As Brazil is significantly less integrated into international trade than other emerging market economies, opening up to trade has significant potential to create jobs that are more productive and better paid. At the same time, this will be associated with structural changes and adjustment costs. Some workers are required to move to more productive firms, change occupations, sectors or even location. In particular, low-skilled workers need to upgrade their skills to move into newly created medium-skilled jobs in expanding firms and sectors. Workers who stay in their jobs will face similar challenges as firms upgrade production processes towards more advanced technologies. Well-designed and well-funded training and adult education policies, combined with effective social protection and employment services, can go a long way to mitigate adjustment costs for low-skilled, unemployed and informal workers. Evidence suggests that training policies can make a real difference, provided that its content is aligned with skill demands in local labour markets. Moreover, the education system plays a fundamental role for preparing current and future generations for the challenges that international integration and rising digitalisation will bring about.
