Where is all the Professional Talent in Latin America?

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A new report finds that Latin America leads the world in talent shortages, and that the problem is getting worse. According to ManpowerGroup, five of the top ten countries that have had difficulty filling jobs in 2014 are from Latin America – Peru, Brazil, Panama, Argentina, and Colombia (See Figure 1). By contrast, in 2013 the only country in the region that made it to the top ten was Brazil.

Manpower’s Ninth Annual Talent Shortage Survey, which interviewed over 37,000 employers in 42 countries and territories, reveals that 36% of employers globally report talent shortages in 2014. This is the highest percentage since 2007, when 41% of employers reported difficulty filling jobs. The countries that complete the top ten this year are Japan, India, Turkey, New Zealand, and Hong Kong.

Between 2011 and 2014, there has been a considerable increase in talent shortages in Latin American nations (See Figure 2), most strikingly in Peru and Colombia. For the majority of the countries in the region, the changes during this period have been following an upward trend. The three exceptions are Brazil, where employers have reported a decrease in the difficulty filling jobs since 2012; Argentina, where the current figures show a reversal of a downward trend; and Mexico, where the results do not show much variation since 2011. Unlike a year ago, in 2014 all of the countries in the region are above the global average (36%) in terms of having difficulty filling jobs.

Employers in the Americas (including the United States and Canada) report that the biggest talent shortages are for technicians (primarily production/operations, engineering or maintenance), followed by skilled trades and engineers. Other jobs employers are having difficulty filling are sales managers, sales representatives, and office support staff. In order to overcome talent shortages globally, 47% of companies are adopting new people practices, 25% are searching for new talent sources, typically by recruiting from under-tapped pools, and 23% are preparing to adopt new, alternative work models.

According to Monica Flores, Managing Regional Director for Latin America at ManpowerGroup, specific factors that cause these talent shortages vary from country to country. However, as a region a key factor behind the observed gap between supply and demand of qualified workers is due to the fact that “educational programs don’t respond to the market needs. They aren’t focused in competences and abilities that are required to be an attractive and competitive talent. Most educational models are centered in the teacher and encourage learning based in memory instead of analysis, logic reasoning, math, etc.” Interestingly, according to another survey by ManpowerGroup, nearly three-quarters of educational institutions judge their graduates to be employment-ready, while only 42% of employers and 45% of graduates consider they are well prepared. Flores believes “there must be a dialogue between educational institutions and companies in order to develop skills needed in young people, like: speaking a second language, problem resolution, teamwork abilities, innovation, and learning to learn.”

The case of Peru is particularly striking. In 2011, only 10% of employers in Peru reported difficulty filling jobs. That number has climbed to a shocking 67% in 2014. According to Flores the disconnect between demand and supply is particularly strong in Peru. On one hand, educational organizations are preparing professionals for careers that are saturated (i.e. lawyers, journalists) and, on the other hand, employers do not provide feedback on the curricula to ensure that future professionals have the skills required by the marketplace.

The rapid growth of Peru’s economy has opened up many jobs for which the skills of the current workforce are inadequate. For example, according to the Research Center at the Universidad del Pacífico in Lima, language skills are extremely important for employers and are also very scarce in Peru. In addition, competition for skilled trade workers has become fierce in recent years. “Many of these employees can switch jobs for less than 20 USD a month,” Flores said. In her view, the difficulty to fill technician positions may be caused by cultural stereotypes that value a bachelor’s degree over a technical education, even though “a specialized technician in electricity or heavy machinery can earn a very attractive salary.”

Weak quality of schooling systems is an important factor behind talent shortages in many countries. As shown by the 2012 PISA 2012 results, which tested 15-year olds in 65 countries, Latin American countries obtained some of the lowest results in math, reading, and sciences. As a result, Flores argues, “companies have to invest a lot of time and money to cover [specific] education limitations.”

In Guatemala, brain drain appears to be an important factor. Flores claims that “young people search for better opportunities in countries in Europe and the United States,” a common issue for several countries in the region, especially in Central America. According to UNICEF, the rate of emigration of Guatemalan citizens has been consistently high in the 2000s, representing a big loss in the country’s workforce.

As noted before, Brazil is the only country in the region where talent shortage has consistently decreased in the last three years. This improvement must come as a relief to the Brazilian National Immigration Council, which in May 2013 launched new measures to attract foreign talent. Previously, host Brazilian companies had to request technical visas and work permits from the Brazilian Ministry of Labor. Uncontested applications were usually processed in 30-45 days, which is still the case for long-term visas. The new resolution allows skilled workers to receive a temporary visa to work immediately for a period of up to 90 days, which allows employers to fill jobs at least in the short term. (Source: Davis LLP)

In addition, Flores claims that Brazilian companies are being more flexible in their recruiting processes, focusing on the main qualifications the employee needs from the beginning and then working on the ones they can learn on the job. There has also been a trend to hire older candidates who were outside of the market and women who had taken temporary leaves, thus increasing hiring options.

It is clear that Latin American employers and educational institutions are experiencing a mismatch between supply and demand of talent. In order to make matching of skills a more efficient process, countries in the region need to improve technical and vocational education, as well as professional development programs. More active efforts to provide information on skills demanded in the labor market would help both individuals and employers adapting their behaviors and expectations.

Federico Sucre is a Program Assistant for the Education Program at the Inter-American Dialogue. You can follow him on Twitter @fedesucre