wage policies delivered by the government budget in a broader context regarding the potential impacts on the macroeconomic situation, fiscal and budgetary stability, and social cohesion. The developers and implementers of this policy need to conduct a critical, comprehensive analysis of the current state of affairs in order to remedy some actions in this sector that have been the product of an improvised governance and ad hoc decisions. As a result of these actions, the share of government wages in GDP and the budget has, in most cases, reached beyond the reasonable limits for the country's development stage and beyond the policies recommended by other empirical researches. This situation is evident even without the effects of the newly approved Law in the spring of this year, but which enters into force with the December wages. The impacts of the law will be known in 2020 and later on, significantly worsening these aforementioned reports. Even before this Law, there have been clear instabilities that have led to the volume and increase of budgetary wages being outside the fiscal rule which stipulates that any changes on government wages should be in line with economic growth.
Chairman of the Board
Co-founder, senior fellow
Senior Research Fellow