More educated Brazilian sees income collapse – 09/03/2023 – Market

The last ten years have been tragic in terms of income and job quality for Brazilians who made an effort to study more, finish high school or enter college. Among the workers, they were the ones who lost the most.

Young people and adults who studied for 12 to 16 years (or more) had a more pronounced loss of income than those with less schooling. There was also an abrupt increase in informality among them, which also affected people who studied for 9 to 11 years.

The conclusion is a survey by the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre-FGV) based on data from the IBGE, from the Continuous National Household Sample Survey (PnadC).

The results reveal an economy that predominantly creates low-quality and low-productivity jobs. This pushes the most educated into jobs that pay less and are increasingly informal —compromising the country’s potential growth.

In general, the advantage, in terms of earnings from work, of those who studied more than 16 years in relation to Brazilians who spent less than a year in school also plummeted.

In 2012, the positive return of education on income in this comparison reached 641%. In the second quarter of this year, the premium was only 353%. Among those with 12 to 15 years of schooling (compared to those with less than one year), the percentage dropped from 193% to 102%.

In the same ten years (2012-2023), the average income of those who studied between 12 and 15 years retreated -11.2%. For those who studied for 16 years or more, the fall was even greater: -16.7%.

“Higher education is giving less return in Brazil; this is very bad news. It is a clear indicator of an economy that is not very dynamic, with companies that are not very active, and with more productive ones that do not grow”, says Fernando Veloso, one of the authors of the work. .

“Since these companies do not evolve due to all the ills we are familiar with —tax system, infrastructure, closed economy—, people reach higher education, but either they don’t have a job or the salary they expected.”

In addition to the generally bad business environment, the researchers claim that the imbalance in public accounts is one of the main factors pushing the most educated people into low-quality jobs.

In the last eight years, the ratio between the country’s gross debt and GDP (the main solvency indicator) jumped 17 points, to 74.1%. Deficit, the federal government needs to pay high interest rates to finance itself, leading companies and consumers to withdraw.

A few days ago, the president of the Central Bank, Roberto Campos Neto, stated that uncertainties about the government’s commitment to fiscal consolidation raised the equilibrium interest rate (capable of keeping prices stable) from 3% to 4.5% per year — which discourages productive investments.

At the beginning of the last decade, the investment rate as a proportion of GDP was 19.3%. Today, it is 17.2%.

“It’s that story of the trained engineer driving Uber. Because creating a job for an engineer requires investments of many thousands of reais. The guy driving Uber costs R$ 2,000 per month at Localiza [onde aluga o veículo]. Thus, he generates his income, which is a sign of lack of dynamism in the economy”, says Fernando de Holanda Barbosa, another of the authors.

This is the case of Fernando Siqueira, 39, from São Paulo, who graduated from a higher education course in Information Technology Management. After graduating in 2019, he started to work formally in a company in the area that paid R$ 2,100 a month.

Afterwards, it went to a third party, receiving BRL 3,400. Finally, this year, he decided to leave the sector and migrate to Uber, earning BRL 6,000 net per month (with one day off in the week and one Sunday every other weekend).

“I have other friends with higher education in the same situation,” he says.

Siqueira is an exception. Despite having fallen into informality, it managed to increase its income in the last ten years. On average, according to Ibre-FGV, the income of workers (formal and informal) with 16 years or more of study fell, between 2012 and 2023, from R$7,211 to R$6,008, in values ​​corrected for inflation.

In this same upper level of education, informality doubled between 2015 (beginning of the crisis generated at the end of the Dilma Rousseff government) and 2023: it went from 1.9 million workers to 4.1 million. Informal workers in relation to the total number of people employed with this level of education increased from 14% to 19.5% (+5.5 percentage points)

For those with 12 to 15 years of study, the average income (formal and informal) also dropped from 2012 to 2023, from R$2,630 to R$2,336. The total number of informal workers in this range rose from 10 million to 14.9 million. Among them, the informality rate jumped 6.6 points, from 27% to 33.6%.

From 2012 to 2023, income from work only increased for the least educated. Among those who did not complete a year of study, earnings rose 27.5%. For them, there was a slight drop in the informality rate, from 75.2% to 72.5%.

Most of the gain in this segment, however, occurred from the beginning of 2020, with the arrival of the pandemic. One of the explanations is that, with social isolation, there was an appreciation of less qualified labor willing to work in that period.

A mitigating factor in these conclusions, according to the team of researchers (which includes Janaína Feijó and Paulo Peruchetti) is that the proportion of the employed population with more than 12 years of study increased from 49.8% to 66.5% from 2012 to 2023, making become less scarce. This would increase competition among the more educated, lowering wages.

“But even with the increase in supply [de pessoas mais educadas]the return to education in the job market shouldn’t be dropping by this magnitude”, says Veloso.

On Thursday (31), the IBGE announced that the average unemployment rate in the quarter ended in July fell to 7.9%, the lowest since the equivalent quarter in 2014 (7%). On Friday (1st), after the higher-than-expected GDP result for the second quarter (+0.9% compared to the previous quarter), consultants began to estimate growth this year at 3%, with more jobs.

“People look at the job market and think it’s booming. But we still haven’t reached pre-pandemic incomes. We’re generating bad jobs, which pay little. more protected”, says Veloso.