With crisis, income of microentrepreneurs falls to value close to the minimum wage
According to a survey we carried out in collaboration with fintech Neon and the venture capital fund Flourish, seven out of ten micro-entrepreneurs are earning below U$ 200 per month in Brazil. Before the coronavirus pandemic, the opposite situation prevailed: eight out of ten professionals earned above that amount and only one had an income below the minimum wage.
Micro-entrepreneurs had to cut expenses, with more than half cutting food consumption to adapt to the new reality. Many reported skipping dinner in lieu of a snack. Particularly hard-hit were workers such as beauticians and owners of grocery stores and snack bars, with over half having to use savings or reduce expenses to cope with the crisis.
“These numbers reveal a tragedy. This is the part of the population that will suffer the most from the effects of the crisis.”– Professor David Kállas
Analysis and commentary reveals that micro-entrepreneurs are one of the most vulnerable categories in Brazil due to lacking the cash reserves and access to credit held by larger companies. Unfortunately, the study revealed that many micro-entrepreneurs perceive public aid as ineffective, with most not feeling supported by the government. Despite this, micro-entrepreneurs represent a large proportion of the Brazilian GDP, having a substantial impact on the country’s economy. The article discusses further solutions adopted by various institutions in Brazil to relieve financial pressure on micro-entrepreneurs.