Brazil's Brain Strain: Will a Skills Shortage Dampen Growth?

This past February, Brazil's Labor Ministry reported that local companies hired 280,799 workers. That was an all-time high, beating the previous record set a year earlier by 34%. Meanwhile, unemployment in the country, having hit an all-time low of 5.3% last year, is still only hovering around 6%. In sharp contrast to so many other economies around the world, it's a job hunter's market in Brazil. For now, that seems like a nice problem to have, but experts wonder whether corporate growth plans will be hindered if supply continues to lag demand.
"It's hard to say if Brazil will have the labor force it needs in the future," says Rafael Pereira, an analyst at the government's Institute for Applied Economic Research, or IPEA. "We have the numbers. It's the quality that is becoming the problem, and a lot of that is going to depend on a company's willingness to train new talent."
In a new report, the IPEA says that if Brazil's economy grows an average of 3.5% over the next 10 years, as it has between 2000 and 2010, the supply and demand curve for skilled labor will be relatively stable, despite an on-going skills deficit in a handful of sectors, such as financial services and engineering. But if it grows more than 4%, Brazil's future might look less rosy.
Even without a worst-case scenario, the impact of the skills shortage is noticeable. One byproduct is migration, with workers moving from the southern half of the country to the faster-growing regions in the north as they seek more -- and better paying -- opportunities.
Immigration, too, is changing. According to the Labor Ministry, the number of authorized foreign workers rose 30% in 2010, to 50,000. The majority came from the U.S., the U.K., Germany and the Philippines. Paulo Sergio Almeida of the Labor Ministry's foreign labor department says many immigrant workers were needed for the offshore oil and gas sector -- about 15,200 of the total. "The increase also accounts for the expansion of Brazil's industrial parks and the modernization of industry, [which] has required us to purchase equipment and technology overseas that demands specialized training and supervision," Almeida says.

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