Curbing Attraction of Foreign Investment

Despite the location and the fiscal benefits that in some cases the countries of the region offer, the lack of education of the population will be the main barrier to continue attracting large investments.

Thursday, February 14, 2019

The lack of guarantee of finding the competent and sustainable human capital necessary for the proper operation of companies is an issue that negatively influences the attraction of important investments in Central America.

See "Foreign Direct Investment is Stagnating" and "Foreign Investment Still Falling"

Regarding the levels of education in Panama, Martesfinanciero.com reports that "... An analysis of the Panamanian labor market shows that 54% of the economically active population has not finished high school and 84% of that group does not have a university degree."

The article adds that "... Young people and adults continue to be trained in obsolete or impractical skills, while those already identified as required for success in the workplace are left aside: Problem solving (analysis), creative thinking, digital skills, collaborative skills, resilience and formative and transformative leadership."

Because companies must respond to more demanding markets to be competitive, the automation of tasks is accelerated in several branches of production, which will generate greater demand for competent workforce.

Also see "Workforce Automation: More Threat Than Opportunity"

Costa Rica is an example that the automation of the tasks in the companies are a reality, because, although the process in the country is still incipient, it is predicted that in a short time will stop employing people with low qualifications.

Explains a Nacion.com article that "... In Costa Rica, according to Monge and Hewitt, automation begins to be implemented from routine tasks and easy to standardize. In some cases, the companies introduced automated activities that were totally new and that were not done before."

The article concludes that "... Thus, the greatest negative impact of these processes would be felt by staff in low-skilled jobs, with very routine tasks and who do not have the skills to assume new roles without extensive training. In medium or highly qualified jobs, the impact is less, as it is easier to retrain and relocate employees to new and more complex jobs. Automation creates previously non-existent jobs and increases the demand for talent with analytical skills, as well as for the development, implementation and maintenance of automated solutions."

See Martesfinanciero's article "Is Panama ready for the jobs of the future?" and Nacion.com's "Most companies in Costa Rica have incipient automation".



More on this topic

Workforce Automation: More Threat Than Opportunity

December 2018

Although new jobs will emerge, technological changes will have a strong impact in the Central American region, where there is a high proportion of jobs with a high risk of automation.

According to forecasts made by the Inter-American Development Bank (IDB), in 2018 it was estimated that 75% of workers in Guatemala and El Salvador are in high-risk automation jobs.

Costa Rica and Foreign Investment in 2017

January 2018

Last year the country attracted 40 new foreign direct investment projects, which generated around $2.165 billion.

Jorge Sequeira, General Director of the Costa Rican Coalition of Development Initiatives explained that "... 'the multinational companies attracted with the support of CINDE generated 20% of formal net jobs in the country and 23% of total employment generated by private companies in 2017. It is important to note that the growth rate of employment in multinationals was 7.8%, 3.7 times more than the average of the country which reported growth of 2.1%'."

Panama: Labor Supply Does Not Meet Demand

July 2016

In job fairs convened by the State over the last two years only 35% of the job offers by companies were able to be filled.

The problem of a labor supply not matching the demands of the private sector persists in Panama, where companies have to invest time and money into order to cover the limitations of graduates of the public education system, which is putting a brake on development. 

Panama Keeps Generating Jobs

December 2011

The Net Employment Outlook for the first three months of 2012 is +24%, putting more pressure on a market with a serious shortage of qualified human resources.

While efforts are being made to the train people locally, foreigners continue to come into the country to meet the demand of international companies based there.

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