Rico earns 39 times the salary of the poorest in metropolitan regions, says study

Inequality in labor income in Brazilian metropolitan regions reached record levels in 2020 and had not recovered when, at the end of last year, the government stopped the payment of emergency aid to the poorest workers.

According to the third edition of the newsletter Inequality in the Metropolises, the income of the richest 10% represented 39 times the gain of the poorest 40%, considering the average for the four quarters of 2020. A year earlier, this difference was 29 times.

The study was developed by PUC-RS, the Observatório das Metrópoles and RedODSAL (Observatory of Social Debt in Latin America). Data from PNAD Continuous (National Survey by Continuous Household Sample), from IBGE, whose series begins in 2012, are used.

The survey considers the income from work. It does not include emergency benefits, such as the aid that was paid last year from May to December. The division of income between the richest 10% and the poorest 40% to measure inequality is known internationally as the Palma Index.

The widening gap from 2019 to 2020 is explained by a larger drop in earnings for those with lower earnings. Among the wealthiest, the decline was less.

Considering only the average of the last quarter of each year, labor income for the poorest decreased 34.2%, from R $ 237.18 per month at the end of 2019 to R $ 155.95 in the last three months of 2020.

Among the richest 10%, the decline was 6.9%, to R $ 6,356. For the intermediate group, which represents 50% of the population, it fell 8.6%, to R $ 1,195.

The biggest differences in earnings between the richest and the poorest were found in the metropolitan regions of João Pessoa (88.3 times) and Rio de Janeiro (59.7). Rio has historically shown levels of inequality similar to those of the North and Northeast states, the poorest in the country.

In the metropolitan region of São Paulo, it was just above the average (40.2 times). The smallest differences are in the regions of Curitiba and Goiânia, both 23.2 times.

The researchers also calculated the Gini index in metropolitan regions. The indicator that measures labor income inequality reached a record high of 0.631 in the last quarter of 2020, according to the four-quarter moving average. A year earlier, it was at 0.609. The higher the value, the greater the inequality.

According to the researchers, rates above 0.5 (on a scale of 0 to 1) are already considered quite high. Brazil, historically, has one of the highest indexes on the planet and no metropolitan region of the country is below half the scale.

Considering the Gini for the quarter only, the record was reached in the July-September period (0.644), with a slight decrease in the last three months of the year (0.631). The improvement is attributed by the researchers to the seasonality of the job market, with more vacancies available at the end of the year parties, the increase in the demand for jobs and the temporary cooling of the pandemic in the period.

Marcelo Ribeiro, a researcher at the Observatório das Metrópoles and one of the study’s coordinators, says that the return of income inequality to lower levels will depend on a recovery of the economy that results in the improvement of the labor market, especially for those who were most affected. by the crisis, as informal workers, in low-paid occupations and with restrictions on remote work.

He states that, even if the situation in the metropolitan regions returns to pre-crisis levels, it will be to a level of inequality well above that which was verified until the recession of 2014-2016.

“The prospect of a resumption of economic growth in the post-pandemic would contribute to the reduction of inequality, but it would contribute to maintaining inequality at a high level, as has always been a characteristic of our society”, says Ribeiro.

Andre Salata, professor of Social Sciences at PUC-RS and one of the coordinators of the study, says that the emergency aid was relevant to compensate for the losses in the labor market recorded last year and that the resumption of payments, even in smaller amounts, can improve social indicators.

He recalls that the government bet that the aid would no longer be necessary in the face of a recovery of income from work from 2021, something that was not confirmed.

“At the end of 2020, the income of the poorest had not recovered, it was much lower than at the end of the previous year, and it was at that moment that the federal government decided to stop the payment of emergency aid,” he says.

“When you have the aid interruption, in the beginning of 2021, you immediately have an increase in poverty, because these people are no longer counting on that compensation.”

The study also includes a section dedicated to the issue of inequality of opportunity. According to the study, among the poorest 40%, 8.8% of people aged primary school and 26.9% of those aged high school had years of schooling below expectations. In the richest 10%, these figures were 2.7% and 4.4%, respectively.

In the stratum of the poorest, 16.8% of young people between 18 and 24 years old had entered higher education in the average of the last four quarters. Among the wealthiest, they were 66.4%.

According to the researchers, the data still does not capture the teaching problems generated by the pandemic, since, from a formal point of view, enrollment numbers have not changed significantly in the past year.


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