Latam lessons

Often businesses’ demand for skills adapts to the skills’ limited supply, meaning investment decisions are adopted based on the limited availability of human capital. This would constitute a barrier to growth and limit expansion of productivity, especially since the sectors that would be adapting to the shortage are precisely those most connected to the global economy and with greater growth potential.

Though the study by the Organisation for Economic Cooperation and Development and the United Nations Economic Commission for Latin America and the Caribbean, titled Latin American Economic Outlook 2013: SME polices for structural change is limited to the issues of SMEs in the Latam region, its findings and observations are equally relevant to the Indian situation.

In Latin America, low levels of training among the workforce and managers are a major barrier to the development and improved productivity of SMEs. Moreover, there are big differences between the skills required by the production sector and the training provided by the education system. The study has suggested a few measures to overcome the skills gap:

Public policy must develop and strengthen the connection between the education system—especially in technical and vocational training—and the productive sector. This requires smooth dialogue between entrepreneurs, workers and instructors to develop mechanisms so that qualification needs can be defined jointly and the skills demanded by the job market can be anticipated. Brazil’s vocational training system (where workers and entrepreneurs are involved in instruction) is an excellent example of this type of strategy. Furthermore, countries should promote training paths that

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