2008 July 03 Thursday
Brazil Hits Skilled Labor Shortages

Natural resource riches have driven Brazil's economy to a level that hits limits in its labor force.

After years of boom and bust, the administration of President Luiz Inácio Lula da Silva is projecting a period of sustained growth, with the gross domestic product increasing 5 percent a year, from now to 2010, and about 3 and 4 percent annually for the decade after.

But many companies and economists, including some inside the government, say the dearth of highly skilled labor, particularly engineers and tradesmen, will jeopardize those goals, and Brazil’s economic and political rise.

“The lack of availability of technical ability may be a constraint on growth, no doubt about it,” José Sergio Gabrielli, president of Petrobras, the state-run oil company, said in an interview. “It is a big challenge for the country.”

The engineering shortage here is spreading across industries. The lack of civil and construction engineers threatens infrastructure projects; areas like banking, aircraft manufacture, petrochemicals and metals are all competing for the same top graduates. In the booming oil and gas industries, companies are turning to foreign labor because there are not enough qualified Brazilians to go around.

Brazil is doing well in large part because of excellent agricultural land, lots of oil, and lots of other natural resources. Much like the resource rich Persian Gulf countries Brazil ends up pulling in skilled workers from abroad. But its ability to pull in engineers and scientists is limited by its national language of Portuguese. Outside of Brazil only Portugal with 10.7 million people shares the same national language.

Brazil could still try to bring in foreign engineers who speak English. Lots of European corporations use English for a substantial portion of their internal communications. A greater embrace of English by their managers and engineers would let them use more highly skilled foreign workers. Anyone have a sense of what fraction of the Brazilian engineers and large corporation managers are fluent in English?

The average level of education in Brazil is very low.

The average Brazilian worker has six years of schooling, compared with 10 years in South Korea, 11 in Japan and 12 in the United States and Europe, according to the National Confederation of Industry study.

Of the few Brazilians who go to a university, fewer than one in five take engineering, science, mathematic or computing, according to a recent World Bank study on the links between education and economic growth.

Brazil has an average IQ of 87 versus 105 for Japan, 106 for South Korea, and 98 for the United States. So these results are not surprising.

Lots of skilled American farmers are setting up farms in Brazil and American capital is flowing into the Brazilian agricultural sector. These farmers can hire foremen who speak both English and Portuguese who can manage manual laborers. American farmers in Brazil operate huge farms.

The gains, though always uncertain, come from both operating income and appreciating land values. John and Kelly Carroll also considered Brazilian farming a good bet. "We put every penny we had into it," says John, 27. A couple from west-central Illinois, they graduated from college in 2003, got married, and honeymooned 10 days later in Brazil.

John's 5,000-acre family farm in Illinois raises corn, soy, and hogs. Here, in the northeastern Brazilian state of Bahia, he mostly grows cotton and operates a cotton gin. Along with other investors, he's running 20,000 acres with 100 full-time employees—a distinctly bigger operation than typically seen in the Midwest.

I wonder how many white farmers from Zimbabwe have made it to Brazil and started farming there.

Share |      By Randall Parker at 2008 July 03 12:36 PM  Economics Labor


Comments
kurt9 said at July 3, 2008 4:37 PM:

I have read articles from various sources about American farmers making it big in Brazil. Most of them are growing soy beans and other products for export to Chinese markets. However, these reports leave me with several questions. One, why aren't there more Brazilian entrepreneurial farmers involved with this? Why would they need Americans and other foreigners to pursue these opportunities in Brazil's agricultural industry? The second issue is whether Brazilian people will come to envy and resent the successful American farmers in their country.

The same thing is occurring in Mexico, where American entrepreneurial farmers are running farms in Mexico. Again, the questions is where are the Mexican entrepreneurial farmers? What exactly in both Brazil and Mexico is preventing their local people from pursuing these opportunities?

There is something in these scenarios that does not add up for me.

Randall Parker said at July 3, 2008 5:01 PM:

Kurt,

You certainly know enough to figure it out. Markets do not give people innate attributes. Markets only allow people to use their innate attributes.

There are also big Brazilian farm operators btw. Also, a Brazilian research institute developed the soy strain that can grow well in Brazil. There are some smart people in Brazil. But look at the distribution.

Dragon Horse said at July 3, 2008 5:30 PM:

Actually Angola, Brazil, Cape Verde, Guinea-Bissau, Portugal, São Tomé and Príncipe, Macau, and Mozambique all have Portuguese as a national language. Surprisingly, some wealthy Angolan oil folks have been buying up stuff in Brazil...recently. Well maybe not surprising...wealthy Africans always invest outside of Africa. The new oil wealth in Angola is being siphoned off by the elites and spent in Europe and Latin America.

I agree with the central thought though...not a lot of "talent" in the greater Lusophone world. A lot of educated Portuguese can also speak Spanish though, and I don't know how long it would take a native Spanish speaker fairly fluent to learn Portuguese, I would imagine with intensive study, not more than a year. I had some friends as an undergrad, one was Mexican and the other Brazilian. The Brazilian could understand about 75% of what the Mexican said, but it didn't seem to work the other way around.


Wolf-Dog said at July 3, 2008 6:50 PM:

Right now there is an emerging new shortage of skilled immigrants in the United States because the new growth in developing countries, which apparently include not only China and India which used to send us skilled immigrants, but apparently raw materials producing countries (not including Australia and Canada) which are less industrialized.

This means that in addition to not having enough skilled immigrants in the United States, we might even face a brain drain away from the United States. Previously, the brain drain was in the direction of the United States, not away from it.

This implies that unless there is a major national program to remedy this situation by means of better education, the U.S. is doomed.

Big John Fallus said at July 4, 2008 4:23 AM:

I'm mighty surprised that Brazil is 'short of workers', since it has suffered from unemployment on an epic scale for decades - due to a Malthusian crisis in which poplation growth touched 3% per annum in the 1960s.
London is full of Brazilian prostitutes and 'strip-tease artistes'. Generally they are exceedingly good at what they do (much better than indigenous women), it would be a shame to see them go.

Bob said at July 4, 2008 5:48 AM:

Bahia, in tropical northern Brazil, has the highest % of Africans in Brazil. So some white American farmers in their mid-20's have 200 blacks working their cotton farm. That's interesting...

An educated Spanish speaker can read with about 80-90% comprehension written Portuguese, but would still need to take classes to understand and speak the spoken language. At my university they had a class "Portuguese for Spanish Speakers" which went 3 times faster than the normal Portuguese class. So the answer is faster, but still requiring a substantial investment of time.

Greg said at July 4, 2008 9:47 AM:

IQ is not a good predictor of performance according to this:
http://www.vistage.com/featured/iq-vs-eq.html

I have not much doubt that innate abilities are inherited, however.

Randall Parker said at July 4, 2008 10:47 AM:

Greg,

But the example they cited for Emotional Intelligence involved a bunch of engineers. Sure, if you take a group of people with similar IQs and compare their performance you will need some other measure aside from IQ to explain the difference in their performance. Do other brain characteristics matter? Of course. But you can't turn 100 IQ people into first rate engineers. The person first needs to have 120+ IQ to even play in the game. Then other attributes weigh in.

Big John Fallus,

Brazil isn't short of workers overall. Brazil is short of skilled workers.

jimmy said at March 5, 2010 4:28 AM:

By constitutional determination regarding the educational system, the aforementioned legislation still applies as long as it does not go against the Constitution. This ambiguity is a consequence of the absence of a new Bases and Guidelines Law and characterizes a transition phase until the new law is finally elaborated and enacted. The bill has already been submitted to congress.

jagpy said at May 28, 2010 4:15 AM:

I think Indians would be looking towards brazil as they have enough skilled labour and our tradinally very close to farming what matters is the land pricing and the policy of the government vis a vis land ownership/lease modeletc.


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