Paraguay to cut public sector wages over COVID-19

BOGOTA, Colombia

Paraguay is cutting wages and other benefits in the public sector for at least three months as part of measures to mitigate the impact from the novel coronavirus, Finance Minister Benigno Lopez and Vice President Hugo Velazquez said Monday at a press conference.

The government will cap monthly public sector wages at 37 million Paraguayan Guarani (around US$5,700), which matches the amount of the president's salary. It is also implementing wage cuts of 10% and 20% for public employees whose salaries exceed five and 10 times the minimum wage, all of which will save a total of about $52 million.

The announcement comes at a time when Paraguayans are demanding wage cuts for the political class as a way of alleviating the social cost of a lockdown imposed due to the novel coronavirus.

Velazquez introduced other long-term measures that will be taken to reform the state in order to achieve an early economic recovery once the coronavirus crisis ends.

The measures are aimed at shrinking the public apparatus to allocate more funds to the public health system in order to combat the virus. There was no talk of layoffs, but Lopez said there will be more cutbacks in the future.

“The rules of the game will not be the same,” he added.

Following the appearance of the coronavirus in Paraguay, the government declared social isolation measures, with movement restricted until April 12. According to the Ministry of Public Health’s latest update, Paraguay has 64 confirmed cases of the coronavirus and three deaths.

After first appearing in Wuhan, China last December, the novel coronavirus, officially known as COVID-19, has spread to at least 177 countries and territories, according to data compiled by U.S.-based Johns Hopkins University.

More than 777,000 cases have been reported worldwide, with the death toll over 37,000 and more than 164,000 recoveries.