Human Resources in Cabo Verde

The human resources landscape in Cabo Verde  

For the discerning investor, the human resources landscape in Cabo Verde presents a dual reality. On one hand, the nation is recognized as a human development success story, having demonstrated a firm and genuine commitment to building up the country's human capital since its independence1. This sustained investment has been a primary ingredient in propelling the country's transition to Upper-Middle Income Country (UMIC) status. On the other hand, the economic reality is constrained by structural issues, including significant skills shortages, labor market inefficiencies, and bureaucratic processes that impact competitiveness across all economic sector.

The government has identified the private sector as the engine for growth and development, viewing job creation as critical for poverty alleviation4. However, a persistent gap exists between the skills available in the local market and the specialized demands of key emerging sectors such as technology, renewable energy, and the Blue Economy. Understanding this dichotomy—high human potential versus specific technical deficits—is the defining factor for any investment strategy in the archipelago.

The Demographic Structure and Labor Fundamentals

Cabo Verde benefits from a favorable demographic structure. The population is remarkably young, with approximately 54 percent of the population under 25 years old and 32 percent under 15 years of age7. This represents a considerable potential labor pool for labor-intensive industries8. Social indicators, including health and school enrollment, are among the highest in Sub-Saharan Africa, reflecting the historical emphasis on education.

Despite these strengths, the labor market faces structural challenges regarding utilization. Unemployment has historically been a concern, fluctuating between 16.8 percent in 2012 and 12.4 percent in 201510. Furthermore, despite performing relatively well on gender indicators, women's economic empowerment remains hampered. Women comprise 60 percent of the workforce in the accommodation and restaurant sectors yet earn 50 percent less than men and are frequently employed on informal, short-term contracts.

Investors should also be aware of the educational paradox. While nine universities now exist where there were none in 1975, these quantitative successes often mask serious problems of quality and relevance13. Businesses frequently report that university graduates lack the quality training and specialized skills needed for the modern market14. This disconnect creates a situation where high youth unemployment coexists with acute talent shortages in high-value sectors.

The Critical Challenge: Skills Gap and Productivity

The most critical constraint facing investors regarding human resources is the skills gap. While the workforce is literate, there is a lack of an educated labor force with specialized technical skills. The industrial sector, in particular, faces challenges related to technical qualifications and specialization.

This deficit is most pronounced in the very sectors targeted for economic diversification. Key areas lacking adequate capacity include climate literacy, renewable energy, energy efficiency, wastewater management, and regenerative agriculture. In the Blue Economy—a sector accounting for more than 20 percent of GDP—there are specific shortages in marine protection, shipbuilding, and sustainable aquaculture. For instance, the aquaculture sector lacks a dedicated training program for technicians, necessitating a reliance on foreign specialized knowledge.

These skill shortages contribute directly to a productivity deficit. Cabo Verde ranks poorly in terms of labor market efficiency, sitting at 125th in global competitiveness benchmarks. On average, it is estimated that an enterprise in Cabo Verde requires 2.5 times more workers to achieve the same result as a peer company in aspirational countries, and 1.5 times more than structural peers23. This reduced efficiency must be factored into operational costs and workforce planning models.

Regulatory Landscape: Navigating the Labor Code

Labor relations are regulated by the Labor Code (Legislative Decree 5/2007), which seeks to balance employee protection with labor market needs24. However, from an investment perspective, the labor market is often described as rigid and inconsistent with ambitions to improve competitiveness.

The code is considered by some consultants to be extremely restrictive and punitive, creating burdensome conditions for businesses. A primary concern is the difficulty and cost associated with dismissing unproductive or excess workers. This rigidity reduces productivity and often dissuades firms from hiring skilled workers as full-time employees, leading to a reliance on precarious employment structures28. Hiring foreign workers adds another layer of complexity. While foreign workers generally have the same rights as Cabo Verdean employees, the hiring process can be bureaucratic.

Employers must explicitly justify their decision to hire foreign nationals by proving that no qualified Cabo Verdean citizens are available to fill the position30303030. The work permit and visa application process requires significant documentation and can take several weeks for approval, requiring investors to plan human resource needs well in advance31. Furthermore, key public agencies often suffer from understaffing and limited specialized skills, which hinders the institutional support available to navigate these regulations.

Compensation Structures and Wage Dynamics

Despite productivity challenges, wage structures in Cabo Verde remain competitive, contributing to cost competitiveness in labor-intensive roles33. The statutory framework establishes a standard workweek of 44 hours and entitles employees to 22 days of annual leave and 11 official public holidays.

As of the available data, the official national minimum wage is set at 13,000 ECV (approximately €120 or $134.2 per month). However, actual compensation varies significantly by region and skill level. Typical blue-collar pay ranges from €120 to €150 per month outside of major tourist hubs36. In contrast, workers on the tourist-heavy islands of Sal and Boa Vista earn considerably more than the minimum due to higher demand and cost of living. White-collar roles across the country typically command pay starting around €250 per month.

Investors should note that the government is taking active measures to increase compensation and attractiveness, particularly for skilled roles. The State Budget for 2025 includes specific incentives for wage valorization and business innovation393939. While general labor costs are low, compensation for specialized skilled workers is substantially higher, reflecting their scarcity in the local market.

Strategic Opportunities: The Blue and Digital Economies

The constraints related to human resources also define major opportunities for targeted investment in education, training, and specialized services41. The government actively encourages investments that bridge the gap between local capabilities and market needs.

A prime example is the information technology sector. Opportunities are emerging here because structural limitations, such as geographic fragmentation, do not hinder development as severely as in physical industries42. To support this, the government has backed the Cabo Verde Technology Park (TechPark CV) with an investment of approximately €45.59 million ($50 million)4343. With campuses in Praia and São Vicente, this infrastructure aims to create up to 1,500 jobs and produce a better-skilled, more competitive workforce.

In the tourism and hospitality sector, institutions like the Hotel and Tourism School in Praia and the Escola do Mar (School of the Sea) represent major steps forward in addressing vocational skills shortages and raising standards. Strategic planning aims to specifically increase the proportion of jobs in the green and blue economies. For investors, this signals a favorable environment for businesses that can integrate local training into their operational model.

Furthermore, the diaspora represents an untapped reservoir of talent. Estimated at roughly twice the size of the domestic population, the diaspora is explicitly viewed by the government as a source of "knowledge remittances" and skills. Engaging this demographic through digital infrastructure and job creation is a core component of the national strategy.

Incentives and the Path Forward

To mitigate the risks associated with the skills gap and regulatory rigidity, Cabo Verde offers a robust package of incentives designed to attract capital and talent. Job creation is a primary metric for investment success, and projects that create employment are highly valued.

Specifically, investment projects that create over 50 jobs may be eligible for a Corporate Income Tax (IRPC) exemption lasting between 5 to 10 years50. Incentives in the tourism and hotel sector are usually proportional to the investment portfolio size and the number of jobs created51. Additionally, the State Budget for 2025 includes measures to incentivize wage valorization, further supporting companies that invest in their workforce.

For specialized talent, the government has introduced the "Remote Working Cabo Verde Program" (CaboWork). This initiative attracts foreign talent by offering a renewable 6-month visa with zero income tax on foreign earnings53535353. With a low financial requirement of €1,500 per month for individuals, this program makes it easier for investors to bring in temporary specialized technical staff to oversee operations or train local teams54545454.

Conclusion

The key challenge for human resources in Cabo Verde is not the availability of labor, but rather the adequacy of specialized skills needed to support high-growth sectors. While the local labor market offers competitive entry-level costs, investors in high-growth, specialized sectors must anticipate a significant skills deficit.

The most effective human resources strategy for an investor in Cabo Verde involves a two-pronged approach: utilizing the CaboWork visa and flexible immigration policies to import necessary international expertise in the short term, while simultaneously investing in local training programs aligned with the objectives of the Special Economic Zone for Technology (ZEET) and state incentives57. By actively molding workforce capabilities through training and education, investors can effectively bridge the structural gap, leveraging Cabo Verde's stability and human potential for long-term returns.