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Productivity and working conditions in Latin America

Small & medium enterprises in Latin America: the path to productivity

A shoe factory in Colombia seeks to improve its competitiveness by establishing mechanisms for better cooperation in the workplace.

Feature | 25 August 2015
© SCORE
MEDELLIN (Colombia) – When they decided to set up a company that produces children’s shoes in 2008, Robinson Montoya, and his partner Oscar Tabares, envisaged to sell their products in the main retail shops of the Colombian city of Medellin.

After seven years of steady growth, they have become more ambitious, wanting to export to the entire Latin American market. The company, Calza Kids, started with two workers – today, it has more than 80 employees.

“From the beginning, our goal was to provide stable employment and income for women and men and their families, while offering a quality product at a reasonable price,” explains Montoya, who currently serves as a production manager.

A great challenge to grow the company was to find ways to operate it sustainably. The route chosen was to increase productivity, competitiveness and improve working conditions as pillars of sustainable business development.

“The first thing we did when we decided to go down this path was to establish an Enterprise Improvement Team within the company, which had the mission to develop workplace cooperation,” Montoya explains.

A participatory approach

This new approach, which was launched in 2013 in the company, is based on sharing inputs and ideas from all employees, both management and workers involved in the production and marketing of the shoes. “Employees have been able to contribute to our success with their ideas and express their needs. So they actively participated in organizational improvements,” Montoya says.

Improving cooperation within the company is part of the methodology proposed by the ILO’s SCORE programme, which supports the development of small and medium enterprises. Currently, SCORE is being implemented in nine countries in Africa, Asia and Latin America, including projects involving 545 businesses with more than 155,000 trained workers.

© SCORE
SCORE promotes a change in management style, supporting working environment improvements and relations between managers and workers, with the support of the Norwegian (NORAD) and Swiss (SECO) development agencies.

“One of the main objectives of the programme is to promote a management model that can positively impact the economic viability of small businesses, and the working environments for employees. SMEs are the major providers of jobs in Latin America, but are also the ones where decent work deficits are critical, hence the urgency to consolidate their productivity and labour conditions,” says Philippe Vanhuynegem, the ILO Senior Enterprise Specialist in charge of backstopping the SCORE program in the Andean region.

A comprehensive business package

The SCORE Centre of Excellence and Methodology for Latin America provides comprehensive business training and technical assistance based on five modules: workplace cooperation, quality management, cleaner production, human resources management, and occupational safety and health – generating a culture of dialogue among employees.

“Companies that adopt this methodology address two fundamental aspects: sustainability and productivity,” resumes Vanhuynegem. “We propose a culture of continuous improvements within production units, both for managers and workers.”

SCORE aims to reduce defects in production, accidents and absenteeism, and promote cost savings and dialogue between employers and employees, leading to increased competitiveness and social and labour well-being. “Productivity gain is key in this process, if we wish that more businesses adopt good labour practices,” concludes the ILO expert.

This program is being implemented now in places as diverse as Ghana, China, Indonesia and Bangladesh.

In Latin America, SCORE is operational in Peru, Bolivia and Colombia. A Peru pilot program was launched in 2013 with the support of government, employers and workers, benefitting 12 agribusinesses that represent close to 3,800 workers.

In Bolivia, the SCORE program is managed by a tripartite committee supporting 14 enterprises and 4,600 workers in the manufacturing industry.

In Colombia, Calza Kids is one of 49 companies that participated in the program. Most of them are in the garment and cutflower sectors. Once SCORE has proven its effectiveness, its methodology is intended to be institutionalized and replicated in other businesses and regions in all three countries.

A mailbox for new ideas

“We created a mailbox, so that our collaborators could bring in their ideas, and say what they would like to change,” says Guillermina Muñoz, a machine operator at Calza Kids. She was one of the people selected to participate in the “improvement team” of the company. Fifteen of the 64 ideas that were collected have been implemented within a month.

All stakeholders agree that productivity has increased while work organization, environment and coordination have been considerably improved. The next challenge will be to further improve this approach, especially to strengthen competitiveness in international markets.

Promoting SMEs is key to job creation

At the 104th session of the International labour Conference, the discussion on 'Small and medium-sized enterprises (SMEs) and decent and productive employment creation' reached broad agreement that SMEs are vital to achieving decent and productive employment.

It concluded that:
  • SMEs account for two thirds of all jobs globally and create the majority of new jobs.
  • Well-designed SME policies help create more and better jobs and contribute to sustainable economic growth. In view of the heterogeneity of SMEs, interventions need to take into account enterprise characteristics such as size, sector, growth or age.
  • Going forward, the ILO should maintain its current portfolio of interventions focusing on: entrepreneurship development, including access to finance; an enabling environment for enterprises; improvement of productivity and working conditions; value chain development; and promotion of cooperative enterprises.
  • The ILO should also do more on formalization of informal SMEs. The ILO's actions need to be strategic and measurable, and attention needs to be given to generate rigorous analysis on the impact of interventions to orient governments and social partners on what works and what does not in the area of SME policies.




This is a web version of the story published in the 2015 edition of the World of Work Magazine.