Is Brazil the World’s Hottest Job Market?

Nearly every business leader you meet in Brazil today has a one hot topic in mind: talent.  In order to sustain Brazil’s rapid growth, and to keep pace with the business growth aspirations of most multinationals and local companies alike, Brazil is facing an intense war for professional people capacity.

Similar to the situation in other high-growth emerging markets, foreign companies looking to expand in Brazil are competing with rapidly-growing local companies for new hires. Those in greatest demand often fall into the same category of desired skills: English-speaking managers and those with skills in business development.

Growing Demand Requires New Tactics
Companies are increasingly adapting their hiring practices to the challenging local market situation.  Despite talk of Brazil’s economic rise for years, higher educational institutions were not fully prepared for the sudden economic boom and corresponding demands for talent in the market, and for-profit schools are attempting to fill the gap, but for now many multinational companies say they are having to educate their own employees and increase college graduate and internship hiring.

Siemens AG has 10,000 employees in Brazil and expects to add an additional 800 in 2011, and is planning to hire about 90% of its current interns. Worldwide, Siemens today generates about 30 percent of revenue in emerging markets, where 25 percent of its workforce is located, and has publicly stated their aggressive growth plans as a company will include outpacing industry growth in the emerging markets.

Audio-equipment maker Harman trains its Brazilian engineers at company research centers in California and Indiana for three to six months at a time, and then sends them back to Brazil.  Otis Elevator is adding over 100 new employees in Brazil, targeting mechanics before they finish school and placing them as interns for a sixth month training program, hiring an estimated 60% of those who complete the program.  Otis even recently made a decision on where to locate a new factory based on the hopefully likelihood of keeping existing workers who wouldn’t be inconvenienced by the move.

Retention is a Challenge Once Recruited

Given the similarity in hiring profiles of ideal candidates desired by multinational companies, it is no surprise that retaining those employees once trained is an increasing challenge.  A recent article in the WSJ highlighted this issue: “You train them for six or nine months your way and then all of a sudden, their market value doubles,” said Harman’s CEO, Dinish Paliwal.  For Liberty Mutual’s Brazilian arm, Liberty Seguros Brazil, their President claims competitors, both foreign and domestic, have tried to recruit 70 of his 1,500 employees, including underwriters, field sales managers and affinity specialists – with twenty ultimately making a move.

Brazil Created More Jobs In Last 12 Months Than the US
The job growth boom is seen across the broader economy, and is not limited just to professional roles.  Over the last 12 months, Brazil created 2.25 million jobs while the US created a little over 454,000, according to data from both governments released in June. The overall number is not an exact, scientific comparison because Brazil includes farm payroll while the US data does not. However, farm jobs in the US are less than they would be in Brazil due mostly to technical advances and mechanization. Brazil’s economy is clearly hiring more than equivalent sectors in the US: construction hires in Brazil in May were 28,922 compared to 5,529 in the US over the same period.  Professional and business services firms in Brazil added 71,246 jobs in May, compared to 44,000 US jobs in the same sector.

No End in Sight
As Brazil continues to grow, and benefits from economic accelerators (or “insurance policies” as I recently heard them called from a foreign business leader) of two Big Events with the World Cup in 2014 and the Olympics in 2016, the market for talent is likely to continue.  Beyond these accelerators, the economy itself has soared in recent years as its oil, gas and ethanol sectors thrived – and continue to demonstrate long-term potential.  In 2010, U.S. foreign direct investment in Brazil totaled $6.2 billion, up from $2.4 billion in 2003 – and in the period of January to April alone, US investment reached $3.1 billion, according to Brazil’s Central Bank.  A boom in domestic consumption, the result of an expanding middle class, has helped turn Brazil into an economy which grew 7.5 percent last year and is expected to register about 4 percent growth this year — slower, but still notable compared to most nations of similar economic size. Yet, some economists (and currency traders) consider the Brazilian real the world’s most overvalued currency against the dollar, interest rates remain high and many debate whether a credit bubble is forming as consumer continue to spend.  Violent crime, while falling in some areas, also remains a serious concern throughout the country and in cities like Rio and Sao Paulo.

Still, foreigners are arriving to work, with government authorizations jumping more than 30 percent in 2010 alone, according to the Labor Ministry.

A Job Seeker’s Dream
The most immediate wave of foreign talent likely to continue growing in Brazil is for professional-level talent, likely to be followed in equally growing (albeit harder to track) numbers for low income earners from nearby Latin and other countries in domestic, manufacturing, mining and support roles (as already visible by the wave of Filipinos working on ships and offshore oil platforms).

Indeed, a “gold-rush” mentality appears to be accelerating: the real estate company Cushman & Wakefield now say Rio is the costliest city in the Americas in which to rent prime office space; and even the Country Manger of executive recruiting firm Russell Reynolds remarked recently: “Our salaries here in Brazil are at least 50 percent more than salaries in the U.S. for strategic positions” – adding increased excitement to the craze when job-seekers begin to evaluate specific opportunities.

Americans are currently the largest group moving to Brazil, followed by those from the UK and Western Europe followed by contingents of Britons and other Europeans (according the NY Times) – some are on temporary assignments, others are starting ventures big and small. David Neeleman, the American founder of JetBlue Airways, recently helped created Azul, a low-cost Brazilian airline. Corrado Varoli, an Italian who oversaw Goldman Sachs’ Latin American operations from New York, now runs his own São Paulo boutique investment bank. Goldman Sachs itself will increase it’s staff by 20% this year in Brazil, after purportedly raising its headcount from 200 to 300 last year.  New Brazilian dot-coms like Baby.com.br, an online diaper retailer founded this year by two Americans fresh from business school, is one of the most notable in the online space.

It’s Not Quite as Easy as it Sounds
While visiting a small store in LA a few weeks ago, the nice sales lady I met asked where I lived and when I told her Sao Paulo she immediately jumped to show my her computer screen which was full of “help wanted” postings and articles about how to complete immigration paperwork for a move to Brazil as an “entrepreneur.”  I smiled and politely told her it was indeed a hot job (and consumer) market and a great place to live, but that there was also still reason for pause.  Brazilian labor legislation favors hiring locals over foreigners, and the lengthy process of obtaining a work visa can surprise even the most accomplished of expats;  the process of starting a new business or forming a legal entity can be equally complex for even those already skilled in navigating Brazil’s bureaucratic systems and “developing” infrastructure; and then even if those hurdles are overcome, you still have the same challenge as every other manager in Brazil: attracting, developing and retaining talent.

Forbes Blog: Brazil Created More Jobs Than US in 2011
Yahoo News: Goldman-Samba? Bank Ups Brazilian Presence
WSJ: Brazil’s Boom Needs Talent
Bloomberg: Siemens Plans to Expand Market Share in Emerging Economies
NY Times: Foreigners Follow Money to Booming Brazil, Land of $35 Martini
Reuters: Brazil labor market still tight, stoking inflation

This entry was posted on Wednesday, August 24th, 2011 at 3:48 pm. It is filed under Brazil, Management and tagged with Azul, Goldman Sachs, Harman, Labor Statistics, Liberty Mutual, Olympics, Otis, Siemens, Talent War, World Cup. You can follow any responses to this entry through the RSS 2.0 feed.