By Bernardo Caram

BRASILIA (Reuters), -The Brazilian government intends to increase all employees’ salaries by 5% beginning in July, in order to quell protests and strikers that are affecting the public sector.

Two sources who spoke anonymously to talk about private discussions say that the government will be paying approximately 6 billion Brazilian reais ($1.28 million) for the increased revenue.

Brazil’s constitutional spending limit means that the government must reduce other costs to raise salaries. Congress passed the budget for 2022 with just 1.7 billion Brazilian reais. There were also options available within the limit. This included a 400-reais increase ($85) in meal vouchers, which was a possibility they mostly rejected.

An alternative option was to give raises to a select group of civil servants. This happened after Jair Bolsonaro, President, stated earlier in the year that civil servants responsible for public security will be allowed to get raises.

Economy Ministry officials opposed the idea behind closed doors, saying that privileging some could lead to a new wave of protests calling for higher raises.

One source familiar with the discussions said that “the biggest problem was giving raises only to certain categories.”

Public employees are not seeing their salaries rise for five years. Protests also took place because of double-digit inflation that erodes the purchasing power in Latin America’s largest economy.

Central bank workers are striking, causing delays in the release economic data. Protesting tax auditors also delayed processing goods that arrived in Brazil.

($1 = 4.6899 reais)