Income for self-employed workers is growing faster than that of workers with formal employment contracts.

While Zeca Pagodinho says he wants to become a CLT employee (formal employment contract), in real life many workers are migrating to self-employment or informal work. Despite the publicity featuring the pagode singer, research shows that the income of workers with formal employment contracts has grown at a lower rate compared to those without formal registration.

According to Ipea, in the second quarter of 2025, the income of self-employed workers grew by 5.6% compared to the same period in 2024. Among those operating informally, without any type of registration, the growth was even greater, at 6.8%. Meanwhile, those with formal employment contracts (CLT) saw a 2.3% increase in their earnings.

Although the average income of formal workers (R$ 3,171) remains higher than that of self-employed workers (R$ 2,955) and informal workers (R$ 2,213), in the second quarter of this year the earnings of those without formal contracts reached the highest level since the beginning of the historical series in 2012.

Ipea researcher Sandro Sacchet de Carvalho believes that one of the factors explaining the income growth in this segment is the end of the pandemic, since during periods of isolation the self-employed and informal workers were the most affected and lost the most income.

He explains that, for CLT (Consolidation of Labor Laws) workers, there are a series of rules to be followed in case of dismissal. Thus, during the pandemic, the largest number of job losses occurred among the self-employed and informal workers, which do not entail costs or losses for employers.

According to Humberto Aillon, a specialist at Fipecafi, the increase in income among workers without formal employment contracts should persist for a longer period and consolidate as a new reality in Brazil, as several sectors of the economy, especially those that have shown high rates of allocation and hiring, opt for models that bring greater tax efficiency and lower labor costs.

Formal employment implies a higher tax burden.

The president of the Brazilian Institute of Planning and Taxation (IBPT), João Eloi Olenike, believes that the difference in income growth is due to the flexibility of self-employed and informal workers, in contrast to the rigidity of formal workers, aggravated by the tax burden that weighs on companies that opt ​​for the CLT (Consolidation of Labor Laws) regime.

“The high tax burden [32.3% of GDP in 2024, according to the Treasury] impacts companies, indirectly contributing to slower growth in formal employment income,” he points out. The high tax burden reduces the capacity for salary adjustments, especially in a scenario of high interest rates.

Olenike explains that, under the CLT regime, companies bear the costs such as FGTS (8%), employer's INSS (20%) and social security contributions, which represent 40% to 50% of the total cost of a salary (CNI, 2025).

"Pejotização" (a form of disguised employment) drives income growth for self-employed workers.

One of the strategies employers are using to circumvent the tax burden is the so-called "pejotização" (a practice where employers hire individuals as independent contractors rather than employees). Sandro Sacchet, from Ipea, comments that this practice gained momentum with the creation of the Individual Microentrepreneur (MEI) regime.

According to the researcher, professionals who adopt the MEI (Individual Microentrepreneur) status tend to be more qualified and, therefore, have a higher income, raising the average income of self-employed individuals. "They continue working with a company, but discreetly the company asks them to become an MEI. So, they end up being classified as self-employed when, in fact, they should be a worker with a formal employment contract," he explains.

Contract workers generate fewer labor costs.

For employers, the solution is attractive because, in practice, hiring a "permanent" self-employed individual (MEI) maintains a worker with hours and obligations similar to those of a CLT employee (employee under the CLT labor law). With a proportionally higher salary, but without the labor costs, it ends up being cheaper to hire them.

According to Aillon, from Fipecafi, this savings can be reinvested in new projects, whether in technology or labor, which positively impacts the economy. One of the sectors that is intensive in this type of labor is the technology sector, which seeks to maintain competitiveness.

Self-employed workers are attracted by flexibility and higher income.

Workers who choose to be self-employed or work informally may be attracted by the flexibility and higher income. However, even if the salary is higher and, in the short term, there is an increase in purchasing power, without proper planning, the long-term consequences can be costly.

Sacchet believes that, in cases like this, the worker fails to receive the 13th-month salary, vacation bonus, and other benefits under the CLT (Brazilian labor law), in addition to contributions to the INSS (Brazilian social security system), which could harm them later on.

However, self-employed individuals who are registered as MEI (Individual Microentrepreneur) have some protection – such as social security benefits, since they contribute to the INSS (Brazilian National Institute of Social Security).

Lighthouse effect: minimum wage increase boosts income growth.

Another factor that may explain the greater income growth of self-employed and informal workers is the annual adjustment of the minimum wage. Fernando de Holanda Barbosa, a researcher in the area of ​​Applied Economics at FGV Ibre, explains that, even for the self-employed and informal workers, there is a signaling effect from the minimum wage.

"In the past, it was called the 'lighthouse effect,' indicating that the labor market is directly affected by the value of the minimum wage, which is a fact," he said.

Sandro Sacchet, from Ipea, also points out that, often, self-employed workers end up basing their remuneration requests on the formal market and the minimum wage, being half, double, or a percentage of that amount.

Other factors that may justify the increase in income for self-employed and informal workers.

Migration from one sector to another may also explain the greater increase for non-formal workers. Self-employed workers tend to move from a sector that paid less to one that pays more.

One of the reasons for this phenomenon is the change in age group. "One possibility is that there are fewer young people in the labor market than before, which causes an increase in real income, because younger workers earn less," explains Holanda, from FGV Ibre.

According to the researcher, even considering all these hypotheses, one factor remains certain: educational level directly influences income. Although, in general terms, the salary level for different educational brackets has not risen significantly in Brazil, an increase in the average schooling of workers can lead to an increase in income.

The job market is in transition.

The Netherlands indicates that the entry of transportation, delivery, and other service platforms, such as design and translation, has led to a transition in the labor market. Again, the main interest on the part of the worker is the flexibility that the model allows.

"The platforms bring an intrinsic benefit, since the person can control their own schedule and working hours. It is possible that this perception of flexibility will stimulate greater growth in these sectors," he assesses.

Data from IBGE shows that, between 2022 and 2024, the number of app-based workers grew by 25.4%, from 1.3 million to 1.7 million registered individuals.

App-based work represents 1.9% of the workforce in Brazil.

The increase meant that, in the third quarter of last year, workers on digital platforms and those providing services via apps accounted for 1.9% of the workforce in Brazil.

The IBGE study, resulting from an agreement with the University of Campinas and the Labor Public Prosecutor's Office (MPT), is still in the experimental phase and considers data from the Continuous National Household Sample Survey (PNAD Contínua).

"Platform workers": total income is higher, but hourly earnings are lower.

According to IBGE data, in the third quarter of 2024, the average income of workers registered on platforms was R$ 2,996, 4.2% higher than those who do not operate through platforms (R$ 2,875).

However, those who work on platforms work, on average, more hours per week — 44.8 hours, compared to 39.3 hours for those who do not work on platforms. This difference means that the average hourly income of platform workers is lower than that of those who do not work on platforms: R$ 15.4 compared to R$ 16.8.

Without reforms, informality could become the "new formality".

According to João Olenike of IBPT, formal employment is currently experiencing a downturn in terms of earnings, but it offers security to workers who, on the other hand, can seek higher incomes and flexibility.

"For companies, the data indicates hybrid hiring; for individuals, it encourages self-employment with planning. Ipea emphasizes the need for tax breaks to balance things out, but without reforms, informality could become the 'new normal'," he explains.