Nearshore Americas

World Bank Gets Pressure to Produce More Knowledge Workers, Especially in Latin America

Pressure is mounting on the World Bank to invest a larger portion of its money and influence on developing human capital as businesses around the world struggle to stay competitive.

ManpowerGroup, found in a recent survey that 49 percent of US employers are frustrated by the lack of equipped knowledge workers in key professional positions. To cap it off, the US Labor Department says that more than three million jobs remained unfulfilled because of a skills gap.

“There is a great paradox in today’s labor market,” says B.S. Murthy, managing director of Leadership Capital, a leading headhunter for Bangalore’s outsourcing industry. “On the one hand you have soaring unemployment rate, and on the other there are millions of jobs that are not being filled.”

It is not as if the World Bank is unaware. The international financial institution has over the years devised a variety of programs and invested billions of dollars to supply trained labor to world markets. But the needs of the world brought on by globalization are far outpacing the supply of higher-level labor.

“The Latin America and Caribbean region received the largest share (39%) of Bank lending for tertiary education over the last 10 years, followed by the East Asia and Pacific (21%),” says the World Bank.

Between 1990 and 2009, the World Bank lent over US$7.64 billion to 337 education projects, with tertiary education components, in 106 countries.  Between 1999 and 2009, the Bank’s lending for tertiary education averaged US$315 million per year. In addition, the Bank has funded a large number of skill-development and job-training programs around the world.

Recently, the Bank trained about 1,000 young Nigerian graduates in IT and communication technology (ICT) as part of a plan to support the African country’s dream of becoming an outsourcing hub.  “There is a strong potential for job creation in the ICT area and services area. But one of the hurdles to realizing the potential is the skills gap. This was a key driver behind the program,” said Marie Francoise Marie-Nelly, the Country Director, World Bank Nigeria, in a statement.

“My First Job”

In Argentina and Bolivia, the Bank has successfully supported job training programs for youths entering the labor market for the first time. Bolivia’s Mi Primer Empleo (“My First Job”) has reportedly helped thousands of youngsters make themselves ‘employable’.

According to the Bank’s statement on May, 2011, as many as 4000 youths have been benefited from the My First Job program.

In Latin America and South Asia alone, the Bank lent more than US$550 million annually in 2009 and 2010 for education. Total Bank funding for youth-related programs in 2010 reached US$2.3 billion. “The Latin America and Caribbean region received the largest share (39%) of Bank lending for tertiary education over the last 10 years, followed by the East Asia and Pacific (21%),” says the World Bank.

Mexico Focus

Another interesting World Bank program is MexicoFirst, which gives IT training to youths, supporting the Mexican IT services market.

The program has so far awarded 43,000 certificates and is training between 12,000 and 15,000 professionals this year. Launched by the Mexico’s Ministry of Economy, MexicoFirst is financially backed by several local organizations besides the World Bank. There are many such programs in countries like India, China, Argentina, Costa Rica and Spain. But MexicoFirst has been rated by the World Bank as the best executed program ever.

Currently, the World Bank and the Inter-American Development Bank are working with individual governments to spread these programs around the globe, providing technical help and loans.

In the early 1990s, the World Bank and IDB jointly invested more than $1.2 billion in three technical education projects in India. The result was staggering: nearly 25,000 technicians graduated – on average – across a several year span. Students were given training in over 200 new and high technology areas, relevant to the services sector. Today most of them, according to the World Bank, are employed with high wages in India and abroad.

Brazil Doing On Its Own

Some governments are doing it on their own. For example, the government in Brazil has planned to work with private companies to develop 50,000 new professionals over the next few years in an ambitious program called ‘IT Maior.

In a recent column in the Financial Times, Sergio Pessoa, Global Marketing Director at Brasscom, calls on Brazilian businesses to use the money saved in tax breaks for training youths and setting up research centers.

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Brazil’s President Dilma Rousseff has recently gone a step further and launched an ambitious educational program called ‘Science Without Borders’, which aims to send thousands of students to universities abroad. The government has committed to fund 75,000 scholarships and the private sector has agreed to fund nearly 25,000 scholarships.  Now 650 students are studying in the US, with another 1,500 scheduled to arrive later this year.

“The overall goal is to strengthen the level of knowledge and training in science, technology, engineering and mathematics,” says the Brazilian government.

Despite all these investments, World Bank officials  believe that Latin America and Caribbean nations need to make the same, consistent levels of investment in education as developed economies in the rest of the world do. According to Unicef, Latin American and Caribbean nations devote just over 14.4 percent of total public spending (4.5 percent of GDP) to education, while developed Western countries spend 5.3 percent of their GDP.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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