News Americas, New York, NY, Thurs. Oct. 29, 2020: Understanding how training interacts with economic growth for countries, including in Latin America, can help explain why some workers, companies and the economy are growing while others are not. As the labor supply increases, wages fall. If the employer’s labor request cannot keep up with the labor supply, wages generally fall.
The excess supply of workers is particularly harmful for those working in industries with low barriers to entry for new employees. This is especially those who do not require a degree or any professional training. In contrast, highly educated and trained industries tend to pay higher wages to workers. The increase in wages is due to a decrease in the supply of labor available to work in these industries, and the required education and training incur substantial costs.
The Economic Situation In Brazil And Mexico
Most countries in Latin America are struggling to escape what economists call the “middle-income trap.” Although most, if not all, of the region has emerged from low-income status, neither growth nor productivity has increased enough to allow Latin America to close the gap with the world’s most developed economies. Although income inequality has been reduced in most parts of the region in recent years, social vulnerabilities are still widespread, and weak systems continue to plague efforts to achieve fair development.
Brazil and Mexico lead Latin America in the downturn caused by the severe coronavirus, but prolonged economic weakness will keep the region as the worst performing one in developing countries. Since the beginning of June, Latin America has been the epicenter of the global pandemic. Although the population accounts for only 8%, it still accounts for more than 40% of the new Covid-19 deaths worldwide.
The severity of the crisis has dealt a heavy blow to the already sick economy. Although Brazil and Mexico took an unusual approach to the coronavirus, most other economies in Latin America were paralyzed by strict embargoes that lasted much longer than in Europe or Asia.
According to Bank of America, the region’s Gross Domestic Product (GDP), is expected to fall by 8.2% this year, which is much lower than the Middle East, Africa or emerging Asia. BOA believes that next year’s recovery from illness means that Latin America will not even make up for half of the lost production, only an increase of 3.5%. The lockdown measures in Latin America are enough to kill the economy, but not enough to stop the virus. Mexico and Brazil have been in their alliance for most of the economic recovery. They have closed the least so far and have recovered faster than all other countries.
The biggest recent revision to the forecast is for Brazil, and most banks now expect Brazil’s GDP to fall by about 5% this year, instead of the 7% or 8% decline previously predicted. The forecast for 2021 shows that the growth rate will exceed 3%. Brazil is in crisis due to weak public finances. President Jair Bolsonaro faces an enviable choice before the 2022 election. Either he withdraws from additional government spending that will help the economy recover quickly or keep spending despite the soaring public debt level, risking a financial market crisis.
The Economic Situation In Other Latin America Countries
Latin America is the third-largest economy and was already in a severe recession before the virus infection. Citibank’s forecasts show that one of the world’s longest lockdowns has failed to contain the spread of infectious diseases, and the economy of this region is still in chaos. It is expected that the Gross Domestic Product (GDP) will fall by 11.5% this year. Other major regional economies in this region that have been in trouble early are Colombia, Chile and Peru. They hoped to emulate Europe’s success in quickly containing the virus but fail to foresee that large informal economies and densely populated urban slums will undermine this strategy in Latin America.
Peru was internationally praised for its early and painstaking blockade and announced a series of stimulus measures aimed at helping the poor. But in any case, the virus has swept the country’s large open food market, causing the number of deaths per capita to rank second in the world. As a result, Peru’s economy fell 30.2% year-on-year in the second quarter, the worst recession in the world. However, the economy is rebounding rapidly and is expected to grow very strongly next year. Peru has invested as much money as Brazil in payments to households and companies, but it has no previous debt loopholes and is on a good growth track.
For similar reasons, Chile is also more likely to escape the corona virus outbreak than most neighboring countries. However, Colombia will continue to be hampered by the continued increase in the number of deaths from the virus and weak fiscal response. Leaders in the region need to use the virus crisis to solve long-standing problems. They need new sources of growth. They also need resilient, inclusive and sustainable growth.
How Training Can Change The Situation?
It is obvious that money is fundamentally essential. The more funds you have, the further away your problems will be. Money gives you security. As for education and training, they get you money. In order to limit inequality and the tax burden between people, employment inspections are also essential. For example, companies in France like Optédif Training use good initiatives about training to make the situation better. During the pandemic, the government took strong measures to train employees.
Significant opportunities exist for people who do nothing due to congestion, unemployment and business difficulties and is absolutely training and education. Indeed, training can help people stay in potentially challenging environments and do things better.
The Importance Of Training For Employers
Successful economies have a workforce capable of operating industries at a level that has a competitive advantage over other countries’ economies. Countries can try to incentivize training through tax breaks, providing facilities to train workers, or various other ways to create a more skilled workforce. Although the economy cannot have a competitive advantage in all industries, it can focus on many industries where skilled professionals are more easily trained.
The difference in training levels is an important factor distinguishing between developed and developing countries. Although there are, of course, other factors, such as geographic location and available resources, well-trained workers will have spillover effects throughout the economy and bring positive externalities. A well-trained workforce can make externalities have a positive impact on the economy. In other words, all companies benefit from external factors that have a skilled workforce that engages employees. In some cases, highly skilled labor may be concentrated in a specific geographic area. As a result, due to those skilled workers, similar businesses may be clustered in the same geographic area.
Ideally, employers want workers who are productive and require less management. Employers must consider many factors when deciding whether to pay for employee training. Some questions that they should ask themselves are:
- Will the training programs increase worker productivity?
- Is the increase in productivity sufficient to cover all or part of the training costs?
- If the employer pays for the training, will the employee leave the company to compete after the training plan is completed?
- Can newly trained workers be paid higher wages?
- Will workers increase bargaining power or increase wage leverage?
- If an increase in wages can be guaranteed through training, will the increase in productivity and profit be sufficient to cover any raise in salary and the total cost of the training program?
Although employers should be wary of newly trained workers to leave, many employers require workers to stay in the company for a certain period of time in exchange for paid training.
On the other hand, the companies may also face employees who are reluctant to receive training. This may happen in trades dominated by unions, because increased job safety may make it more difficult to hire trained professionals or fire fewer trained employees. However, unions can also negotiate with employers to ensure that their members receive better training, thereby increasing work efficiency and reducing the possibility of jobs being transferred overseas.
The Importance Of Training For Workers
Workers increase their income-generating potential by developing and improving their abilities and skills. The more they know about the functions of a particular job and about a particular industry, the higher their value it is to employers. Employees may wish to learn advanced technology or new skills in order to fight for higher wages. Generally, workers can expect their own wages to increase, but the magnitude is smaller than the employer’s increase in productivity. Workers must consider many factors when deciding whether to participate in the training program:
- How much additional productivity do they expect?
- Will the training program benefit the workers?
- Workers will see the right to increase wages, can the cost of the plan be guaranteed?
- What are the labor market conditions for well-trained professionals in this field?
- Is the labor market severely saturated with trained labor in the field?
Employers can pay for all or part of the training costs, but this is not always the case. In addition, if the plan has no salary and may not be able to work for as many hours as before, workers may lose income.
The Importance Of Training For Companies
Regarding further work-related training, employers provide training opportunities to meet their human capital needs and improve production efficiency. Therefore, facing economic modernization and higher qualification requirements, they are increasingly investing in further training arrangements, especially to ensure and improve their competitive position. Therefore, facing economic modernization and higher qualification requirements, they are increasingly investing in further training arrangements, especially to ensure and improve their competitive position.
In order to ensure long-term profits, consider the costs and benefits of further training arrangements, and ensure a lasting employment relationship, the knowledge and skills conveyed in the on-the-job further training courses are mostly company specific. Therefore, qualified employees, especially managers and qualified commercial and technical personnel, are all qualified. This is a way of binding these employees to the company.
Online Learning And Training Is Obviously The Future
Over the years, everyone has found an excuse not to use distance learning solutions, such as online learning, digital learning, and social learning. Now there is no choice but to choose it, which is also better for the equality between the earth and people. Knowledge, training and education are also solutions for each of us to rebuild a new future.
Even before the Covid-19 crisis, there had been high growth in the global education technology investment and the adoption of education technology. In order to meet the large demand, many online learning platforms provide free access to their services.
The Digital Expansion
The digitalization brings advantages and opportunities for people with the required skills, but for those who are not fully prepared, it can exacerbate inequality and vulnerability. The acquisition of skills, the distribution of knowledge and training opportunities are essential to improve the well-being of citizens in the digital age. Preventing the widening of the education gap during the pandemic is the key to promoting inclusive rehabilitation. Therefore, improving the company’s digital capabilities is essential.
New technologies may help reduce skills gaps and, more importantly, promote the acquisition of basic skills by groups that are traditionally marginalized. Training with the use of technology can support meeting these challenges, especially because dealing with the impact of adverse conditions on skills, such as socio-economic disadvantages, is more effective early in life. At the same time, training needs to teach young people the skills they will use in an increasingly digital future.
New technologies can develop innovative teaching practices, provide personalized distance courses and feedback, and encourage workers’ interest and participation through new learning methods. Connectivity allows companies to access new learning resources and materials. Therefore, digital transformation can provide additional support for the development of basic cognitive, non-cognitive and digital skills, and prepare students for life and success in the digital world.
The Future With The Online Courses
Some people believe that an unplanned and rapid shift to online learning (no training, insufficient bandwidth, insufficient preparation) will lead to a poor user experience and will not be conducive to continued growth. Then again, others believe that a new hybrid education will emerge. For those who do have the right technology, there is evidence that online learning can be more effective in many ways.
To conclude, the knowledge and skills of workers available in the labor supply are the key factors that determine business and economic growth. An economy that brings a large number of skilled labor through vocational training can usually take advantage of this by developing more high-value-added industries, such as high-tech manufacturing.
Countries need to pass legislation and employment plans to ensure that all their citizens have access to training that can improve the level of workers, companies, and the entire economy.
