Spending on Government Personnel
In this report we analyze: a) the expenditures on active and inactive personnel by the state governments; and b) the current stage of the administrative reform in the federal sphere. Outlays on personnel represent over 20% of the total spending of the federal government, of which approximately half goes to pay the pensions of retired civil servants under the Federal Social Security Regime. In the case of the states, those expenditures – for active and inactive personnel – account for just over 55% of the total. In part this is due to the attribution given to the state governments by the Federal Constitution of activities that are labor intensive, such as health, education and public safety. However, the growth of public payroll expenses is squeezing the state governments’ capacity for investments, and has already caused various states to exceed the limits imposed by the Fiscal Responsibility Law. In the federal sphere, the growth of expenses for active personnel is making it hard to satisfy the spending cap, and the precarious situation of the states is increasing the risk of a bailout by the federal government, jeopardizing the spending cap even more.
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