From Knowledge Economy to Human Progress: Walking the Talk

One of the most critical sectors requiring significant investment in Brazil is its human capital

"We've noticed in the last years that the workforce in Brazil is becoming very, very expensive, yet unqualified for certain of the jobs we need for the economy," said moderator Marcus de Freitas, professor of law and international relations at both the Armando Alvares Penteado Foundation and the Superior School of Advertisement and Marketing, speaking at Brazil: A Pathway into the Future, the 2012 Brazil Conference hosted by Johnson's Emerging Markets Institute.

Some of the daunting challenges in education were introduced earlier in the conference, before the panel sessions began, by Sthefano Costa, VP of investor relations, at the Union of Educational Institutions of the State of Sao Paulo (UNIESP). Only 7.9 percent of Brazilians have actually finished high school, said Costa (whose comments in Portuguese were translated by Alice Martin, MBA '13). Good education seems primarily the privilege of the wealthier classes: 75 percent of students attending high school go to private schools, which are considerably better than the public schools. UNIESP, which partners with the government to support students, has sponsored 60,000 students to date, said Costa.

That poster child for emerging-markets success, South Korea, often serves to provide benchmarks for developing countries. Luanne Zurlo, president and founder of Worldfund, a nonprofit dedicated to raising the quality and relevance of education in Latin America, as well as a lecturer in business and economics at the Catholic University of America, pointed out that Brazil and South Korea were at approximately the same place in terms of average years of schooling for an average citizen in 1960. However, by 2000, South Korea had meaningfully improved the number of years of schooling on average, and by 2010 had reached 12 years, close to the U.S. levels (14 years). Brazil, by contrast, had reached only 7 years by 2010. "Most kids in Brazil have access to education; but a lot are not completing it," said Zurlo.

The South Koreans, pointed out Zurlo, started improving primary-level education by making entry into the teaching profession difficult and compensating teachers highly. Then, they worked on improving secondary education. The Brazilians, by contrast, invested in tertiary-level education, but did little at the primary and secondary levels. As a result, about half of Brazilian 15-year-olds tested functionally illiterate on a recent OECD exam; 70 percent were not even minimally competent in math, and over half could not explain familiar scientific phenomena.

The quality of education is not simply an academic question, Zurlo added, pointing to a Harvard study done in 2011 that showed that replacing a single bad teacher (in the bottom 5 percent) with an average teacher increased a student's lifetime earnings by more than a quarter million dollars.

To help even the odds, Wal-Mart in Brazil has a program that promotes professional development in young people ages 17 through 29, preparing them to enter the retail industry, said Caroline Pagano, senior director of recruiting for Sam's Club and former senior director of recruiting for Wal-Mart Stores, International Division. "This is to work in small, medium, large retail multinationals, training people who don't have an education and are most likely illiterate, giving them the tools to become cashiers, area managers, e-commerce workers, team leads; from there, they're going to progress in their career," said Pagano.

In a typical leadership training program for her organization, Pagano noted, 2,000 individuals would apply for three slots. "Once those three individuals are in, they think they're God's gift because they beat more than 1,900 others," said Pagano. "The company's challenge, when we've done this incredibly selective program, is, ‘How do we keep these individuals from thinking, "In one year, I'm going to be the CEO of this company?"' It's a significant adjustment and it requires a significant investment from the training and development," said Pagano.

Marcio Canedo, a professor at Universidade Federal de Mato Grosso do Sul, expressed his frustration with the educational system, pointing out that he and his colleagues from public universities were striking at that very moment for better wages. "We have a system in which you're not attracting the best and brightest to teaching, you're not paying them well, and so a very good teacher is paid the same as a very poor-quality teacher," said Canedo. "And that's a truly demoralizing situation."

"I have students that come to this federal, public university, and they are supposed to be the best. They can put letters together, but they don't understand what the text is saying," said Canedo. He also pointed out that technical education in Brazil is particularly lacking, especially in his part of the country, where engineers have to be imported from São Paulo. "We'll have to import the workforce from abroad, too," he added. Referring to David Neeleman's keynote address, Zurlo said, "I think natural resources have been probably one of the biggest factors why Brazil has not developed its human-capital potential. When you can rely on ten people to grow a hardwood forest that yields $100 million from a $3 million upfront capital investment, why develop human talent? Natural-resource-based economies simply do not need high-level human capital."

Moderator: Marcus Vinicius de Freitas, professor of law and international relations, the Armando Alvares Penteado Foundation and the Superior School of Advertisement and Marketing