The Shortage of Skilled Labor in Brazil: A Barrier to Economic Growth
The shortage of skilled labor in Brazil has become one of the country’s main challenges to economic development. Recent data reveals that about 40% of formal occupations face difficulties in finding qualified professionals, even as unemployment rates hit historic lows.
ECONOMY
Everton Faustino
4/5/20253 min read
This situation is affecting strategic sectors such as technology, construction, and services, hampering productivity and the competitiveness of businesses.
Misalignment and the Skills Gap
Among the factors contributing to this shortage are the mismatch between educational training and labor market demands, as well as high employee turnover in industries like retail and manufacturing. The lack of investment in professional qualification programs and the absence of effective public policies to align workforce supply with market needs further exacerbate the problem.
Labor Shortage and Low Unemployment Rate
Brazil's low unemployment rate, despite the shortage of skilled labor, can be explained by a combination of economic and structural factors. Many Brazilians have found employment in the informal sector, which does not require specific qualifications. While this reduces the official unemployment rate, it does not solve the issue of underqualification. Areas such as services and commerce have generated many jobs, particularly in roles that demand less specialization. However, sectors like technology and construction struggle to fill highly technical positions
Brazil’s educational system often fails to meet market demands, creating a paradox: job vacancies exist, but professionals lack the necessary skills to fill them. Qualified professionals frequently migrate to sectors or regions offering better conditions, leaving gaps in critical areas. And despite government initiatives to reduce unemployment, such as hiring incentives, challenges remain in aligning these policies with workforce qualification needs.
The CLT and Professional Mobility
The CLT (Consolidation of Labor Laws) is Brazil’s labor legislation regulating employer-employee relations. Introduced in 1943 during Getúlio Vargas's presidency, the CLT is a cornerstone of Brazil’s labor policies, guaranteeing rights such as annual paid leave, the 13th salary, a 44-hour workweek, and protection against arbitrary dismissal. However, it is now considered outdated and often drives workers toward informality.
The CLT guarantees rights such as paid annual leave, a 13th-month salary, a maximum 44-hour workweek, weekly rest periods, the FGTS (Severance Indemnity Fund), and protection against arbitrary dismissal. Additionally, it defines hiring regulations, working conditions, contract termination procedures, and other employment-related matters. It also establishes institutions such as labor courts and labor unions to mediate conflicts between employers and employees and ensure compliance with labor laws.
Despite government efforts to attract workers to formal employment, recent attempts have largely failed. Among the main reasons for this failure are the high costs of formal employment for businesses, the complexity of labor laws, and the rise of alternative work models like gig work and independent contracting.
However, the primary reason for the failure to attract workers to the formal labor market is the burden of taxes and deductions, which reduce workers’ net monthly income while imposing rigid rules regarding work hours and rest periods.
Employees working under the CLT system face mandatory deductions, including social security contributions and income taxes, which can amount to up to 27.5% of their monthly salary. Additionally, for employers, the cost of hiring under the CLT system is significantly higher due to required labor charges and benefits. To compensate for these expenses, many companies reduce wages or limit job opportunities.
It is widely recognized that the CLT was designed for traditional jobs and does not adequately address the complexities of app-based work, which operates on-demand and requires greater flexibility to be economically viable
Economic Impacts and the Need for Solutions
The economic consequences are substantial. Companies report difficulties expanding operations due to a lack of skilled professionals, limiting growth in key sectors and driving up operational costs. Additionally, offering higher salaries to attract talent can create inflationary pressures.
Experts suggest that the solution lies in an integrated approach, including investments in technical and higher education, public-private partnerships for training programs, and incentives to retain talent. Without these measures, Brazil risks missing growth opportunities in an increasingly competitive global landscape.
This issue is not just an economic challenge but also a social one, reflecting inequalities in access to education and professional training. Addressing this problem is vital to ensuring a more prosperous and inclusive future for the country.