Usual real income for September quarter reached R$2,737, a monthly increase of 1.4%

11/08//2022

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Labor income has been recovering unevenly. In recent months, sectors like agriculture, construction, services, and commerce have seen a sharp increase, while public administration and the industry decelerated. Even though inflation is up again in October, economists say this recovery is expected to continue driven by a nominal rise in salaries and the composition effect, which captures changes in the profiles of workers.

According to microdata from the Continuous National Household Sample Survey (Pnad Contínua), compiled by Tendências Consultoria Integrada, the usual real income for the September quarter reached R$2,737, a monthly increase of 1.4%. Comparing the moving quarter ended in September versus the April-June period, the increase reached 3.7%. In the year-over-year comparison, the usual real income is up 2.5%.

Lucas Assis, an economist with Tendências, said that this recovery in labor income is due to the higher generation of formal jobs and lower current inflation.

“From the sectorial standpoint, in the comparison with the third quarter of 2021, the positive highlight was the growth in real income in agriculture, forestry, fishing and aquaculture,” which saw a 13.2% increase, of more R$216. “Besides the impact of lower inflation, a composition effect may have happened, with the dismissal of low-wage workers.”

He added that the construction sector saw a 5.7% increase; commerce and motor vehicle repair is up 8.3%; and domestic services grew 4.6%.

“The sector of information, communication and financial, real estate, professional and administrative activities was among those that advanced the most in average income, with a 3.1% year-over-year growth, above the total average growth of 2.5%,” he said.

According to Mr. Assis, the sector is among the ones that concentrates the largest number of workers, with 11.9% of the total of occupied people, behind commerce, public administration and industry.

Six months ago, in the March quarter, the average income in the agriculture sector was R$1,685. It rose to R$1,855 in the September quarter. In the commerce sector, it went to R$2,270 from R$2,160. In the construction sector, it went to R$2,114 from R$2,111. And in information, communication and financial activities, to R$3,942 from R$3,748.

The downside was public administration, defense, social security, education, human health, and social services, which fell 3.4% year-over-year, equivalent to R$134. The main reason is the expansion of lower paid positions.

According to Daniel Duque, with the Fundação Getulio Vargas’s Brazilian Institute of Economics (Ibre-FGV), the increase in income has been driven by information and communication services, which have shown a relevant effect on wages.

“The pandemic recovery is over, but the service sector is performing better than expected. People are possibly over-consuming services after two years without doing so, but the fact is that we are seeing wage increases in services in a way that has been quite surprising this year,” said Mr. Duque.

He points out that the big drop in income in the last two years has been driven by the public sector. “It was the best-paying sector until recently, but it has fallen in terms of percentage of employed people,” he said.

“The information and communication services sector has been pulling down a lot of income because it’s overheated. The post-pandemic demand for more skilled data, information technology work, has increased a lot. And that has had relevant effects on wages.”

Claudia Jeronimo — Foto: Silvia Zamboni/Valor

Computer scientist Cláudia Jerônimo, 43, decided to leave her job as a technology infrastructure consultant for a U.S.-based company three years ago to focus on her software development company.

At the beginning of 2019, Gestão Tecc had only Ms. Jerônimo on staff and was grossing about R$3,000 per month. Today the company has four people working on demand and has seen its expenses and gross earnings explode. Today it grosses up to 700% more than three years ago.

The big boost came with Covid-19, she said. “I have had the technology company for more than five years. But in the Covid pandemic, IT services became popular. Apps allowed a lot of people to stay home because there were delivery services. And they also helped a lot of people work remotely or without having to leave home,” she says.

Danilo Amarante — Foto: Silvia Zamboni/Valor

The heating up of the sector made Danilo Amarante, 29, change jobs for better opportunities twice in the last two years. A former employee of the technology sector of a hospital chain until 2020, he joined a magazine publisher in February 2020 to work with IT support earning R$2,000 a month, 20% more than in his old job.

In February this year he was invited to work for a company that provides services for a big tech company. He works in digital marketing, ads, and merchandising, and he doubled his salary.

“I think it all came together. A better salary and also the fact that I work for a giant company, with development and microinformatics. Support is the first step on the ladder. And today I work more with code and processes than with microinformatics,” he said.

In parallel, he has with a partner the applications company Devsampa, which yields from R$500 to R$7,000. “It depends a lot on how much I invest,” he said.

The current expansion of the labor market is marked by an increase in the number of self-employed workers and formal jobs, said Hélio Zylberstajn, with the University of São Paulo.

“What we are seeing is a great boost in the labor market, which is expanding differently of what was seen in the past. We have more formal workers and more business entities, which would be the self-employed ones. There is a sign that formal jobs are growing more than informal one,” he said.

Mr. Assis argues that the advance in employment is seen mostly in the formal segment, which showed the inclusion of 4.9 million people in the September quarter, up 8.8% year-over-year. Informal jobs are up 1.4 million, or 3.8%.

Mr. Zylberstajn warned, however, that this pace has slowed down. “This indicates that the effects of monetary policy may be starting to weigh,” he said. Brazil’s Central Bank has raised its key interest rate to 13.75% per year from 2% in March 2021.

Victor Candido, chief economist at RPS Capital, points out that some sectors are still not feeling the delayed effect of the interest rate hike.

“This recovery in salaries that we have seen has much more to do with the nominal income effect. It is natural that, with high inflation, salaries recover again, the employer seeks an adjustment and this puts pressure on the labor market, which is tighter,” he said.

“This has manifested itself especially in the most heated fields, such as civil construction, retail, and services. These sectors have not yet felt the effect of higher interest rates. There was not any hit yet and there is still pressure on wages,” he said.

Despite the recovery in labor income seen in recent months, Mr. Assis argued that the average usual income remains 1.9% below the level seen in the same quarter of 2019, before the pandemic.

This is because, he said, there are still characteristics such as professional reinsertion via less skilled occupations and shorter working hours, difficulty for the employed to negotiate wage replacements, and return to the labor market for lower pay than before the pandemic.

*By Marsílea Gombata — São Paulo

Source: Valor International

https://valorinternational.globo.com/