Agribusiness has rising wages and falling informality

There was no shortage of adversity: recession, truck drivers’ strike, Covid-19 pandemic, crop failure, war in Ukraine. Even so, the formal agribusiness job market – which covers production in the field and in agroindustry – increased and started paying higher wages.

According to a survey carried out by the Center for Agribusiness Studies at Fundação Getulio Vargas (FGV) based on data from the Brazilian Institute of Geography and Statistics (IBGE), the sector created 366.3 thousand formal jobs between the second quarters of 2016 and 2023 , which corresponds to an expansion of almost 7%.

The average monthly salary grew 12.6% in real terms, already discounted for inflation, going from R$1,793.69 to R$2,018.99. It is almost triple the growth in the average salary for all occupations, which increased by just 4.3%.

FGV Agro notes that this trend has resulted in a reduction in the wage gap between agribusiness and the average for all sectors of the economy. In 2016, agribusiness workers received 66% of the national average salary. In 2023, this proportion increased to 71.2%.

“Inside the gate” are the biggest gains in agribusiness

The increase in remuneration in agribusiness was mainly driven by expansion “within the gate”. The average monthly salary in livestock farming had a real growth of 22.3%, reaching R$2,063.66. In agriculture, the correction was even greater, 25.9%, totaling R$ 1,764.22.

On the other hand, the agroindustry did not record an increase in its average monthly remuneration, with a drop exclusively in the food and beverage segment of 6.9% in the period.

However, the non-food products segment, which encompasses agricultural inputs, textile products, forestry products, biofuels and tobacco, saw its average monthly remuneration grow by 1% in real terms in the same period.

Number of informal workers fell 10.3% in seven years

Informality in agribusiness decreased during the period analyzed, with a 10.3% drop in the number of informal workers, resulting in the closure of 924.3 thousand jobs. Employees without a formal contract, employers and self-employed workers without CNPJ and auxiliary family workers are considered informal.

These results indicate that, although the agribusiness job market has shrunk over time in terms of total jobs (3.9% or 558 thousand jobs), the quality of jobs has increased, since formalized workers have labor rights, greater stability and better remuneration. Thus, agribusiness reached its highest number of formal employees and highest formalization rate for a second quarter.

In reality across all sectors, the job market grew 9.1% between the second quarter of 2016 and 2023, driven mainly by the expansion of informal employment (+12.4%). Formal employment (with a formal contract) grew at a smaller rate (+6.7%).

This scenario contributed to a drop in the formalization rate of the Brazilian labor market in the last seven years, going from 58.9% in the second quarter of 2016 to 57.7% in the same period of 2023. Meanwhile, in agribusiness the rate of formalization rose from 37.3% to 41.5%.

Production “inside the gate” feels little turbulence

In relation to agricultural production, it was little affected by moments of turbulence and, even with crop failures throughout the period, it accumulated a growth of 34.1% in grain production between the 2016/17 and 2022/23 cycles, from agreement with the National Supply Company (Conab).

Livestock also performed well, with few negative effects from the Covid-19 pandemic in terms of production. The sector benefited from increased international demand for Brazilian meat, especially due to African swine fever, which hit China. In the last seven years, the gross production value (VBP) of livestock farming increased by 14.6%, highlights the Ministry of Agriculture.

On the other hand, activity “outside the gate” felt more of the impacts of the turbulence recorded between 2016 and 2023. In the second quarter of this year, agro-industrial production was 4.4% below the 2016 level, according to data from the Index of Agroindustrial Production (PIMAgro) of FGV Agro.