Cover Image
close this bookThe Transition of Youth from School to Work: Issues and Policies (IIEP, 2000, 188 p.)
close this folderChapter II. Training unemployed youth in Latin America: same old sad story? by Claudio de Moura Castro and Aimée Verdisco
View the documentIntroduction
View the document1. On the elusive art of training
View the document2. Training to improve employability: experiences from Latin America
View the document3. Lessons
View the document4. Conclusion: are youth training programmes still a good idea?

1. On the elusive art of training

Training has long occupied a central position on the agendas of governments everywhere. Like most other public policies, it has undergone considerable shifts, responding to different economic conditions and serving different political constituencies. Traditionally, governments promoted and financed training as a means to increase productivity and to create a workforce capable of absorbing more complex and sophisticated technologies. This was the main justification for training during the post-Second World War economic boom, although economists often put forth the argument of economic returns to training in the form of higher incomes for those receiving training - which, although not the same thing, was compatible.

By the 1970s, circumstances had changed. As economic recession set in around the globe, training was asked to do something else - to create employment. The policy justification was eloquent and simple. The more training people had, the higher their employment level would be. Rather than responding to the supply of jobs, training was seen as a means for stimulating labour demand, particularly for marginal populations.

Regardless of approach or ethical considerations taken, training has proven to be a good investment only if those trained find a job utilizing their newly obtained skills or are already in a position where these skills can be used. Indeed, this is the bottom line of and for training. Training otherwise is a bad investment: it is more expensive than regular education and, if the skills learned are not utilized, there is no point in spending the money. It is better to provide more education. Therefore, obtaining a good match between the demand for and the supply of training thus becomes and remains the sine qua non justification for its provision.

1.1 From training for jobs to training without jobs

From the perspective of public policy, training essentially arrived on the coat-tails of the post-Second World War economic expansion. The explosive growth in training during this period coincided with fast economic growth and severe bottlenecks in skills; overcoming these shortages provided the obvious justification for national training policies. As the rapid expansion of industrial and manufacturing sectors outpaced the capacity of on-the-job training efforts - dominant at the time - to prepare skilled labour in a timely manner, nations around the globe responded by creating publicly operated and financed training institutes. Latin America was no exception. Indeed, the region's national training institutes - referred to here as the 'S & Is' (they are called, for example, SENAI, SENA, SENAC, SENAT, SENA, SENATI, and INA, INCE, INFOTEC, INACAP) - can trace their origins these past periods of economic expansion. All shared a common approach and vision. It was the supply of training that mattered; and the more, the better (see de Moura Castro, 1995).

Training followed a straightforward sequence: train instructors, translate; adapt and prepare training materials; build centres and purchase equipment at the fastest possible pace. In most cases, this model proved viable and self-sustaining. Structures for financing, delivery and political autonomy were built into the system. A payroll levy provided financial stability, comfortable budgets and a long-run perspective. The so-called 'methodical series' supplied a practical, fail-proof and effective means of delivery. The independence from academic schools and from the Ministry of Education (in most cases) liberated vocational training from the academic schools' middle-class ethos and prejudice against manual occupations. Furthermore, these institutions were often quite close to the enterprises, thus ensuring the general direction of training provided was in line with the needs of industry.

For several decades these systems enjoyed a good reputation and adequately trained several generations of highly skilled workers. They were, overall, significantly better than the regular schools in their countries. Some were outstanding institutions. They trained workers who allowed the modern sectors to develop and fostered the process of import substitution. Despite the criticisms launched against them, most were respected islands of serious learning, in contrast to the overall mediocrity of the academic schools.

Yet, as economies across the region began to stagnate, the 'S & Is' - as most supply-siders - lost their dynamism. The oil crises, the economic disturbances that followed and the labour-saving nature of industrialization slowed growth in employment in the modern sector and led to the rise of the informal sector and self-employment. The 'S & Is' thus lost their edge, and began graduating students who did not find a clear and active labour market in the industrial sectors. Many experimented with training for the informal sector - experiments that were often broader-based than elsewhere in the world (Ducci, 1990) - but few (e.g., INA and its Talleres Populares) were actually able to make this transition. On the whole, most of these experiments remained as such, small initiatives that were never replicated on a larger scale.

As the market for modern industrial occupations lost its impetus, the 'S & Is' failed to adapt accordingly. Rather than catering to new markets with a more active demand, they remained stuck in their original supply-side priorities as if nothing had happened. As a result, both their prestige and reputation eroded and they became far more vulnerable to pressures from the outside. Budgets were poached, if not raided outright, and activities were redirected away from training per se and towards more socially productive or politically expedient activities. No institution was immune. Neither SENA (Colombia) nor INA (Costa Rica) - the most prestigious institutions in Spanish-speaking Latin America - escaped; SENA budgets were subjected to central controls and similar constraints were imposed on INA. The Peruvian SENATI, in much the same vein, lost half of its budget, which fell from 1.5 to 0.75 per cent of payroll.

1.2 If training institutions do not change, buy training on the market

The 'S & Is' provide an interesting case of solid training institutions failing to adapt to changing circumstances - in this case, to an environment in which jobs are few. Pressed by economists worried about rates of return and little interested in what goes on inside the black box where training takes place, trainers and governments alike have been forced to redefine the very notion of training. The result has been an about-face. In contrast to times past, to some decision-makers of the present, it is the demand for training that matters. This demand needs to be closely monitored and only that training which responds to a clearly identified demand should be offered. The general rule is simple: no demand, no training.

In Latin America, this about-face has been manifested in what can be termed a 'chequebook approach' to training (see de Moura Castro, 1998). The approach is an attempt to re-engineer the entire system of training, instead of reforming the training institutes (if this occurs, it is seen as a positive spillover effect). The chequebook approach is part and parcel of larger processes to 're-invent government' and to use economic incentives in areas that have traditionally been the domain of conventional hierarchical structures. It signals a clear shift in paradigm. Rather than being an operator of training or trying to govern the training systems by means of hierarchical or administrative controls, the state becomes a buyer of training services. In this capacity, the government becomes a financial agent who establishes clear rules for purchasing training, selects the best bids and controls the quality of the service offered. The state gives up the attempt to manage institutions, as it had done with the 'S & Is'. It adopts a different strategy.

In short, the chequebook approach epitomizes a tendency that is becoming widespread in Latin America and elsewhere: that is, to create surrogate markets for services which are normally produced by the public sector. In this process, a multiplicity of suppliers - both public and private - compete for contracts. Vouchers may be used to give users full freedom to choose the services they want. Yet in all cases, funding is split from execution. The people who pay are not necessarily those who deliver the services and greater choice is given to users. 'Voting with the feet' becomes a way of controlling activities that were previously delivered under traditional public service.

1.3 The logic of training without jobs

The chequebook approach to training, although simple in conception, begs the question of how to justify training in the absence of demand. Most chequebook programmes - including those examined in this paper and those implemented in OECD countries - are created as responses to high youth unemployment (OECD, 1996; Johanson, 1994; Soffer and Zymelman, 1993). In these periods of economic downturn, too many are left without jobs, even those who have had vocational training. Yet there is an implicit assumption or hope that such programmes will alleviate the problem and create jobs.

In the assumption that training creates employment, the burden of the proof is with those who defend it. Evidence compiled to date suggests that training (except in cases of training for the self-employed or to micro-entrepreneurs) does not create employment. From much that is known, employment appears to be created when the macroeconomic variables are right and the economic climate is favourable, rather than when skilled labour is available (Lee, 1995). "The link between employment and economic growth has not become weaker... For every percentage point increase in the growth rate of a country in the last ten years there has been an increase in the level of employment" (Boltho and Glyn, 1995).

Critics of training-for-employment-creation programmes base their assertions on a series of reasonable arguments. The first is the so-called substitution effect. Under this line of thought, training may very well increase the odds of any particular person to obtain a job, yet the number of jobs at any moment is a given, determined by other variables - mostly at the macro level. Training, thus understood, substitutes one job candidate for another - and often does so at high costs to the state. Even if the employment levels of trainees increase, as compared to well-designed control groups, the substitution effect remains. Youth training programmes in the United Kingdom are a case in point. "By the mid-1980s the evidence of 'deadweight' or 'substitution' etc. told against any further use of direct youth employment or recruitment subsidies to lower the effective cost of youth labour and the government concentrated on developing the education and the training system" (Lindley, 1996:170).

The evidence required to demonstrate that training programmes create jobs is not easy to come by. Convincing evidence would have to be produced to show that either: (1) Graduates of training programmes get more jobs than they would in the absence of the programme. (2) Or, the jobs created add to the total number of jobs available, rather than merely changing the distribution of jobs in favour of those who have received training. These, of course, are two independent issues. The first concerns increasing the employability of the graduates and the second deals with the aggregate impact on employment levels of such programmes.

Both issues raise empirical questions. If (2) is satisfied but not (1), we return to the 'golden age' of the 'S & Is', that is, to a supply-driven approach to training reminiscent of the past that is neither viable nor defensible at the current juncture. If, on the other hand, (1) is satisfied but not (2), we face a substitution argument that not only is hard to dismiss but, for its advocates, is equally difficult to demonstrate in empirical terms. The empirical tools to measure the strength of substitution effects remain underdeveloped and underutilized.

1.4 Why train if there are not enough jobs?

Despite the empirical difficulties of substantiating their impact, the arguments for youth training still make sense. Key arguments are reviewed below. These arguments justify youth training on several grounds. Yet, as has been made clear from preceding discussions and those to follow, empirically demonstrating the grounds upon which each justification applies is no trivial matter.

1.4.1 Vacancies remain unfilled due to the lack of skilled workers

When firms have openings or potential openings that remain unfilled due to lack of skills on the part of candidates, training can make a significant difference. In this case, there is no substitution but a net increase in employment. This is the usual justification for youth training programmes. Government officials claim their employment agencies report many positions that remain open for lack of job-seekers with the requisite skills. By preparing youth to become skilled in the areas where lingering vacancies exist, these programmes could increase aggregate employment.

This argument makes much logical sense. However, the quantification of these job openings is always elusive and the empirical grounds upon which to expect significant employment creation are shaky at best.

The rationale is clear enough and there is casual evidence of job openings that remain unfilled due to the lack of suitable candidates, even within contexts of high unemployment. But does the evidence stand behind these assertions of surplus jobs? Not quite. Most surveys done by labour services in Latin America and elsewhere ask employers about unfilled vacancies. As any introductory text in economics suggests, demand is a function of price. There may be vacancies that remain unfilled, but at what wage levels? If sufficiently higher wages are offered, someone will appear with the requisite qualifications. Do the surveyed employers prefer to engage in wishful thinking rather than pay the prices that clear the market? Hence, most estimates of job offers, while not necessarily untrue, are not necessarily that meaningful either. The United Kingdom case provides a telling example: during "the mid-1980s especially it would seem wrong to attribute high youth unemployment or underemployment primarily to poor school preparation for the transition to work" (Lindley, 1996:159).

1.4.2 It is better to give chances to poorer kids

It is very difficult to rule out substitution effects in real-life training programmes for the unemployed. However, substitution is not necessarily a fatal argument against them. In fact, even if there is a substitution effect, training can still be justified if those who benefit from the substitution are the most vulnerable and dispossessed. The end result would be an increase in the equity of the system. Since such programmes are clearly targeted to the less educated and less affluent youth, they favour the employment exactly of those who are less well equipped to withstand the consequences of unemployment. The trainees may take away jobs from others but, at least, those who do get jobs are the most deprived candidates.

1.4.3 Training is cheaper than incarceration

Some observers advocate training on the basis of social integration and the provision of 'soft skills'. In some instances - including those examined below - training may be linked to "the need to address dysfunctions or 'pathologies' in society" (Favennec-H, 1996:667). Such objectives are becoming increasingly important, as the literature widely suggests. Under-and unemployed youth are likely to have low self-esteem and a remote notion of what work actually entails (see Soffer and Zymelman, 1993; Jacinto, 1996); they also face a greater likelihood of becoming petty or serious criminal offenders. The impact of non-cognitive benefits of training - such as discipline, learning to deal with authority and punctuality - thus cannot be easily dismissed. The bottom line is simple: training is cheaper, both in economic and social terms, than incarceration.

1.4.4 Training increases productivity, which increases growth, which increases employment

The most robust argument in favour of youth training programmes - or any training for that matter - is their strong impact on productivity and the consequent benefits of increased productivity on growth and employment creation. While this mechanism is more roundabout and takes much longer to show results, it is the most predictable.

There is ample evidence to indicate that better-prepared workers produce more. In other words, an overall environment favouring productivity growth is pitifully incomplete without the requisite skills of the labour force. Thus, even if training does not increase employment immediately and if the insertion rates of graduates are less than spectacular, training remains more than justified in the long run. This argument has strong implications for the content of training. If the benefits take some time to materialize, improvisation and stopgap policies are not justified. What matters is what lasts and not all training is equally durable or effective in the long run.

Indeed, the long-run impact may provide the strongest justification for training in a less than optimal economic context. It is in this regard that the content of training becomes critical. Durability of skills matters. If trainees are unable to find employment immediately upon completion of their programmes (as happens with some graduates of the three programmes examined here), then the real value of training may be in its provision of a more durable core of basic skills.

The exact definition of 'basic skills' remains elusive. For the sake of the present discussion, however, it suffices to say that 'basic skills' are those skills which are used in a multiplicity of situations, such as reading, writing, using numbers, analytical thinking, problem solving and team working. Thus defined, the durability of basic skills remains unquestioned. Basic skills provide a foundation upon which subsequent training and skills development can be absorbed and applied.

A solid basic education remains the best preparation for a wide range of jobs (see Dougherty, 1989). In fact, basic skills are what good education is about. Modern economies require a strong cognitive development as the foundation for vocational skills. Learning an occupation requires increasingly higher levels of understanding of scientific theories and the technological component of occupations. Part of this education should precede training, thus facilitating and shortening it. Workers with a good mix of practical skills and conceptual understanding of technology can adjust more easily to new and different occupations, grow in their careers, and adjust to technological changes. The real issue is not general versus super-specialized training but the solidity and depth of the basic skills taught with specialized training.

It should be clear that training cannot replace schools for all at the primary and secondary levels. Whereas training has done so in limited cases, such experiences cannot be generalized owing to the high cost of training. Yet training can include the theory and knowledge required for understanding the conceptual side of occupations. In this sense, good training can also impart good education. The practical orientation of training can support the development of contents that lie at the core of a good education. Reading comprehension, calculus and physical principles can be seamlessly integrated into technical and workshop subjects. The 'methodical series' delivered through the 'S & Is' provide good examples of how practice can be blended with basic conceptual skills; other interesting examples include the 'basic skills movement', 'applied academics' and the 'contextualization of learning'.

One of the strongest justifications for adding basic skills to this category of training programmes is that they boost the shelf life and amplify the reach of the training offered. If employment does not come right away and if, when it comes, it has little to do with the content of the course taken, what then will be of value to the trainee are the basic skills that have wider applicability.

Therefore, it seems reasonable to assume that the development of basic skills should be one of the main objectives of most training courses rather than casually added on to some as a response to the complexity of the subject matter at hand (e.g. some mathematics, as required by machinists). In much the same vein, the development and/or reinforcement of basic skills would be a valuable use of class time in those courses on simpler occupations (e.g. supermarkets; or sales). Yet reinforcing basic skills does not happen automatically. Considerable planning and investment are required. It is not something that can be included in the guidelines of a programme, but rather is a task that requires fixed investments in time and in review of similar experiences elsewhere. Indeed, the best training programmes around the world have benefited from, and committed significant resources to, curricula that combine and integrate basic skills.

Such considerations further evidence the need to devote more resources to the preparation of training materials. The merging of basic skills with training cannot be expected to occur when courses are contracted on a one-by-one basis. Nor is it easy to explain to training providers what is required to include basic skills in courses. Merging basic skills with training content requires that some courses be designed from the bottom-up and used as models for subsequent repetitions. To make this happen, training providers should have access to the best training materials available (books, workbooks, tapes, methodological papers; materials for training trainers; computer programmes, etc.), and additional funds should be allocated - e.g. to create experimental courses in specific areas and get support from experts. As will be illustrated further ahead, PLANFOR operates in this direction: its courses build on the accumulated experience of the 'S' system. The incentive structure found in both 'Joven' projects, in contrast, appears to operate in the opposite direction: away from a focus on materials and towards the contracting of courses made from scratch.

1.5 The limits of training

Training alone does not create jobs. To be effective, it must be carefully targeted to skills already in demand in the workplace and to emerging occupational requirements. The failure to target training along these lines stands as the primary reason why most training programmes that seek social objectives without the proper economic context produce less than convincing results. The political appeal of mounting campaigns for unemployed youth is a hardy perennial. The circular reasoning for youth training programmes suggests that disadvantaged segments of the population lack the skills needed to get worthwhile jobs and thereby lift themselves out of poverty; skills training, accordingly, provides the key to a better future for these populations. Taking these notions a step further, governments often justify public subsidies for individuals who cannot afford to buy the services themselves but remain in need of skills to access jobs.

Such arguments support the targeting of training assistance. Yet they are not sufficient. Effective training is doubly targeted: objectives are targeted as carefully as the training clientele. The skills taught must be readily absorbed in employment since training itself cannot create the jobs. "An over-expanded, overly subsidized training system that is not accompanied by increased opportunities for employment or enhanced wages will not improve welfare and is a needless waste of scarce resources" (Middleton, 1993:114). The skills taught must also be appropriate and relevant to those being trained. For programmes targeted towards disadvantaged youth, a focus on basic skills remains indispensable. Regardless of what occupation training targets, in the end, what matters on the job is the ability to think through various systems and processes, learn along the way and adapt to changes in technology or production as they arise.