More and better jobs: how the northeast can drive Brazil’s next growth cycle

In Olinda, sitting at Alto da Sé on a warm evening, surrounded by a place so deeply woven into the region’s history, we found ourselves deep in conversations about jobs, growth, and the future of Brazil’s Northeast, while enjoying a delicious tapioca and cuscuz from the small stalls gathered around the square. We had been traveling across the region, sharing preliminary analyses and learning from voices across the private sector, government, and civil society, each offering perspectives on the region’s challenges and opportunities.  

After all those conversations, one thing was clear to us: Brazil’s Northeast pulses with youth, diversity, and opportunity. Home to around 54 million people, roughly 80 percent of whom are of working age, and an increasingly educated workforce, the region holds significant potential to drive Brazil’s future growth.

Why has this demographic dividend not yet become a source of stronger growth?

About 41 percent of the population lives in poverty, and labor force participation remains low, with only 56 percent of the working-age population employed, compared to 65 percent in Brazil’s more prosperous Southeast.

Therefore, the region needs more and better jobs. The Northeast has one of the highest levels of underutilized talent in the country: only 14 percent of human capital is efficiently used in the formal sector, and 32 percent when considering the informal sector. 

Informality is high at around 52 percent, compared with 34 percent in the rest of Brazil. Female labor force participation was low at 41 percent in 2022, compared to 52 percent in the country, despite women having education levels equal to or higher than men. Care responsibilities, barriers to opportunity, and structural inequalities shape this gap.

Total and female labor force participation and working-age population in Brazil’s Northeast (percent of total population aged 14+), 2012–2022 (formal and informal)

Source: Authors’ calculations based on IBGE PNAD data.

How can talent be transformed into new pathways for growth?

The Pathways for the Northeast report highlights that productive jobs are central to accelerating regional development. This requires creating more and better jobs by strengthening firms’ competitiveness and productivity, particularly in manufacturing and services. These sectors account for 86 percent of employment and have larger productivity gaps than Brazil’s richer regions.

Key priorities include simplifying regulations for businesses, improving access to credit for innovative firms, and investing in infrastructure such as transport, logistics, sanitation, and digital connectivity. Brazil’s new National Regional Development Fund, as part of the country’s landmark tax reform, offers States the opportunity to strengthen public investments and policies that focus on creating productive jobs. 

Equally important is aligning workforce development with a changing economy. Policies that expand mobility, employability, and skills matching can help ensure that education is aligned with the opportunities of a more productive private sector.

Porto Digital: a promising example

Some local initiatives already point to practical solutions. Porto Digital, a technology innovation hub founded in Recife in 2000, illustrates how partnerships between government, academia, and the private sector help bridge the gap between education and productive employment. 

By combining skills training, scholarships for low-income students, direct collaboration with firms in the hub, and urban revitalization to offer adequate infrastructure to firms, the district has attracted or birthed some 500 technology companies and created more than 21,000 high-paying tech jobs. Childcare services within the district reduce barriers to female participation. These programs, in turn, help attract more companies looking for top talent.

The future of the northeast is the future of Brazil

More and better jobs in the Northeast are not only a regional priority but a national opportunity. Closing the productivity gap between the Northeast and Brazil’s more advanced regions would be a powerful engine for growth for the entire country. A more dynamic, innovative, and productive Northeast has the potential to become a powerful driver of Brazil’s next development cycle, contributing to a more balanced, resilient economy capable of delivering shared prosperity.