Latin America has great difficulties to solve and, in the meantime, opportunities are very nearby. The speed with ...
Latin America has great difficulties to solve and, in the meantime, opportunities are very nearby. The speed with which we may solve these difficulties and seize opportunities will be crucial. The demographic bonus has an expiration date, and, once that date is gone, the possibilities of development become more complex.
By Martin Padulla for staffingamericalatina
The Latin American context provides small margin of error. Reinventing the wheel would be a huge mistake. There are urging matters, such as poverty, youth unemployment, marginality, exclusion, employability, productivity and competitiveness that become even more urgent when considering the window of demographic opportunity.
The region must implement active employment policies but, what are active employment policies? Are they linked to education? Basically, these policies are the ones that include training for unemployed people, labor market intermediation, or permanent studies of job offers and crossing that information with the labor market demand and providing continuous skills’ training based on this demand that, as we know, is constantly changing.
What goals should we establish? Talking about full employment seems a utopia for a region with elevated informal labor rates. When we analyze OECD countries it is difficult to find countries with unemployment levels below 5%. However, there are cases to consider.
Two years ago, in Rome, during the World Employment Conference organized by CIETT (today WEC) and Assolavoro, I had the chance of listening and talking to Peter Hartz. At the beginning of this century, the Social Democrat German government, under the administration of Gerhard Schroeder, contacted Peter Hartz, who back then was the Director of Human Resources of Volkswagen, and made him responsible for leading a taskforce that included 15 experts, with vast experience in the private sector.
In six months, Hartz and his team presented a report to the German government. The recommendations included in this report started being gradually implemented between 2003 and 2006, becoming what has been known as the Hartz Reform. What were the measures taken?
Unemployment allowances were re-designed. Those who lost their jobs used to be paid 70% of their last wage during over 30 months. Once that period of time was over, if they failed to get a job, they started earning 60% of their previous wage, and that income had no time limits. The Hartz reform hardened the unemployment allowance, cutting back the amounts, reducing the period of time of the allowance and limiting the requisites that entitled people to access the benefit. A direct attack to the feature of the allowance that used to favor non-employment.
Several tax reductions were also promoted, achieving two positive effects: companies could hire at a lower cost and workers could rise their available income.
In addition, the bureaucracy linked to job searches was simplified, and workers started receiving a “training check”, so they could choose what courses to take, among the courses available (that were pertinent and based on demand) in order to reinvent themselves professionally.
And, most importantly, the Public Employment Service (PES) was re-designed to turn it into a complement of the dual training system, which trains apprentices in over 350 crafts and has received global recognition.
It was established that every PES action had to aim to place unemployed people from the start. This resulted into a profound modernization and strategic alliance with private employment agencies. Public and private employment services started working together.
The strategy was based on four clear steps:
Furthermore, a results oriented management system was set, similar to that of private employment services, and collaboration were added, and the result was an efficient public employment service and a more dynamic and inclusive labor market.
Germany created nearly 300,000 new jobs during 2016. It has an unemployment rate of 4%. When the reforms were developed, unemployment was rising, slowly but steadily, going from 8% to 11%. If those taking courses are also considered unemployed, the real unemployment rate was 14%.
Generally, in Latin America, public employment services have basic flaws: the quality of the service is poor. This cannot be solved with partial changes. It is necessary to re-design the role of PES and intensify active employment policies as part of an integral strategy that focusses in every job-hunter. The final goal should be to provide customized attention for every person looking for a job or for job training. It is not about expending, but better and linking the service with the “real world”, which is the one that creates jobs.
Occasionally, the employment programs promoted by governments are in the hands of technicians who have never created a job. Germany wanted to avoid that, and trusted the design of its labor reform to very experienced and prestigious people in the area of employment creation and human capital development.
In certain countries in the region, the approach of professionals from the private sector to the public administration is discredited. Neologism such as “ceocracy” are claimed or the capital-work unbalance is questioned, establishing dichotomies that move away from the goal or making a strong defense of an old-fashioned concept of the State. Service, efficiency, results, are not discussed.
Moreover, private employment services have not emerged as such in the region, as most countries have failed to ratify ILO Convention 181 on Private Employment Agencies, which openly promotes the collaboration between business and PES. These ratifications are urgent, they are strictly linked to the employability of our youth and with inclusion. We need to create strong and efficient systems, and promote initiatives such as GAN4Youth, which bring us closer to the future of work.
Hartz reforms enabled Germany to achieve a 4% unemployment rate and a 0.8% tax surplus of the Gross Domestic Product (GDP). And these triumphs were accomplished in a context of a Europe affected by unemployment and budget problems.
Pragmatism and professional management of problems seem to be a good idea, or at least something worth trying, particularly when we are talking about human problems. We cannot keep on wasting time with political stinginess or ancient theoretical fantasies. There is no margin left to reinvent the wheel when what it is at stake is the opportunity of sustainable development…
About Martin Padulla
Founder and Managing Director of staffingamericalatina. Martin Padulla is Sociologist (USAL), MBA (UCA) and labour markets expert. He published “Flexible Work in South America” and “Regulatory framework for private employment agencies in Latin America” two books about the new realities of work in Latin America.
Follow Martín Padulla on Twitter: @MartinPadulla
mpadulla@staffingamericalatina.com
About staffingamericalatina
It is the unique independent digital media specialized in Latin American´s labour markets.
Produce and spread contents, researches and developments about issues such us Employability, Youth Employment, Training for Employment, Decent Work, Private Employment Agencies, Active policies for employment, Teleworking, Public and private actions for the creation of decent work, Green Jobs and Corporate Social Responsibility.
It is the meeting point for companies, providers, candidates, service´s companies, academics and independent professionals of Latin America.
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