Income of richest workers drops 16% in pandemic

The crisis generated by Covid-19 and the rise in inflation reached the pockets of workers with higher wages, who are better able to face the difficulties in the economic scenario.

A sign of this is that the average income from work of the richest 1% in the country has fallen by 16.4%, in real terms, since the beginning of the pandemic.

Even with the reduction, the income of this portion is still 80.9 times higher (R$ 26,899) than that of the 10% poorest professionals (R$ 332) on average.

The conclusions are from a survey of the Sheet from microdata from Pnad Contínua (Continuous National Household Sample Survey), carried out by the IBGE (Brazilian Institute of Geography and Statistics).

In the fourth quarter of 2019, before the outbreak of the pandemic, the average income from work of the richest 1% was R$32,157 per month.

Two years later, in the fourth quarter of 2021, with the health crisis already underway, the income dropped to R$ 26,899.

From this comparison, the drop of 16.4% – or less R$ 5,258 – comes from. The indicator evaluated is the usual average income of each person who is employed in formal or informal work.

Unemployed are not included in the calculations. The data only include the resources received from the work, and do not consider investment values ​​and social benefits.

“Workers are finding it difficult to get readjustments. The civil service elite, for example, is more at the top of the income distribution and tries to bargain it,” says economist Alysson Portella, a researcher at Insper.

“What explains the loss at the top of the pyramid is the inflation. It is generating real losses in wages”, says Professor André Salata, from the postgraduate program in social sciences at PUCRS (Pontifical Catholic University of Rio Grande do Sul), which studies inequality and income distribution.

Income of the poorest rises, but with a change in composition

At the base of the pyramid, the income of the poorest 10% workers in the country rose from R$324 to R$332 between the fourth quarter of 2019 and the same period of 2021, an increase of 2.3%.

The advance in the average, however, should be analyzed with caution due to an effect of composition of the group, ponder analysts.

According to them, the arrival of the pandemic, in 2020, expelled the most vulnerable workers from the market, largely associated with informality and lower wages.

This is one of the possible reasons for the income of the poorest 10% to have grown on average after the beginning of the pandemic.

In the second quarter of 2020, marked by restrictions on economic activities and fewer professionals working in the market, the income of this layer was 16.2% higher, on average, than at the end of 2019.

However, in the most recent intervals, this advance has been getting smaller — it was 2.3% in the fourth quarter of 2021 —, amid the return of the most vulnerable Brazilians to the employed population and the advance of inflation.

Economist Janaína Feijó, from FGV Ibre (Brazilian Institute of Economics of Fundação Getulio Vargas), emphasizes that the richest, even losing income, have more mechanisms to protect themselves from inflationary pressure.

“Inflation hits income from work, but these people manage to protect themselves in other ways. The loss can be compensated, for example, with financial investments. This reduces the impact of inflation among the richest”, says the researcher.

On average for all groups, the income of employed workers was BRL 2,675 in the fourth quarter of 2019. In the same period last year, it dropped to BRL 2,447, a drop of 8.5% in real terms.

The most recent result represents the lowest level of Pnad’s historical series with traditional quarters (January to March, April to June, July to September and October to December). Registrations started in 2012.

Weak GDP defies reaction

In the view of analysts, the recovery of labor income largely depends on the advance of economic activity.

The problem is that forecasts indicate low GDP (Gross Domestic Product) growth in 2022, less than 1%.

Factors such as inflationary pressure and higher interest rates are identified as obstacles to a stronger GDP performance and, consequently, income.

“The forecast is not so good. We have even been recovering jobs, but the income is lower on average”, points out economist Alysson Portella, a researcher at Insper.

“There is a puzzle in the scenario, which is how to encourage the recovery of the economy and, at the same time, control inflation”, says André Salata, from PUCRS.

“The issue is that the main remedy to contain inflation is to increase interest rates, which makes it difficult to recover economic activity”, he adds.

According to the data, the average income of the richest 1% workers in the fourth quarter of 2019 (R$32,157) was 99 times higher than that of the poorest 10% (R$324).

This ratio dropped to 80.9 times in the fourth quarter of 2021, especially due to the drop in the richest.

“The ideal would be if everyone earned more, and the base, the poorest, had a proportionally greater increase”, points out Salata.