AT THE AGE OF 20, JORGE MENEGASSI, FROM RIO GRANDE DO SUL, STARTED AS AN INTERN at the Brazilian subsidiary of Ernst & Young, one of the largest auditing and accounting firms in the world. It was 1977, and he was adamant about following the script his generation cherished: have career at a large company. Today, Menegassi is president of Ernst & Young in Brazil. Circumstances would have it that one of his most arduous tasks is to find youths with the same ambition he had and to structure a team capable of making good use of the economy's good moment. Because he runs a service provider, Menegassi needs many people – and well-qualified people. Ernst & Young, with a total staff of 3 850 employees, currently has 200 openings. Of the 700 interns hired last year, 30% migrated to other companies just a few months after selection. They are in the sights not only of competitors but also the 200 companies that plan on holding IPOs in Brazil and need to set up their financial sectors with professionals qualified in accounting, economics and administration.
Disputed qualification
Luciana Pires, 33, Atlântico Sul Shipyard, Pernambuco
Luciana from Pernambuco has a technical course in mechanics, college of engineering and fluent English. This much in demand, but rare profile enabled her to work at local Votorantim, Bunge and Alcoa units, leaving the latter to accept a position at Atlântico Sul Shipyard with a 50% raise. She is proud to be of a generation of northeasterners who did not need to abandon her homeland in search of better life in the southeast.
“We are fighting a veritable war for professionals, and this situation is only going to get worse," says Menegassi. “We are going to need to live with this new reality. It is useless to fight against it.” Every year, Brazilian executives at Ernst & Young know they will need to attract and train nearly 1 000 new employees in in their corporate university. And they also know they will inevitably lose a great many of them. This sort of situation is the rule in Brazil today. People are one of the main bottlenecks for economic and company growth. Today, the country has 92 million employed people, the largest contingent in its history. This total represents more than 90% of the population with both the age and conditions to work. The unemployment rate reached 5.3% in December in the six major metropolitan regions. That is the lowest level since the survey began to be conducted by the Brazilian Institute of Geography and Statistics in 2002 – and the average for the year, 6.7%, was also a record. That is good news, a sign of the many advances the Brazilian economy has made in recent years. More employment means more people with income and credit to consume and make the wheels of the economy spin. However, recently, the country began to realize that good news in the job market also imposes complex challenges. The first is precisely the shortage of people ready to fill those positions companies are creating. According to a projection made by Itaú Unibanco economists at EXAME’s request, if the country maintains an average growth rate of 4.6% per year until 2015, it will need another 8 million people – equal to the entire population of Austria – educated and qualified to assume increasingly more sophisticated functions. By coincidence, today Brazil has about 8 million unemployed. The solution for the shortage of professionals will certainly not come from this group. Those 8 million Brazilians without jobs were placed outside the market due to a total lack of qualification. They are the damned inheritance of an almost always inept and inefficient educational system.
When a country is unable to cover its demand for labor, the very perspective of growth is put in check. The mechanism works as follows: very low unemployment empowers workers to ask for raises. Higher salaries pressure company costs, and the latter react by raising prices and generating inflation. The government thus finds itself in face of the option to cool off the economy or to accept higher inflation – and good sense says the first option should be chosen. Salaries are currently one of the items exerting most pressure on inflation. Salary readjustments for household employees, a cost that is included in the IPCA (Broad-based Consumer Price Index), the official inflation index, have been higher than the IPCA for the past five years. The government contributed towards this by granting expressive real increases to the minimum wage. Nevertheless, labor unions continue obtaining readjustments above inflation. Last year, nearly 90% of the 700 negotiations between employers and employees resulted in real gains. Recently, nearly 80 000 workers crossed their arms at Growth Acceleration Program works, demanding pay raises ( ). Since 1973, labor costs had not represented a source of inflationary pressure in Brazil. “We run the risk of entering a spiral of price increases,” says Aurélio Bicalho, economist at Itaú Unibanco. “This is a decisive year for containing inflation, and the only way to do so is by slowing growth.
In theory, there would be a better alternative. In any economy, salaries can rise in a sustained manner if they are accompanied by an increase in productivity. Productivity, a measure of value generated annually by the worker, depends on several factors: application of technology, operations management, level of innovation and the worker’s educational attainment. “No country can sustain robust and consistent growth if it does not invest in productivity,” says economist Laurence Ball, professor at John Hopkins University in the United States and a scholar of the productivity and growth ratio. Statistics show just far behind Brazil really is. From 2000 to 2008, South Korea’s productivity index grew on average 7.4% per year. China’s, 5.2%, the United States, 4.6%, and Argentina’s, 3%. Meanwhile, Brazilian productivity grew a mere 0.9% per year. The pace is slow mainly because education at our schools has lost quality. This makes most of the newly-graduated enter the job market with deficiencies that cannot always be corrected with qualification courses. Not to mention that the companies are absorbing people without any educational foundation due to a lack of options. “It is not easy to train,” says José Márcio Camargo, professor at Pontifícia Universidade Católica of Rio de Janeiro. “You can teach a bricklayer to place one brick on the other, but if cannot read, do simple math, measure, and cannot talk with the engineer, his job will be performed in a slow and wasteful manner.
That means a product will cost more and take longer to be finished in Brazil. That is what is happening at the Atlântico Sul Shipyard, in the Port of Suape, Pernambuco. Since it was founded in 2005, the shipyard has been running after guaranteeing the offer of naval industry professionals in a region without any tradition in the activity. Over the past four months, it kicked off a search operation in seven states to fill 1200 openings for skilled workers. Two thousand résumés were evaluated. Many are from people who have never worked in an industry before. The Atlântico Sul’s production line includes former fishermen, former sales reps and even former maids. Training people in the region was viewed as a practical solution and a social recovery, celebrated by the government. But it is a sinuous process. The shipyard needs to deliver 22 oil tankers, seven drill ships and one platform hull by 2018. The first oil tanker was pre-launched in May of last year at a ceremony with the presence of then President Luiz Inácio Lula da Silva. Final deliver was supposed to take place in September, but it was postponed until May of this year, and then deferred again to the second semester. If the timetable sticks, delivery will take place three years after the beginning of construction. In South Korea and in Singapore, oil tankers are built in no more than nine months. Part of the delay is attributed to the team’s lack of experience. In February, Ângelo Bellelis, president of the shipyard since 2008, affirmed that the delay was part of the "learning curve" to build that type of embarkation for the first time. After a few days, Bellelis resigned claiming he was going to assume “new challenges”. The fact is, his declarations were poorly received by clients – including Petrobras – which demanded results and greater agility.
Imported specialist
Albert Paardekam, 50, Shell, Rio de Janeiro
With a shortage of skilled labor, the oil and gas industry has resorted to importing professionals to meet the demand for specialists. Paardekam from Holland left a position in Norway and refused another in the Middle East to work in the Campos Basin in Rio de Janeiro, because he found the technical challenges in extracting oil from Brazilian reserves exciting.
Economic theory has a name for the new dynamic recorded in Brazil – full employment. It is the stage at which the unemployment rate falls to very low levels and practically every qualified person is employed. There is no number that precisely marks when this will occur. Due to the large number of still existing unemployed persons, there is no consensus among specialists whether is or is not, after all, at full employment, Those who say yes take into account the difficulties encountered to fill openings. “Just look at what is going on: we are seeing shortages of nannies, bricklayers, welders, technicians, engineers, and the routine of people and companies is already being affected by this shortage of people,” says Luiz Carlos Mendonça de Barros, partner at Quest Investimentos. “We are experiencing full employment – with its benefits and problems.”
CLASS C’s BRAZIL
The positive side of full employment helped put Brazil among the most attractive emerging economies at the moment. The exuberance of the job market contributed towards the ascension of class C and the formation of a new middle class, the reduction in inequities and the increase in consumption, which attracts companies and investors to the country. The last time employment and income grew with such strength was in the 1970s, during the so-called economic miracle.. For economist Marcelo Neri, head of the Center for Social Policies at the Getulio Vargas Foundation, despite the similarities, the current moment is much more representative. “Now, there is income distribution, which did not happen in the 1970s," says Neri. Since 2003, income of the poorest 20% has grown practically twofold more than the richest 20%. This cycle was a sort of redemption for people like Juscilene dos Santos. She migrated from Piauí to São Paulo at the beginning of the 1990s. She had not completed elementary school so she remained unemployed for years, working odd jobs. In 2005, at the age of 38, she found the chance to turn things around. We got a job with signed working papers at cleaning service provider and she finished her studies through the free courses offered by Seac, the union for sector companies. Juscilene took the National High School Exam last year, earned a scholarship, took the college board exams, and today, at the age of 41, she is studying her first semester in safety management at Unip. It is a technical program that offers a two-year degree. “I still need the cleaning job, but life is better,” says Juscilene. "And it is going to get even better still."
Outside the market
Cristlane Silva Campos, 22, unemployed, Bahia
Brazil has more than 8 unemployed. Most are young like Cristlane, who lives in Salvador, a city with one of the highest unemployment rates in the country. Over the last year and a half, she has handed out more than 100 résumés in vain. In her own assessment, she lacks education. She finished high school, but she always gets beat out by candidates with technical or college degrees.
Her case shows that the shortage of professionals has generated new opportunities for the education sector. With a focus on the job market, shorter durations and a curricular grid geared towards practical learning, technology courses (or associate degrees) have grown by leaps and bounds in recent years. Total enrollments have gone from less than 70 000 in 2001 to more than 680 000 in 2009 – and these technology programs are already responsible for 11% of total undergraduate enrollments. “The education of these technology graduates is as qualified as that of the Bachelor Degree students, just more specific,” says Arthur Sperandéo de Macedo, vice-dean of the United Metropolitan Colleges of São Paulo. In the United States, short-duration college course are called associate degrees, and they correspond to an even greater percentage of the students. According to the United States Department of Education, in 2008, undergraduate students in traditional programs totaled 1.6 million Americans.
Quick ascension
Diego Freira Costa, 23, BRQ Solutions, São Paulo
Representative of the Y generation, Costa set up a company that develops websites at the age of 18. A year later, he took a course in Cobol, a language neglected by youths, but in demand in the market. Even without a university degree, he began as an intern at BRQ, a technology company, with a salary of 600 reais. After successive promotions, he was hired by a competitor. He returned to BRQ in 2009 and today he makes more than 4 000 reais per month to lead nine people.
Qualification efforts aside, the fact is the demand for professionals runs much ahead of the supply. This can be seen very clearly in construction, once of the most heated sectors of the economy. Three years ago, the demand for workers became a sort of bottomless pit, and constructors were pulling in workers from other sectors as well. In São Paulo, there is a shortage of 100 000 technicians in subscription TV service provision companies and another 20 000 at cleaning companies because may employees got jobs with better salaries in civil construction. In a situation of generalized shortages, any strategy to fill one's staff is worthwhile. One of the most desperate is to pull personnel from the competition when the project is in full progress., An emissary looks for workers and says there is a company offering more for whoever accepts changing job sites. At the end of last year, a three-tower, 27-floor residential building in the western zone of São Paulo, built by PDG, the country's largest real estate developer, lost more than 100 workers in one day to a job in Santos, 70 kilometers away. The difficulty in replacing the workers delayed conclusion of the apartments, which should have been delivered by December. The sector estimates that 70% of the works are delayed due to a lack of people. In Caxias do Sul, the largest city in the metal-mechanical center of Rio Grande do Sul, Randon, a manufacturer of truck bodies, ceased demanding experience from its candidates and began to recruit workers in an unusual manner. With 100 openings, the company sent a car with loud speakers to circulate the outskirts of Caxias and neighboring cities offering training, jobs with signed working papers and benefits for whoever wants to learn a new trade. "In a normal world, you advertise an opening and choose the candidates,” says Luiz Antonio Oselame, CEO at Randon. “In a full employment world, you accept whoever wants to work.”
THE FOREIGNERS TURN
The search for people is also stirring up the country’s migratory flows. In Teresina, Piauí, in order to guarantee growth in operations, the Pão de Açúcar Group recently launched a program called De Volta Para a Minha Terra Natal (Back to My Native Land).. Besides being on the lookout for people to cover 2500 openings today, the group will also need 15 000 new workers by December in cities like Palmas, Tocantins. In Rio de Janeiro, one of the biggest knots is in the oil and gas sector. By 2013, the sector will require more than 200 000 professionals. There is a concentrated effort for formation, but while the country is unable to meet the demand, the openings are filled with the importation of skilled personnel. The sector is the record holder for requests for working visas by foreigners. Last year, the state of Rio de Janeiro received nearly 22 000 workers from abroad, 40% of those who entered Brazil over that period.
The engineer became an engineer
Ciro Alex Felix, 35, FBF Engenharia, São Paulo
An electrical engineer with a major in telecommunications, Felix made a career in telephony and once coordinated teams with 300 technicians. Three years ago, he realized his engineering degree could open doors at construction companies and guarantee better salaries. Today, he is job site engineer for three buildings. He earns nearly 40% more and has perspectives for promotion.
In some cases, the required professions do not even exist in the country. In order to create its fifth research center in the world, in Rio de Janeiro, GE of the United States needs 200 skilled researchers to work in the private sector – an exotic profile in a country where this sort of professional tends to be confined to universities. They are engineers and PhDs specialized in oil, gas, energy, transportation and health. "We are going to visit 17 of the best Brazilian institutions and sensitize the scholars,” says João Geraldo Ferreira, president of GE in Brazil. “We used this strategy when we created the centers in India, China and Germany, but we still don’t know what the result will be here.” Another career ignored here is treasury analyst, a specialist who plans financial operations to apply and capture resources. "In Europe and the United States, there are specializations and MBAs in this area,” says Thierry Giraud of France, president of the local Sage XRT subsidiary, specialized in this type of service. “There isn’t a single course here, and we are obliged to train our professionals.” They train them and lose them. Sage needs a team of 90 people, but today they are ten short. The gap was caused its own clients. They took the professionals because – obviously – others could not be found on the market.
A new trade
Cristiano Alex Kunas, 19, Randon, Rio Grande do Sul
In order to guarantee labor, Randon, of Caxias do Sul, keeps a car equipped with loud speakers roaming the streets announcing job openings and qualification courses for whoever wants to invest in a new profession. Kunas, who used to work at a small footwear factory earning by the hour and without any benefits, accepted the challenge. Today, he makes nearly 1 000 reais as an assembler and he is getting ready to take the college board exams for engineering.
Openings are a barrier to growth and cause business losses – to companies and the country. In the information technology area, the current shortage is around 200 000 professionals. It is estimated that the sector would need an additional contingent of 750 000 people by 2020. Due to the lack of people, business is slowing down. IBM has a good thermometer of the situation. The company defines the number of professionals it needs as its clients place their orders. On March 25, there were nearly 300 job openings on the company’s website. "We only sign off on a contract after we form the team that will run it,” says Edson Luis Pereira, professional development executive at IBM. “When we are unable to gather the group, Brazil loses the order to a subsidiary in another country.” The question remains: what does a company without any units in other countries do? "It selects and trains the highest number possible of people all the time to guarantee it has people,” says Benjamin Quadros, partner at BRQ Solutions, a technology service provider. The company has trained 300 professionals per quarter, at a cost of 5 000 reais per student. “We have become an information technology school,” says Quadros. Nevertheless, BRQ always has about 200 openings.
Problems such as those Brazil faces in employment are typical of emerging countries. In this sense, it is a showing of success to know that today the challenge is very low unemployment and not the opposite. This challenge needs to be faced with gains in quality for our labor force. The value of high work productivity became clear when the United States reached full employment at the end of the 1990s. It was one of the most prosperous economic periods of American history, which combined stability with growth and unemployment under 5%. One of the explanations for the bonanza without inflation was the increasing productivity, which between 1997 and 2000 expanded on average 3% per year thanks to the technological revolution. With some exaggeration, the virtuous moment was baptized the New Economy. Replicating the American example is vital for us to also be able to deal with the challenge of full employment. We are facing an historical moment to qualify our labor force and pave the way for growth over coming years – or to once again be left on the dock as the ship sets sail.