Pandemic already affects work of 53.5% of families, FGV IBRE finds 

Special question in business and consumer surveys analyzed how COVID-19 has already affected Brazilians’ lives
Economics
21 May 2020
Pandemic already affects work of 53.5% of families, FGV IBRE finds 

Most Brazilian families are experiencing the pandemic’s effects in their everyday lives. According to a new survey by Fundação Getulio Vargas’ Brazilian Institute of Economics (FGV IBRE), 53.5% of 1,300 interviewed consumers said their family has experienced some kind of impact on their work – and nearly half of them (43.9%) have been prevented from working because of social distancing measures. Families on low incomes (receiving up to R$2,100 a month) are the worst hit: 20.6% of them have been affected.

Another 24.9% have had their salaries and work hours reduced, 14.7% said that at least one member of their family has had their employment contract suspended, and 12.7% said that one family member has been laid off. These results explain the drop in consumption recorded in FGV IBRE’s surveys since the beginning of April. In the latest survey, 78.3% of consumers said they were only buying essential goods and services, down slightly from 79.1% in April. In this area, the poorest families are also suffering the most: 89% of them said they are only buying essential products.

“More than half of the interviewed consumers said their family’s income has been affected. As a result, many of them are running down their savings to pay for everyday expenses and taking on debt, thereby increasing their level of financial stress. This particularly applies to low-income households, which have much smaller savings, or none at all. Heightened uncertainty and concerns about the coming months are causing consumption to be postponed, but it is unlikely to recover immediately, even after the loosening of lockdown measures, as reduced income during the pandemic will naturally lead to higher default levels among consumers,” said Viviane Seda Bittencourt, FGV IBRE’s survey coordinator.

Companies are adapting

The survey also consulted 2,528 companies in order to understand how they have been adapting to the new social distancing phase, among other things. In all sectors except commerce, most companies said they have partially or fully adopted telecommuting as one strategy to tackle the crisis. Working from home has been adopted by 80.4% of manufacturers, 68.6% of service provider firms and 59.6% of construction companies. In commerce, just 26.6% of companies are using this tool.

The services sector – the area of the economy hardest hit by the pandemic, unlike in previous crises – has the highest proportions of companies that have given early vacations to their workers (65%), cut salaries and working hours (46.4%), and laid off employees (45.8%). Also noteworthy is the high percentage of companies that report suspending employment contracts (42.3%) – the highest proportion out of all sectors, according to the answers to the special questions in May’s preliminary surveys.

Commerce has the highest percentage of companies that have not adopted any of these measures (21.9%) – partly due to the relative resilience of the “Hypermarkets and Supermarkets” (30.3%) and “Other Retailers” (28.9%) segments.

Still analyzing the services sector, in which 45.8% of companies have shed staff, the most affected segments were “Food Services” (64.7%), “Road Transport” (57.5%) and “Accommodations Services” (57.1%). In other sectors, however, some segments have seen even higher proportions of companies that have reduced their staff numbers. This is the case with the “Leather and Footwear” segment in the manufacturing sector (68.3%), and the “Non-Residential” segment in the construction sector (61.9%).

“Since April, the services sector has shown clear indications of the pandemic’s impacts on it. Our survey indicates that this is the sector with the highest proportion of companies that have taken measures related to their workers to try to survive the crisis, such as layoffs, employment contract suspension and reductions in salaries and work hours. Segments that provide services to families are suffering a lot. They only expect to see a recovery in 2021, and this sets off warning bells, given that this will have a major impact on GDP this year,” Bittencourt explained.

The survey’s data was collected between May 2 and 13. To see the complete study, click here.