Public servant loses more income than private sector employee in the pandemic

Average labor income fell more for public sector employees than for private sector employees during the pandemic in Brazil.

This is what data from the Pnad Contínua (Continuous National Household Sample Survey), produced by the IBGE (Brazilian Institute of Geography and Statistics) indicate.

In the quarter from May to July 2019, before the health crisis, the average income from work was estimated at R$ 4,468 for employees in the public sector.

Three years later, in the same quarter of 2022, income dropped to R$4,086, equivalent to an 8.5% drop in the pandemic. The data takes inflation into account.

In the same period of comparison, the average income of employees in the private sector, excluding domestic workers, dropped from R$ 2,421 to R$ 2,350. The drop was 2.9%.

Domestic workers, in turn, had a contraction of 5.1%. The average shrank from R$1,106 to R$1,050.

The IBGE data only consider the resources obtained from work by those who are still employed in formal or informal positions. Sources such as social benefits do not enter into the calculations.

High inflation made Brazilians’ incomes generally shrink in the pandemic. In the case of employees in the public sector, the effect of the rise in prices was enhanced by the absence of readjustments or by timid increases for part of the servers, evaluate economists.

“In a context of high inflation, the freezing of salaries makes the average income fall more”, says economist Vivian Almeida, professor at Ibmec-RJ.

Economist Alysson Portella, a researcher at Insper, has a similar opinion. “We saw difficulties in obtaining readjustments in the public sector, which is very heterogeneous”, he says.

The civil service data released by the IBGE reflect the situation of workers in different spheres of government (municipal, state and federal). They cover, in addition to direct administration, foundations, autarchies and public and mixed-capital companies.

In the quarter to July 2019, the group comprised 11.5 million people, according to the institute. In the same period of 2022, it reached about 12 million, an increase of 4.6%.

“The loss of income has an impact on the freezing of civil servants’ salaries”, says economist José Celso Cardoso Júnior, coordinator of the Fonacate study commission (Permanent National Forum for Typical State Careers).

“Inflation lowered everyone’s purchasing power. Depending on the category, workers got more or less replacement”, he adds.

Even with the most intense decline, public sector employees still have a higher average income (R$ 4,086) than those in the private sector (R$ 2,350), according to the IBGE.

Economists, however, point out that the civil service has a high level of disparity in pay. Thus, the super wages of the so-called civil service elite end up pushing the average income up.

“The bulk of the payroll is filled by employees from areas such as health and education, far from being privileged”, observes Almeida, from Ibmec-RJ.

Of about 11.5 million employment contracts in the Brazilian civil service, in 2018, a quarter received up to BRL 1,566, and half earned up to BRL 2,727, indicated a technical note from Ipea (Institute of Applied Economic Research) of August 2021.

According to the same study, almost 90% of the civil servants in the country received a value equal to or less than 80% of the servants of the federal judiciary.

“The public sector is highly heterogeneous. It ranges from vacancies with super salaries in the Judiciary to workers like the receptionist at a hospital”, analyzes economist Rodolpho Tobler, from FGV Ibre (Brazilian Institute of Economics of Fundação Getulio Vargas).

According to data from Pnad Contínua, the income of employees in the public sector also fell more than that of employers in the private sector in the pandemic.

Business owners saw the average income decline from R$6,932 in the quarter through July 2019 to R$6,459 in the same range in 2022. The decrease was 6.8%.

At Pnad, only the category of self-employed workers had a positive variation in the same period, of 3.5%.

The average income of this group, whose employed population hit a record during the pandemic, went from R$2,051 to R$2,122.

Low reaches 18% in part of the category

The IBGE research divides the public sector into three slices: military and statutory, registered and non-registered employees.

The largest group is the military and statutory. The number of employed rose 2.6% between the quarter to July 2019 and the same period in 2021, to 7.9 million. It represents 65.3% of the total number of employees in the public sector (12 million).

The military and statutory have the highest average income of the civil service, according to the IBGE. Yield, however, was not immune to losses. It dropped 6.6% over the course of the pandemic, from R$5,128 to R$4,792.

“There is the effect of inflation and non-recomposition of wages”, says Tobler.

In relative values, the biggest drop in income within the civil service was registered by employees with a formal contract, who total 1.3 million people (11% of the total).

The income of this group fell by 18.2%, from R$4,651 in the quarter to July 2019 to R$3,803 in the same period in 2022.

For economists, the reduction may be associated with the opening of jobs with lower wages during the pandemic, in addition to the effects of inflation.

According to the IBGE, public sector employees normally hold commissioned positions. That is, they bring together nominated people who, because they are not public, follow the CLT (Consolidation of Labor Laws) regime.

In general terms, the average income from the main job in the country shrank 3.5% between the quarter ended in July 2019 and the same period in 2022, according to IBGE data. Yield decreased from R$2,702 to R$2,608.

According to economists, recent signs of a lull in inflation could stimulate an improvement in income in the coming months.

A more robust advance, however, would depend on the consistent growth of the economy, and analysts’ forecasts point to less breath for activity next year.

“The trend for 2023 is for weaker activity, with the job market moving sideways”, projects Tobler, from FGV Ibre.

“The outlook for income is positive in the short term, but it is a very slow reaction. We would need more good news”, says Portella, from Insper.

In the case of public servants, economists highlight an additional factor: the need to negotiate with governments. Throughout this year, federal servants, for example, pressured President Jair Bolsonaro (PL) for readjustments, but encountered resistance.

Bolsonaro tried to contemplate only police officers, but the movement triggered reactions from other careers, and the president gave up on the boon. About 1 million servers have their salaries frozen since 2017, as shown by the Sheet.

“The determinants of remuneration in the public sector are also political, even more than economic”, says Cardoso Júnior, from Fonacate.