SMEs in Latin America face major challenges related to the shortage of human capital and job skills, which affect the sector’s productivity. The challenges the region has traditionally confronted in terms of availability and quality of education are exacerbated by the challenges of globalisation and technological change with new training demands that the education system and job training system must respond to. Further progress is needed in developing institutional capabilities and in designing and applying policies to satisfactorily meet SMEs’ various demands for competencies.&nb

Strengthening the institutional framework among managers, workers and trainers to advance a shared definition of qualifications that promote co-ordination with job skills, the development of mechanisms to anticipate demand for competencies, and promotion of classroom training and workplace training are some of the policies that can have a relevant impact.

A description of some of the fields where public policy in the region can have a relevant impact follows. 

1) Developing the link between the education system and the job market, between supply of training and the demands of the production sector. Progress can be made in several directions:

Strengthening the institutional framework to foster dialogue between managers, workers and trainers; and opening a steadier flow of communication, to help understand the nature of the supply and demand. Countries such as Finland, for instance, have developed an interesting system of dialogue between labour and management, which leads to jointly defined qualifications and fosters consistency between the available skills and employers’ needs.

Developing mechanisms to anticipate the market’s demand for competencies. Brazil’s SENAI long-term planning model is a good point of reference. 

Other Latin American examples that aim to strengthen co-ordination between the education system and the production sector include Mexico’s CONOCER, while on the sectoral level there are the Sectoral Certification Councils sponsored by Argentina’s Ministry of Labour, Employment and Social Security, Brazil’s SENAI Sectoral Technical Committees, and Colombia’s SENA Sectoral Committe

Besides more traditional training, it is important for the training curriculum to include so-called “soft skills” and give greater relevance to generic competencies applicable to different work environments.

2) Promoting training paths that combine classroom sessions with workplace training, and which continue throughout the worker’s adult life. The two-prong model of vocational training in Germany is perhaps the most representative example of this strategy, which combines training in companies and learning centres, and enjoys a high participation rate among the workforce, besides being well regarded in German society. 

3) Reforming the technical- and vocational-training curriculum to include “soft skills” and give greater weight to generic competencies. This helps resolve some of the main training gaps identified in the region and which are demanded by the production sector. It also fosters the workforce’s ability to adapt to changing professional requirements and boosts the employability of the workforce throughout their adult lives. 

4) Make progress in establishing credible benchmarks to suitably define assessment scores and their relationship with the various education levels, whether resulting from formal education, vocational training, practical experience or some combination of these. A certification system would make it possible to validate hands-on training and give it the greater recognition and the social prestige it deserves. This is especially relevant in Latin America, where young people often drop out of school to work for a living, and as a result the recognition of training obtained through informal channels or in the workplace is vital for one’s prospects for professional success. A useful approach that could be adapted to each country’s needs is the European Qualifications Framework for Lifelong Learning (EQF), a fairly advanced scheme for recognising, interpreting and converting qualifications among EU countries. To be effective, however, this framework requires institutional capabilities and a certain amount of social capital, both within the government and among the private and social agents involved.

An essential challenge facing SMEs in Latin America is to strengthen the professionalisation of these businesses’ managers and senior executives to identify training needs and implement the production advantages of worker training.

5) Strengthening and broadening the co-ordination of vocational training with the social and regional context, as well as the production and technology environments. This is a key way to achieve synergies, foster results and contribute to the specific development of comparative advantages. Also, it is an education policy not focused exclusively on demand, but also an instrument to help generate a supply of training that is high in quality and therefore aligned and co-ordinated with industrial policy. 

6) Promoting professionalisation of small businesses’ managers and senior executives, a central challenge that is very important in order to properly grasp the existing qualification problems and boost productivity by making the most of the training available to workers. At the same time, managers’ ongoing acquisition of specialised knowledge about the specific area or sector they work in is important for their development. A notable case is SENA’s SME Strengthening Programme in Colombia, which promotes training initiatives to improve business management with emphasis on ICTs, logistics and human-talent management. 

7) Establishing and/or strengthening institutions and the incentive programmes to encourage SMEs to provide in-house training for workers and have greater participation in externally provided training programmes. More progress could be made in creating networks of SMEs to activate synergies and take advantage of economies of scale, instituting frameworks of tax incentives for training, and using ICTs in training. 

8) Improving information and broadening the basis for empirical proof of job skills to get a more accurate diagnosis of the region’s training challenges and how well aligned its education systems are with the needs of the production sector. This favours a more efficient, sustained and focused design for public policy in this field. Initiatives such as the OECD’s PIAAC can represent a chance to improve this diagnosis and make international comparisons. 

9) Putting in place assessment mechanisms and programmes to evaluate the impact of the policies applied and appropriate use of the invested resources. This will focus policies on quality assurance, guaranteeing compliance with the established goals and continual improvement of the policies’ design and application.

It is important to move forward in establishing credible benchmarks that make it possible to suitably define qualifications and foster recognition of practical training. Additionally, strengthening the institutions and the programmes by providing incentives for SMEs to conduct in-house training and co-operation among themselves can be very useful.