Pandemic Impact Reduces Brazilian Workers’ Income by Almost 25 Percent

RIO DE JANEIRO, BRAZIL – The impact of the novel coronavirus on the economy has been felt in the pocket of Brazilians who have managed to maintain their jobs during the pandemic.

The drop in income of employed workers was higher for those with less schooling, according to Pnad/Covid data from the IBGE, organized by the Idados consultancy.

In the first semester of 2020, wages of workers who failed to complete high school had dropped as much as 25 percent compared to what they used to earn in the month. To estimate this loss, the IBGE asked how much workers were paid that month and how much, in fact, reached their pockets.

“It is the dark side of every economic crisis: those who studied less are more vulnerable in the labor market, the first who had their contract suspended and their hours cut. This is even more serious given that these are the people who most depend on work to survive,” says economist Matheus Souza of Idados.

Through May, the loss of income from work stood at 18 percent on average for all schooling levels. In June and July, with the gradual economic rebound, the drop was mitigated, first to 17 and later to 13 percent.

Despite its different methodology, the Continuous Pnad (which is the benchmark survey) shows that such a drop has never occurred in these months: “Since the survey began in 2012, the largest drop for these months was three percent in 2015,” says Souza.

Now, despite having improved, the difference in the loss of pay that the less schooled (who failed to complete elementary school) had in relation to those who went to college remained high, by eight percentage points.

Souza points out that the data refer to an average of workers with these qualifications, and that the loss of income considers both formal and casual occupations. In the case of casual workers, part of them received the emergency aid, which used to be R$600 (US$120) per month and will now be R$300 until the end of the year.

“Although the poorest have seen an increase in income, the memory the Brazilians will keep of the pandemic will be the loss of what they once earned from work,” says the economist.

Between May and July, unschooled workers or those with incomplete elementary schooling lost as much as R$431 per month. This represents a loss of 40 percent of a minimum wage of R$1,045.

“We get used to living on less, but it’s never easy. It creates a feeling that life has regressed by ten years”, says elderly caregiver Neomar Maria da Silva, 62, from Maricá (RJ). Illiterate, she was forced to move into her relatives’ home and joined the city’s basic income program, where she receives R$130 a month. “I lost virtually everything, except hope,” says Neomar.

The day after

With the pandemic, almost a quarter of formal workers (9.5 million) are estimated to have had their labor contracts suspended or their working hours reduced, according to data released by the Ministry of Economy, which directly affects the income of those who depend on work.

Part of these losses was offset by the compensation the government provided to those who had their wages reduced. But even Brazilians with higher education and better jobs had significant income reductions, from 14 to 10 percent between May and July.

For legislative consultant Pedro Fernando Nery, workers who lost the most may eventually recover this loss in the future, but this tends to take longer than the return of jobs. “It is usually a slow process. Even after the last recession, employment grew much faster than income.”

He says it is important to think about the day after the pandemic, so that the income losses, particularly for the most vulnerable, will not last even longer, despite the scenario of rising unemployment and the still uncertain rebound pace.

“Access to the a signed worker’s book in Brazil is historically concentrated on white men, but the idea of zeroing the burden on the payroll, even if somewhat limited to a minimum wage, tends to help in the integration of the most vulnerable in the formal market.”

Source: InfoMoney