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ARGENTINA: From High Unemployment to Shortage of Skilled Labour

Marcela Valente

BUENOS AIRES, Mar 13 2006 (IPS) - After 37 months of sustained economic growth, Argentina’s unemployment rate has plummeted from 23 to 10 percent. But any further reduction will be difficult to achieve, because of a lack of skilled workers to meet growing demand.

According to a monthly survey carried out among 200 companies by the Sociedad de Estudios Laborales (SEL), a Buenos Aires-based consultancy firm, the main factor restricting hiring in 2004 and 2005 was “uncertainty over the future performance of the economy.” But today the main reason cited by businesses is a shortage of qualified applicants.

SEL director Ernesto Kritz told IPS that the lack of skilled labour rose from second to first place among the responses listed by the companies surveyed. “This is a widespread problem among businesses in many sectors, which is especially intense when it comes to operative, technical and professional personnel,” he said.

Kritz said there is virtually no area where the problem is not seen. Even companies that are not seeking new hires worry about losing valuable employees and being unable to replace them. A sense of uncertainty, which in the past was basically a burden felt by employees, is now increasingly shared by employers.

“There is full employment today in the formal sector of the economy, where more than half of all people with work are employed. And most unemployed people coming from the informal sector are too low-skilled to enter the job circuit and help satisfy the growing demand,” he remarked.

That is corroborated by National Institute of Statistics and Census surveys on unmet demand for labour. In the last quarter of 2005, 44 percent of the companies surveyed were seeking new hires, and of that total, 15.4 percent responded that they had been unable to cover their vacancies.

The scarce offer of skilled labour is especially a problem in the metallurgical, paper, automotive, chemical, textile, rubber, plastics and leather industries.

A new unemployment scheme that provides for a monthly income along with a job training programme is aimed at addressing the problem. And parallel to this Labour Ministry policy, the Education Ministry has increased its budget 17-fold for vocational-technical schools.

Public vocational-technical secondary schools had been left without financing in the 1990s, and there is now a high level of demand for the few that remain. Compounding the pressure is the fact that students attend the schools for six years – from ages 12 to 17 – and the market cannot wait that long for new graduates.

Claudio Flores, director of the Agein consultancy on human resources, discussed with IPS changes in the labour market since the Argentine economy began to recover from the severe crisis that followed the late 2001 economic and political collapse, and pointed to several of the main bottlenecks.

“In 2005, we were contacted by many companies seeking well-trained, experienced workers in the areas of mechanics, electromechanics, and chemistry,” said Flores. “The companies turned to us after months of unsuccessful searches with other agencies, and after a while they left without finding anyone,” he recalled.

The businesses are offering decent salaries of 1,500 pesos (500 dollars) a month to university graduates with degrees in business administration, while chemistry students who have not even completed their last year of high school yet are offered 1,000 pesos (333 dollars) a month under a one-year apprenticeship contract.

“Once these students have graduated, they can hope to earn 1,500 to 1,800 pesos (between 500 and 600 dollars) a month at the young age of 17 or 18, and without any previous experience,” noted Flores. But despite the relatively high salaries, employers are having a hard time finding qualified personnel. “In the case of chemical, mechanical or electronic engineers, the demand is terribly high. It pays really well, but there just aren’t enough applicants,” he added.

Flores noted that companies are once again experiencing a phenomenon that had not been seen in the labour market since the mid-1980s. “We find a candidate and make him a specific offer. But when he tells his bosses that he’s quitting, they go so far as to double his salary to hold on to him,” he said.

During the 2002 and 2003 economic and social crisis – the worst in Argentine history – Agein received an average of 500 to 600 CVs a day from people looking for a position as financial manager, compared to between 30 and 40 today.

Another novel aspect is how the kind of employee sought by companies has changed. For instance, companies now seek older human resources managers, with abundant experience, who are able to deal well with labour relations during a time when trade unions are more likely to press their demands like higher wages, Flores explained.

But that is precisely the kind of employee who is not looking for a job today. For that reason, Flores said companies should offer their valuable employees good salaries and working conditions, in order to keep them. “If a company wants to find a plant maintenance manager, for example, I tell them they should start by offering more than the going salary, because otherwise employees will just stay where they are,” he commented.

In fact, employment agencies are not focusing this year on recruiting the unemployed, but are targeting good employees who already have a job, attempting to lure them to better-paid jobs in other companies.

The unemployed, meanwhile, are finding it more and more necessary to seek training in order to rejoin the labour market.