5G is hope to restore industry productivity. What is missing

Industry is the ugly duckling of productivity in Brazil. A study by Fundação Getulio Vargas (FGV) points out that between 1995 and 2021 the productivity per hour worked in the sector shrank 5.7%, while the general index of the Brazilian economy grew 27.6%. The expectation is for a resumption of expansion with the diffusion of 5G technology and its applications.

The productivity problem has gained strength in recent years. Data from the National Confederation of Industry (CNI) show that it fell in both 2020 and 2021. Last year’s drop of 4.6% was the biggest since 2000 and made the indicator return to levels close to 2016.

“This slowdown reflects the effects of the second wave of Covid-19 that occurred at the beginning of the year. [2021], and the difficulties faced in the resumption of investments and production. In addition to old bottlenecks, such as the complexity of the tax system, there are problems with the lack or high consumption of inputs and raw materials”, points out the entity.

The CNI complements by stating that, in the short term, the indicator should return to the low growth trajectory presented before being impacted by the effects of the pandemic. But the expectation is that the major trends related to industry 4.0 technologies and the development of 5G and its applications represent opportunities for sustained productivity growth, depending on investments in innovation.

The new technology for cellular telephony should debut in the capitals in the second half of the year. “This will ensure greater connectivity”, says the president of the Brazilian Industrial Internet Association (Abii), José Rizzo Hahn Filho.

The biggest gains, according to him, will be in the efficiency of operations and in the development of different business models. “The right information at the right time will facilitate decision making and allow for efficiency gains.”

But the trumps will not be immediate, evaluates researcher Fernando Veloso, from the Brazilian Institute of Economics at FGV (Ibre/FGV). “It is an important innovation, as are artificial intelligence, robotization and digitization, but its gains are not immediate. Companies need to invest to change their business plan.”

The workforce challenge

One of the main bottlenecks is related to manpower. “There are no qualified people for the new demands. That’s why salaries in information technology are increasing so much.”

CNI’s industrial policy manager, Samantha Ferreira e Cunha, says that the industry will have to act on two fronts when implementing this technology: training the workforce and digital transformation. “5G is an essential technology for the Brazilian industry not to lose more space”, she says.

The National Service for Industrial Learning (Senai) points out that Brazil needs to qualify 9.6 million workers in industrial occupations by 2025 to replace inactive workers, fill new vacancies and ensure the updating of the workforce.

Taking advantage of the benefits of 5G technology is also part of an industry development agenda, which, according to Samantha, already includes other items such as the challenges of climate change, energy transition, environmental concerns and the adoption of more sustainable practices.

The technical and technological challenges

One of the main technical challenges for the implementation of 5G technology is the modernization of the Antenna Laws, which are a municipal prerogative, says the president of the National Federation of Call Center, Installation and Maintenance of Telecommunications and IT Network Infrastructure (Feninfra), Vivien Suruagy.

According to her, of the 27 capitals, only 12 have laws that adhere to the new technology. “It’s a big bottleneck in the development of technology in Brazil,” she says.

Other problems are related to technology. According to a study by the German consultancy Roland Berger, Brazil was the fifth country that suffered the most cyber crimes in 2021. In the first quarter alone, there were 9.1 million occurrences, more than last year. This year, at least eight companies listed on B3 were targeted by cybercriminals and had their systems hacked.

“The issue of cybersecurity is crucial”, points out Rizzo, from Abii. An issue that is also challenging the industry is interoperability, that is, how to ensure the connection between modern and older machines and equipment.

The economic challenges of 5G technology

Economic factors can also influence. “It is necessary to have money to invest in new technologies, whether public or private”, says Rizzo. And the moment is not the most favorable, with the tightening of monetary policy.

The cost of money is more expensive. The average interest rate charged to companies rose from 0.79% per month in September to 1.42% in February, according to data from the Central Bank.

Within this challenge is also the lack of semiconductors. The problem arose with the Covid-19 pandemic in 2020 and was exacerbated by recent lockdowns in the Shanghai and Shenzhen regions, two of China’s biggest economic and industrial hubs.

The president of Abii believes that the situation will only return to normal in mid-2023. “We will have to adapt and reduce our dependence on China”, says Vivien, from Feninfra.

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