Average income from work reaches its lowest level in nearly a decade in Brazil

Average income from work reaches its lowest level in nearly a decade in Brazil

After the destruction of jobs in the initial phase of the pandemic, the reopening of vacancies has been marked by lower wages in Brazil. A sign of this is that, in the quarter ended in October 2021, when the unemployment rate dropped to 12.1%, the average income from work dropped again and reached the lowest level in almost ten years in the country.

This is one of the conclusions of the Pnad Contínua (National Survey by Continuous Household Sample), whose data were released this Tuesday (28) by the IBGE (Brazilian Institute of Geography and Statistics).

In the quarter through October, the average real income, usually earned by employed workers, was estimated at R$2,449 per month. It is the lowest value of all quarters of the IBGE historical series, started in 2012.

In comparison with the previous quarter, ended in July 2021, the drop in income was 4.6%. In relation to the same period of 2020 (August to October), the retraction was even greater, 11.1%.

The institute’s data take into account inflation, which gained strength throughout 2021, breaking the double-digit barrier in the 12-month period.

The soaring prices are precisely one of the factors that reduce the average income and the purchasing power of the employed population, indicated the coordinator of Work and Income at IBGE, Adriana Beringuy.

In addition to inflationary pressure, the creation of jobs with lower wages, largely associated with the informal market, also helps to explain the lower income, according to the analyst.

“The expansion of occupation has not been accompanied by growth in income,” stated Adriana.

Economist Daniel Duque, a researcher at FGV Ibre (Brazilian Institute of Economics at the Getulio Vargas Foundation), classifies the scenario for workers’ income as “very bad”.

“This comes as much from higher inflation as from the recovery of jobs such as self-employed and informal ones,” he observes.

According to the IBGE series, the highest average income was registered in the country between May and July 2020: R$2,799. At the time, the initial phase of the sanitary crisis pushed mainly lower-paid workers out of the market, analysts say.

Thus, the income of those who managed to remain employed rose on average. In addition, inflation was below the current level, impacting less on Brazilians’ pockets.

“The mixture of weak economic activity and persistent inflation brought income down. Income is the lowest in the series, a very serious problem. Since 2012, Brazilians have not earned so little”, analyzes the chief economist of Necton Investimentos, André Perfeito .

According to data released by the IBGE, the unemployment rate dropped to 12.1% in the quarter to October, due to the increase in the population employed in some type of work in the country. Even so, 12.9 million professionals were still unemployed in the period.

By official statistics, a person is considered unoccupied when he doesn’t have a job and keeps looking for new opportunities. The IBGE survey considers both the formal and informal sectors.

In the previous quarter, ended in July 2021, the unemployment rate was 13.7%. A year earlier, between August and October 2020, it was 14.6%.

The unemployment rate estimated by the institute until October 2021 (12.1%) was below financial market expectations. Analysts consulted by Bloomberg agency projected an indicator of 12.3%.

During this period, the population employed in some type of work reached 94 million people in the country. The growth was 3.6% (3.3 million) compared to the previous quarter, until July.

The informal sector accounted for more than half of the new jobs. Of the 3.3 million more people employed up to October, compared to the previous three months, 54.1% (1.8 million) worked without a formal contract or CNPJ.

“There were times when this variation in informality was much greater. Even so, it still accounts for more than half of the occupation’s recovery”, pointed out IBGE’s Work and Income coordinator, Adriana Beringuy.

Until October, Brazil had 38.2 million informal people. The number corresponded to 40.7% of the employed population (94 million) with some type of work. The highest rate of informality in the historical series, started in 2012, was recorded from May to July 2019 (40.9%).

The IBGE indicated that there was also an increase in the population employed with some type of formal employment. Employment with a formal contract, for example, reached 33.9 million, growth of 4.1% compared to the previous quarter. That’s 1.3 million more people — or about 40% of the 3.3 million more people employed.

For Daniel Duque, from FGV Ibre, unemployment tends to remain low at least until the first quarter of 2022. However, after that, the scenario should become more complicated, says the researcher. Because, according to him, recent signs of economic weakness tend to hit the job market as the months go by.

“There is a delay for the effects of the economy to be felt in the labor market”, comments Duque.

In the third quarter of 2021, the period with the most recent data available, the GDP (Gross Domestic Product) retreated 0.1% in Brazil, renewing signs of stagnation. It was the second consecutive casualty.

Amid this scenario, forecasts for the performance of economic activity in 2022 have been revised downwards.

Financial market analysts started to project growth of less than 0.5% for next year’s GDP, according to the Focus bulletin, released by the BC (Central Bank) on Monday (27). The estimate is for an advance of 0.42%.


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