In the last decade, the Brazilian economy enjoyed its largest growth in 70 years. More than 20 million jobs have been created since 2001 – an increase of 68% — due to business investments and increased production across several industries.
This recent growth was driven in part by the discovery of the pre-salt layer off the coast of Brazil. It is currently being explored by Petrobras, the world’s 5th biggest energy company, through partnerships with other national and international companies. Currently, the pre-salt layer (including Campos Basin and Santos Basin) has a total production yield of 230 thousand barrels per day, which represents almost 12% of the state owned company`s total production (1.94 million barrels per day). In 2016, the pre-salt fields are expected to represent 31% of the country’s total production.
Exploration of Brazil’s pre-salt has also highlighted a lack of skilled labor in Brazil, which is needed to meet the demands of the energy industry. Obviously, the shortage of skilled labor is a global issue, not a Brazilian one, but there are some policies in this country that make everything a little harder. One of them is the local content law.
The local content law establishes that Brazilian people and services have hiring priority, but this varies according to each segment. The minimum percentage depends on a number of factors since the law is so complex. There are projects in which at least 50% of the individuals/companies hired need to be Brazilian, and other areas where demand is 70%. In the energy industry, this percentage is 65% and is one of biggest obstacles that hinder its development.
In the country, the oil and gas industry is expected to double its production by 2020, but the professionals who graduate every year are still very few and won’t meet the demand.
Some companies have already taken notice of this problem and have been investing in trainee and internship programs, partnering with universities and offering international opportunities for its employees, as well as great pay. These are moves that aim to attract what little manpower is available today, since these professionals are also being sought by other industries such as mining and infrastructure, both very heated markets in Brazil.
This lack of manpower in Brazil means the country is at risk of serious stagnation in productivity levels. Currently, only 7 percent of Brazilian workers hold a university degree. Other economies that are less developed than Brazil have a higher proportion of workers with university degrees. This is true in countries like Chile (24%), Russia (23%), Kazakhstan (18%) and South Africa (9%).
To solve this issue, some ideas have been proposed by industry experts: relaxation of work permit requirements for foreigners while still valuing domestic labor, ensuring that foreigners who come to Brazil help train the local workforce; providing training for current workers; and more government investments in technical education and training courses for those who are interested in the opportunities generated by this period of growth in the country’s energy sector.
Hopefully the Brazilian government will address the situation shortly – it has already started public hearings about the relaxation of work permits – avoiding a collapse of the infrastructure sector and allowing companies investing in Brazil to continue growing and creating more jobs.