Three Ways Governments Can Promote Skill Development in Latin America

Life Skills November 26, 2015

This article is part of a series on innovative solutions to tackle the main challenges of Latin American education (part 4 of 6). 

Across Latin America, higher education is in trouble. In Mexico, to take just one example, the Organization for Economic Cooperation and Development (OECD) points out that just 23 percent of all young adults (up to age 35) have completed a higher degree. That is far below the OECD average of 39 percent, and well below even other countries in the region like Chile and Argentina.

At the same time, the region is facing a skills crisis. In Mexico, again, nearly a fourth (24.7 percent) of all young adults are “Ni-Nis” – not in education nor employment. What’s more, even if most people in the region never go to university, they will still need to be able to develop the skills necessary to compete in the coming decades.

Companies are facing a lack of qualified talent. Many of them are turning to their own training programs to fill their human resource needs. That solution makes sense from the companies’ perspective – but it is not a policy that can benefit the majority of workers. So we must ask: what are governments doing to try to bridge this skills gap?

Governments are getting involved in many different ways. To begin with, almost every country in the region now has an agency tasked with developing skills in working adults. Some, like Chile and Uruguay, offer subsidies to incentivize companies to provide their own training. This can be effective: companies know their own needs and are in closer contact with the market. But it doesn’t provide much assistance to workers should they change jobs – which is increasingly a certainty.

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Other government have created their own public institutes to directly offer training. Colombia created its National Learning Service (SENA) in 1957, and now trains over 9 million students a year. Brazil’s National Service for Industrial Training Organization (SENAI) offers over 200 courses a year to provide workers with cutting edge industrial skills. Here, the government is working with the industry group National Industrial Confederation in a form of public-private partnership.

Smaller countries, as well, have developed similar initiatives. Bolivia, Costa Rica, Honduras, and the Dominican Republic all have agencies that bring together the private sector, government, labor unions, and other civil society groups to put together training programs that will meet the needs of both workers and business.

Some in the industry applaud this proactive approach. “When entry level employees start at many companies, they lack the technical training necessary to succeed,” explains Pablo Rodriguez de la Torre, a partner at Pratt Pinet, an executive search firm and former VP of Human Resources at McDonald’s. “But instead of paying companies to train their own employees, which they sometimes fail to do, governments should play a strategic role in fomenting their own capacity building programs.”

Still, while commendable, there are major questions about the effectiveness of such efforts. In a recent report from the Andean Development Bank (CAF), entitled Technical Education and Professional Development in Latin America,the bank’s experts note that “in Latin America, though numerous public and private entities that offer professional training have appeared, the relevance of their courses to employers and to their students is not assured.  Employers and individuals often lack objective information about what they can expect from these entities, both with regards to the competencies acquired and with regards to their ability to find a job where they can put the above-mentioned competencies to use.”

As CAF Technical Specialist Diana Mejia explains, “the labor training systems are still unsatisfactory because they have not adapted to the needs of companies.” Here, the state needs to play a greater role in regulating the sector, as well as providing more and more transparent information about just how effective their efforts have been.

Such information is critical for the ultimate “consumers” – the students being trained and the employers seeking qualified employees. Governments can also focus on developing effective and compatible standards across various programs. Colombia, for instance, recently established the National System of Higher Education (SNET), which makes technical and vocational training on par with traditional university school. This allows anyone with a technical diploma can transfer straight to a university or master’s program.

Ideally, all three of these pillars – funding for private training programs, public-private partnerships, and modernized regulations – can work in tandem. Governments can bring the private sector to a more proactive dialogue, helping to understand the labor demands needs for hard and soft, skills. In addition, government can complement the markets, providing information about jobs and careers trends and the return of education based on income and salaries. Finally, through different fiscal incentives and public-private partnership, governments can get more actively involved in providing skills for adults in Latin America. Developing the skills of the next generation of workers must, though as many mechanisms as possible, be made the highest priority.

Gabriel Zinny is an entrepreneur focused on education and the improvement of educational quality in the Americas. He tweets at @gzinny.

Read Gabriel Zinny’s article: How Are Corporations Making a Difference in Providing Middle Skills?