Brazilians earning less and becoming more dependent on welfare

Brazilians earning less and becoming more dependent on welfare
Illustration: Overearth/Shutterstock

The average income of Brazilian workers dropped 3.4 percent between 2019 and 2020 as a result of the pandemic crisis. It was the biggest year-on-year drop ever recorded since the Brazilian Institute of Geography and Statistics (IBGE) began measurements in 2012.

The average income from all revenue sources sits at BRL 2,292 (USD 411) per month. Per IBGE, the rise of unemployment and the economic impacts of Covid restrictions severely impacted the services sector — Brazil’s biggest employer. “Many of the country’s labor-intensive segments ground to a halt during the pandemic,” said IBGE analyst Alessandra Scalioni.

The only source of income not to be negatively affected by the pandemic concerns welfare payments, such as the coronavirus emergency salary program created in April 2020, which paid BRL 600 per vulnerable worker until September 2020, after which stipends were halved.

Indeed, one in four Brazilian households received welfare benefits last year. Excluding families which were already a part of the Bolsa Família cash-transfer scheme, households depending on government aid skyrocketed from 0.3 percent in 2019 to 23 percent a year later.

Another indication of the sheer economic impact of the pandemic is that the distance between the poorest 50 percent of Brazilians and the top 1 percent has narrowed slightly. The richest people in the country earn an average of BRL 15,816 a month — almost 16 times the minimum wage, and 35 times the income of the bottom 50 percent. 

Before the pandemic, the gulf was 40 times.