Workforce Automation: More Threat Than Opportunity

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.

Thursday, December 6, 2018

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. In Costa Rica the proportion is 68%, in Panama and Nicaragua 65%, and in the Dominican Republic 62%.

Because of technological transformations, several trends are now being identified that are impacting the labor market, among which are the decline in wage employment, decline of "titulitis" (overvaluation of academic degrees) and emergence of "know how to solve", work by project, labor flexibility, compensation beyond work, among others.

René Quevedo, an expert in the labor market, explained to Martesfinanciero that "... The rise of companies and Internet applications that connect workers with clients such as Uber for cars with driver, Deliveroo for home deliveries with bicycle drivers, Taskrabit or Cronoshare for tasks ranging from writing a storyline to developing software, causes that millions of people have lost the status of employees, and thereby the right to have paid vacation or sick leave, get a credit or plan household finances."

Human capital formation is essential to Central American economies' success in overcoming the obstacles to future growth since technological revolutions will require structural changes in education systems.

In this regard, the regional director of the International Labor Organization (ILO), José Manuel Salazar-Xirinachs, explains that "... There is great pressure on education systems, which must be up to date with their curricula, teaching methods and careers, to adapt them to the skills that the market is demanding and to train workers in new trades."

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The labor market reports a structural change, as fewer and fewer people are being paid a fixed salary for their work, while at the same time the number of employees earning per project is increasing.

Although the trend has been reported globally for several years, the pandemic accelerated this process, as the economic crisis generated by the Covid-19 outbreak destroyed thousands of formal jobs.

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Faced with the sudden change that the new normal generated in companies, employees are challenged to increase their skills to work remotely, adapt to more flexible contracts and refine their technological skills and cognitive qualities.

Telecommuting has become an everyday occurrence among companies in the region, which have had to adjust to the restrictions imposed by governments due to the outbreak of covid-19.

Change Promise for the Labor Market

June 2019

Finally, in Guatemala the agreement was approved that will allow companies to hire part-time workers, which promises to be part of the solution to the unemployment problem affecting the country.

On June 27, Governmental Agreement 89-2019 was published in the Official Gazette, establishing the Regulations of Convention 175 of the International Labor Organization (ILO), which will regulate the hiring of part-time workers in the country.

Weak Labor Market

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Poor mathematical skills and limited English language proficiency are the main weaknesses reported by young people seeking to develop in the labor market in El Salvador.

An analysis by the Salvadoran Foundation for Economic and Social Development (Fusades), details that, in general terms, the labor market segment made up of young people shows strong and weak areas.

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