Why you should care
Because we hear about the migration of professionals during boom times, but what about during busts?
Jeff Sobel has been hitting up a party every single weekend in Rio. The New York-born consultant, who’s lived in Brazil for about 15 years, says that every Saturday, there are more boozy cheers, more tearful embraces. More goodbyes. The parties are called despedidas in Brazil: farewell parties. No, no one’s dying. They’re just leaving Brazil. And freakin’ fast.
They’re part of a troubling trend that hasn’t gotten a lot of attention, but that poses a series of risks for a country that’s spent the past couple of decades crawling out of developing-world doldrums and now has a grand global event — the Olympics — lined up to mark its glorious arrival on the world stage. Only, that plan has gone all to hell. Brazil is tanking, and leaving massive ripples as it sinks.
So prepare yourselves for the exodus of the expats. According to data provided to OZY by the Brazilian Ministry of Labor, the number of work authorizations granted to foreigners in the first half of this year is down 13 percent from the same period last year (and on pace to be down about 50 percent from 2011). And that slide doesn’t capture the steepest slope of the economic drop-off in Brazil. Just in the past few weeks, Brazil’s economy crossed the threshold into recession, its debt hit junk bond status and its valuation slid at a rate faster than another other major currency, losing a third of its value against the dollar. “If you are part of the expat community down here, you definitely know someone who is leaving,” says Sobel.
Brazil’s drop has come fast and as a surprise to many expats, who have grown accustomed to living in a thriving economy.
This comes after a boom that buoyed up Latin America and caught the world’s attention. As the U.S. economy tanked back in 2009, Brazil wasn’t hit as badly, and many foreigners packed up for sunnier shores. From 2011 to 2013, headhunting firms in Brazil were flush with résumés from foreign professionals, mainly from Europe and the U.S., says Aurea Imai, managing partner of the headhunting firm Boyden, who points to the gap left between a growing economy and the lack of skilled workers in Brazil during those years. But since the end of last year, businesses have become more concerned about the economic and political situation, as well as the volatility of the Brazilian real’s exchange rate. As a result, investments by foreign companies have “decreased greatly,” Imai says, as has the number of foreign professionals arriving in Brazil.
Obviously, bad economies are bad news for everyone, and the hangover of boom times tends to lead to this result. We’ve seen examples of the same phenomenon around the world just in the past few years. In the United Arab Emirates, a fast drop in the crude oil price last year led to an expat draining, mostly back to the U.K., as the cost of living jumped up, making the pound seem not so frightful. And this summer, the expat flight has been happening in Greece and Russia as well, thanks to dumpy economics.
But in Brazil’s case, for reasons both obvious and not, the drop has come fast and as a surprise to many expats, who have grown accustomed to living in a thriving economy. It’s all a bit tragic, as the boom — publicized by an Economist cover of a rocketing Christ statue over Rio — was supposed to be Brazil’s chance to catch up with the developed world, to live out the BRIC dream. In other places, like Southeast Asia or India or even Greece, even during rough times, there was always a sense that things were probably going to work out, via bailout or buckling down, that the boat was probably going to right itself. In Brazil, there’s not as much optimism. Just ask the Brazilians closing up businesses and trying to pay off exorbitant credit card debts. “It’s not just foreigners wanting to leave Brazil,” says Henrique Sassa, a director of the headhunting firm Michael Page.
And though this sounds like a purely economic story, it has a lot to do with politics as well. Experts point to the political instability as another factor driving out the foreigners. “People who have lived here a while know that things could change overnight,” Sobel attests, such as in the case of a change in government. And the Brazilian government isn’t doing much to stem the bleeding. A pack of austerity measures have thrown salt on the wound for those already hurting, and the budget deficit is what’s led to Brazil’s downgrade in the first place. The government is too absorbed with managing massive, out-of-control corruption scandals and historic unpopularity to worry about holding on to the foreigners who have rooted down here.
The flip is particularly vexing to those packing their bags in Rio because it’s been so damn hard to get settled here in the first place. It’s one thing to leave Dubai or Athens, but Brazil is a special animal both for setting up and departing. Talk to any expat — trying to move in here is a nightmare of bureaucracy. On the “Ease of Settling In Index” compiled by the expat organization InterNations, Brazil ranks No. 55, below Uganda and just a few marks above Kazakhstan. And as for moving out, that’s not easy either. Megan Prichard, a management consultant, lived in Brazil for three years and moved out late last year — nine months later, she was still dealing with a tangle of phone calls and paperwork as she tried to close out her Brazilian bank account.
And it’s definitely vexing for those who wanted to come. Like Andrew Morrison, a 23-year-old Minnesotan who had planned on a career in booming Brazil. He spent his senior year of college here, flash-carding his way through Portuguese, and aimed to work for local companies after graduation. Now, he’s not so sure. Or, rather, he’s definitely sure. “The Brazilian economy is just too volatile,” he sighs, by phone on his way to a job interview in Chicago. It’s an impression reinforced by his expat friends, who have discouraged him from moving down. “The chance of me relocating there now is zero.”
But that could mean good news for firms looking for talent with Latin American experience: The new crop of professionals will be flooding back into New York, Miami and London markets soon, bringing with them tons of on-the-ground experience. As for Sobel, he made a career in Brazil advising foreign companies on entering the Brazilian market — only to have the tide reversed. “Now, Brazilian firms are contacting me about moving out of Brazil and into the U.S. market,” says Sobel, who plans to relocate to Miami by Christmas. As for his despedida, he might not even have one: He’s not sure he’ll have enough friends left to invite when that day comes.