Employer-Led Training: The Answer to Latin America’s Skills Gap?

During the last decade, the talent conversation has revolved around the importance of skills in the workplace. This conversation, which started in larger US and EU-based companies, has trickled down to large corporations, mid-sized companies and SMEs in Latin America. 

Now more than ever there is an overwhelming consensus that the skills of the labor force is one of the major drivers of productivity and economic growth. The ILO, OECD, World Bank and Banco de Desarrollo para América Latina have shown consistent evidence that for Latin America specifically the skill level of the workforce—and of the population at large—hugely impacts productivity, business growth, and overall wellness. 

Socio-economic indicators clearly show a growing training gap that is rapidly widening for women, young people and those without historic access to formal schooling

But, as usual in Latin America, it is near-impossible to speak about the region as a single homogenous whole. On the one hand, socio-economic indicators clearly show a growing training gap that is rapidly widening for women, young people and those without historic access to formal schooling including racial minorities, people with learning disabilities, and rural communities. This serves to deepen the poverty trap. 

On the other hand, while the spending in education and training has risen significantly, Latin America falls short of properly upskilling and reskilling its populations and incorporating them into some type of labor, let alone formal employment. Data is still very early, but we can confidently predict that the economic and health crises that stem from the current Covid-19 pandemic have worsened this situation.

Leaving Formal Schooling Behind

Moving forward, it is crucial to move the conversation away from the formal schooling narrative. Formal schooling and its access are too dependent of macro factors, such as elected officials, historical social conditions, location and even rigid cultural frameworks. Consistently, Latin America scores low in international assessments of education quality. Furthermore, only around 50% of the currently employed population finished high school and less than 20% have some education, according to UNESCO research. This speaks of some the institutional challenges that population in Latin America face. It would be naive to expect a quick turnabout of the Latin American education system that both provide access to populations and guarantees educational quality.

Increasingly, businesses and technology companies are stepping up to take training into their own hands. Recent trends, mapped by the IDB in 2019, show that automation is quickly pushing people into new roles that require new skill sets. We would argue that in-work training—processes that happen in the workplace, conducted or sponsored by the employer—is the only way to guarantee a pool of competent employees. Research suggests that the largest part of the talent employers will need in the upcoming years is not currently available in the market. This represents the most significant shift in the industry in the last decades, where employers are transforming “from mere human-capital consumers to direct producers”. This is definitely true for their current employees, but we believe that it should also impact other populations, specifically young people, who are the future of work. 

Employer-Led Training Success

This transition would place private employers at the heart of the education process, offer a pathway to hundreds of millions of people across Latin America and the world to labor opportunities. It is still very early on but we are already seeing interesting shifts, that are so impactful that they will fundamentally transform labor and the employee life cycle in Latin America. Two examples that we’d like to highlight (among many others) are: 

1. Mercado Libre and Globant’s Certified Tech Development (CTD)

These two staple companies joined forces and launched CTD, an accelerated 2-year program that takes people from zero to a tech developer, either as a frontend specialist or backend specialist. The expectation is that graduates quickly join companies, such as Mercado Libre and others, to respond to the increasing demand for tech developers.    

Speaking about the program, Mercado Libre’s founder Marcos Galperín said “instead of complaining, we sat down together to create new things and shift the dynamic (of tech labor supply). It is an example of how we can create value together.”

A key aspect to underscore is the fact that CTD graduates do not hold a formal university degree. In lieu of this, their degree is backed by Digital House, Mercado Libre and Globant, affirming their position as direct producers of human capital. 

2. Universidad Coppel 

Coppel Group, one of the largest retailers and one of the fastest growing companies in the region, has launched up to 65+ courses available to its workforce during the last three years. The training load is set up to guarantee engagement, with flexible study-work hours, lower associated costs and higher-than-average industry knowledge. Employees can participate in full blown professional degrees and even MBAs. 

José Ramón Fernández, Corporate Head for Organization Development, told Expansion: “This is the best way for employees to grow. We are confident that Coppel University is a great benefit for all employees at the organization. And securing better talent definitely gives us a competitive advantage.”

In addition to these efforts, startups are becoming key assets for large scale employers in the development and delivery of training content. Programs, such as Oracle’ Talent Management, SAP’s Success Factors, Coursera, Linkedin Learning and others are providing content and tools to support the efforts employers are making in bridging the institutional skill gap in Latin America. But this is only one side of the coin.

Skill Mapping a Must

Proper skill mapping is fundamental to push the workforce forward and increase labor productivity. The OECD and others are drawing attention to the fact that employers struggle to measure and internalize the skill sets of their employees and are forced to make assumptions regarding their skill level. Efforts should be geared toward including the identification and measurement of skill sets and their use in the workplace. 

Companies not only should be able to train their workforce but also should be able to effectively assess individual skill and experience levels throughout their ELC and match employees with responsibilities in the workplace to maximize productivity, employee satisfaction and retention. It is clear that for companies to succeed, skills and professional experience must be put to productive use at work.