Training Unemployed Youth in Latin America: Same Old Sad Story?

Claudio de Moura Castro, Aimee Verdisco, IDB

 

This text explores training programs for disadvantaged youth in Latin America, especially through looks at Chile Joven, Argentina's Proyecto Joven, and Brazil's PLANFLOR. One of the central points is seeing how each system could learn from the other. Basically speaking, the first two are seen as well-targeted while the third of them is of good quality, with the inverse could be said as to their weaknesses.

The authors explain how the change of circumstances between the post-WWII economic boom and the 1970's. Since then, training has been expected to stimulate labor demand instead of responding to the supply of jobs. The attainment of a correspondence in the training offer and demand is the primordial requisite when trying to justify the provision of training programs. No longer can we think in terms of "the more the better" when providing training. The place training had in Latin America was clear, especially with its privileges over academic schools for taking up the preparation for manual occupations, independent of ministries of education and middle-class ethos, and relatively close relations with employers. Later came crisis, with loss of prestige, some experiments with training in the informal sector (mostly unable to translate into much), and some major budget cuts. This initial failure to adapt to change was answered with "a clear shift in paradigm" that has to be understood in the wider perspective of "reinventing government" toward the role of regulator, selector of bids and controller of quality.

Greater choice of services is handed over to users, whose election becomes a factor of quality control in what used to be the domain of public services. Funding is "split" from execution, as the author explains.

After that initial exposition, the authors delve into the question of how to justify training in the absence of demand. "Most checkbook programs .. are created as responses to high youth unemployment," but as the text goes on to say, "Evidence compiled to date suggests that training (except in cases of training for self-employed or to micro-entrepreneurs) does not create employment. From much that is know, employment appears to be created when the macro-economic variables are right and the economic climate is favorable, rather than when skilled labor is available".

By the mid '80s, the substitution effect had become a clear argument against training for the creation of employment. It suggest that the number of jobs at any moment is a given, so training "substitutes one job candidate for another". One thing which is clear is that the empirical tools to measure this effect are underdeveloped and underutilized. After distinguishing between the issue of job creation and the distribution of jobs, the authors go on to present arguments in favor of youth training.

• The first of them is very questionable, but some may say that programs can prepare youth for areas where lingering vacancies exist due to lack of skills, but since demand is a function of price, the real question is the wage level at which those jobs would be filled.
• A second justification, already alluded to, is that of increasing the equity of the social system by seeing to it that poorer, more vulnerable youth are the ones who benefit from the substitution mentioned above.
• The third issue is social integration, "the need to address dysfunctions or 'pathologies' in society," in a way the authors sum up like this: "training is cheaper than incarceration". Training contributes to self-esteem and has other non-cognitive benefits (such as discipline and punctuality).
• Despite mediocre labor insertion rates of graduates, training is said to be a predictable, if indeed roundabout, way of favoring productivity (which increases growth which increases employment). Then emphasis of the text is placed on the observation that "in this regard .. the content of training becomes critical. ...If trainees are unable to find employment immediately... then the real value of training may be in its provision of a more durable core of basic skills".

The solidity and depth of basic cognitive skills taught with specialized training are mentioned as the essential elements for good training, which can be blended with practice. Contextualized, applied learning help to give training a wider applicability, but they require considerable planning and investment, with some newly designed courses to be used as models. The programs of Chile and Argentina, on the contrary, fail to focus on the "bottom-up" development of materials.

Training also must identify the skills in demand and respond to the economic context. Or as the authors say, "Training objectives must be targeted as carefully as the training clientele".

The three programs explored in this text are demand-oriented, but the Brazilian one runs parallel to a solid training system.

Chile Joven dates back to 1992, created with support from the IDB. "The (seemingly radical) idea was to create a market for training services targeted to low-income sectors" which generally did not take part in the Ministry of Education's services nor those of SENCE. During Chile Joven's execution, youth employment varied between 11 and 17%, while paradoxically the country was experimenting growth in its economy and demand for labor. A campaign was launched along with initiatives for enterprises and low-income youth, and the response exceeded projections by over 28,000 participants (28%). Public bidding took place to contract training services from start to finish. The establishment of rules of operation is identified as another basic aspect. They avoided bureaucracy in the execution and evaluation, and decentralized decision making, permitting specially targeted services. ("Operators served as intermediaries between the demand for training and the supply.") The payment depended on student progress and program completion. As a general appreciation of Chile Joven, "it took a creative approach to matching training with the demand for labor" with courses often "tailor made" to the needs of enterprises of any size and trade where demand was identified, especially in the search for internships.

Evaluating the prior program, several things are said in terms of targeting and results:

• 95% of the 90,839 participants came from the low-income target population, and only about half of them had finished the middle-level schooling.
• The program was "socially profitable". 55.5% of the participants ended up employed or in school after completion, (vs. 41.3% in a control group,) and with better wages than the control group, too. Evidence is also shown regarding the success in the targeting of women.
• Only 18.5% of all participating enterprises were large (200+ people).
• Over 90% of enterprises expressed satisfaction, in terms of willingness to receive future participants.
• The program has been used as a model, it was extended without funding from the IDB, and the country's training system underwent transitions in line with those discussed here.

In terms of the quality of training:

• Insufficient emphasis was given to the generating of "quality inputs" (materials and institutional knowledge, for example) required for effective training in line with the nation's economic transformations. Incentives for quality weren't present, and concentration was overwhelmingly on the creation of a market.
• The options of courses ended up quite standard and traditional: 37% industrial arts / 31% commerce / 27% technical areas / 9% agriculture and forestry. Furthermore, greater percentages of participants wound up being employed in some of the most traditional sectors.

Project Joven (Argentina) is one of the programs modeled after Chile Joven. It began in 1994, also with support from the IDB, and continues to date. It too tries to instill appropriate values, attitudes and skills among mostly lower-income youth. The situation of Argentina spoke of roughly 30% unemployment among youth. The funds to contract training are handled through the Ministry of Labor, which looks above all to the compromise of enterprises to provide internships, as an indicator of the match between the institution proposal and market demand. The project has targeted 170,000 of the roughly 600,000 unemployed youth.

Results of the program (with some success to a large degree similar to that of Chile Joven):

• 83% of the participants are unemployed and 80% are from low-income families.
• It has raised employment rates, especially among men: from 43.7% to 61.3% 11 months after training (vs. 51% to 59.9% in the control group). For women it has been basically ineffective in promoting employability, however.
• Also the proportion returning to school increased, from 7.9% to 20.8%.

Evaluation of quality (Note similarities to Chile Joven):

• Insufficient attention paid to planning and development.
• Frequent changes in curricula without clear evolution. Even conventional courses are prepared from scratch.
• individual consultants increasingly won out over training firms. "The nation's training system is thus left without institutional bearings. Training becomes an initiative of—an often inexperienced but aggressive—few; quality suffers".
• In the midst of a deteriorating technical school system, these "polimodal" system came along without representing a true, full-fledged replacement of the collapsing system, but rather a "light, ad hoc" set of courses. Some occupations, especially industrial arts and other classical trades, "have been forgotten under the new system" since they have relatively long training periods on account of the skills they require. Furthermore, the opportunity for organizational learning is nil because of the reduced size of participating organizations.
• In synthesis, "Since there is neither the expectation of continuity nor the funds or incentives to develop new materials, most courses—and instructors—are improvised; the equipment, by extension, is often inadequate for the task. As a result, the wrong practices may be taught. And, experience does not accumulate".

In the case of PLANFOR, its creation in 1996, must particularly be seen in light of a parallel system. In Brazil, institutions like SENAI and SENAC, catering to industrial arts and the service sector, respectively, have half a century of experience developing courses, and newer institutions (SENAR, SEBRAE, SENAT) have also worked closely with their respective sectors, deeply developing training experiences. A 1% payroll levy means they have responded to the firms in the formal and modern sector, and have done so quite well usually, but this represents a real problem in terms of targeting.

Here the Brazilian Ministry of Labor acted upon the existing capacity and experience of the "S" system (SENAI, SENAC, etc.) and short courses it contracted from SENAI in the 70's under PIPMO. The 1997 target population of unemployed and dispossessed youth was estimated at 40 million.

PLANFOR is financed through a U$S 20 billion unemployment fund. Around $300 million of that goes to training approximately 1.3 million workers. As in two previous cases, it operates with a checkbook approach. However, important differences include:

• It focuses on marginalized people, but not necessarily unemployed youth. Almost half of the participants don't fit in the unemployed category (and of these, half are employed in the formal sector).
• It doesn't insist on the concrete existence of jobs (the "no demand, no training" rule).
• Centralized course allocation with very little input from course providers.
• On the other hand, developed materials and basic skills are better prepared for the participants.
• It clearly runs parallel to the "S" system, targeting at a clientele the traditional system left out (though failing to appropriately target within that sector).

 

25% of the participants come from rural areas (where 21% of Brazilians live)—which the article points out as "quite an achievement considering the urban bias of most social programs as well as the S's". 49% of the program participants are women (who make of 40% of the work force) and blacks have turned out to be privileged.

Its execution is decentralized, making it heterogeneous, so generalizations of the results is a problem.

In the Interior of the States, particularly positive results have begun to show. While in general reports of improved situations have been coming in, those that most benefited are mid-aged, and men are deriving more benefits than women.

Despite surprisingly short training courses (for instance, 1/4 that of the "Joven" projects), wage increases show satisfying results—that is, in Minas Gerais. Pernambuco, meanwhile only shows positive results in the feeling participants come away with. The author explains, "The absence of financial gains is a perfectly natural outcome of such training courses (50-hour, first-come-first-serve, poorly targeted courses)."

The courses are also reviewed on the basis of the instructor experience, materials, equipment, and practice/theory, on page 20 of the text, getting a generally good review.

Specific criticism includes:

• 2/3 of participants have completed primary schooling, while only 1/5 of the Brazilian working population can say the same. A whole tenth of the participants have even completed high school. Simply stated, whether it be a problem of information, access, screening or whatever, PLANFOR is biased against the less educated, who are in greatest need. "By targeting those with the levels of education demanded by the market, PLANFOR ensures a minimum level of employment of its graduates."
• 25% of interviewees said they took courses in activities for which there is no demand. As a specific example, courses in agricultural techniques are offered in a non-agricultural area.
• 33% of interviewees said they could not use what they learned.
• Insufficient information about course offerings at local offices of the national employment service.

While decentralization has the potential for better responding to local needs (creating a check-and-balance system to attain a tighter match between demand and supply), it doesn't work that way in Brazil. It takes place only from the federal to state level, which "leaves the programs in the hands of highly centralized bureaucracies, the majority of which tend to be poorly equipped and capacitated and heavily contaminated by politics. The problems of identifying clienteles—the eternal curse of training systems—thus remain."

A synthesis of the above observations is made in terms of what Chile and Argentina can learn from Brazil and vice-versa.

Then the authors discuss equity on different grounds. Do the programs displace older workers, whose situation can be critical? What about when employers use internships to screen and select the best students through formal requirements? How do you arrive at an optimal compromise between the response to social and economic needs, which is to say, successful targeting and high job placement rates?

The conclusion at which they arrive is that the real justification for training courses gets back to what was said about productivity and competitiveness, and therefore growth: that training has an impact on growth, and that is what creates jobs.

 

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