The State Grows and Spending on Salaries of the Bureaucracy is Doubled

In 2012, the cost of the salaries of public servants surpassed the collection of income tax and value added tax (VAT) together. Experts say this trend could be repeated later this year.

Jaime Carrera, secretary of Fiscal Policy Observatory (MRO), discussed the factors that have led to the growth of the wage bill are increasing bureaucracy, the creation of new public institutions and increased salaries. It also notes that public spending increases for salaries in the budget when the economy is based on high oil prices, higher public debt and building taxes.

More than $ 7,264 million were invested in public sector wages in 2011 and exceeds the sum of the revenue from the tax ($ 4,200 million) and income tax ($ 3,030 million) in the same year.

This means that to pay the salaries of about 500,000 civil servants (about 3% of the national population), it has to invest the payment of taxes of Ecuadorians and businesses to pay their taxes.

According to the OPF, Central Bank data show that the payment of wages in the public sector in 2006 accounted for 7.5% of gross domestic product (GDP, all domestic production), while in 2011, 10.8% , moreover, that between 2006 and 2011 public spending in Ecuador grew 213%, when GDP barely made it in 61.7%. That growth lag creates risks in an economy that is increasingly dependent public sector and less than private apparatus.

(BG)