Lessons from Labor Training and Intermediation Services in Latin America and the Caribbean

1. Lessons from Labor Training and Intermediation Services in Latin America and the Caribbean Dr. Jacqueline Mazza Inter-American Development Bank October 21, 2004

2. Objective: • Labor markets which are: • efficient • transparent • productivity – enhancing To contribute to job creation and economic growth in the region

3. Broader Policy Context: • Training and intermediation as an investment in human capital development • Priority on improvements in education • Strong regulatory, oversight role by national governments • Investment and economic policies that don’t favor capital over labor • Complementary social protections and insurance

4. Objective of training system: • Provide firms and workers with the appropriate skill mix needed for increasingly productive employment in a competitive market economy

5. Training Models in LAC Traditional Model State-based Training Institutes vs. Emerging Models Competitive Private-NGO Training Market + Public Financing Incentives + Private Sector/Worker direct participation

6. Record of National Training Institutes in LAC • Nominal private sector-union-public management; in practice, little tied to private sector demand • High cost, out-moded training facilities and programs • Poor bureaucratic management + control • Impact evaluations poor

7. … big exception Brazil = SENAI/SENAC Key: direct private sector management

8. Some Examples of Innovation • Youth training models (Chile, Argentina, Peru, Panama) • Training tax incentives + training regulator (Chile) • SENAI/SENAC (Brazil)

9. Some additional lessons from LAC • Higher rates of labor insertion for classroom training plus traineeships in firms; classroom based models more limited utility. • Salary impact higher for women than men • Better quality of training providers have greater impact • Need for greater incentives for lower skilled workers; many workers receiving training are already better educated

10. New Policy Directions Stronger program and impact evaluations Improved linkages with education, school-to-work transition Training within Labor market system • continuous education-work-training cycle • skill certification systems • strengthened labor market policy and regulation

11. Objective of LIS Services: Improve the speed and the quality of the insertion of workers into the labor market

12. Benefits: • Reduce short-term unemployment • Reduce unnecessary job rotation • Improve labor mobility • Increase labor market transparency, reduce discrimination • Increase labor market information, policy • Increase social welfare

13. Traditional “National Employment Service” vs. Modernized “Labor Intermediation Service”

14. Principal LIS Services * 1. Job Search Assistance * 2. Job Placement - “Brokering” 3. Training Referral 4. Specialized Employer Services 5. Labor Market Information/Data 6. Social Services “Gateway” – UI * = Core Functions

16. Level 1: Strengthening LIS’s • Legal reforms to open private market, separate regulatory role • Information systems • Enhance training links • Strengthen employer participation • Internal management reforms

17. Level 2: Reforming LIS’s… Key = Restructured Institutional Framework • New management structure • National information systems (e.g. electronic “bolsas”) • New and expanded services • Training registry and referral • On-line services

18. Lessons from early experience • Bringing in non-profit and private providers can increase clientele and returns for all providers (e.g. Peru) • Linkage of intermediation and work orientation can increase labor market insertion (e.g. Mexico) • Use of job fairs, employer – employee forums can yield low-cost results (e.g. Panama, Mexico)