GENERAL OVERVIEW:
As the world approaches the 6.5 billion population mark expected for December 2005, the fact remains that humanity has made little progress in its efforts to neutralize the problems faced by most. According to the INED (National Institute for Demographic Studies), there are 1.1 billion people in the world who lack drinking water, 77 million of whom live in Latin America. If there were 100 people in the world, 9 would live in Latin America, 61 in Asia, 14 in Africa, 11 in Europe, 5 in North America and less than one in Oceania.
Ten percent of the population of Latin American holds 45% of the income, while the poorest 10% scarcely owns 1.46% of wealth (Inter-American Development Bank).
One of the challenges of the Latin American job market is to create more jobs. Economic growth is an important factor, but it is not enough. It is necessary to change the inefficient and corrupt regulation of labor entities (CIEN).
The following chart shows the impact of this regulation in Latin America, including hiring flexibility (type of contracts, duration, termination) employment conditions (employee rights regarding salaries, holidays, benefits, working hours), dismissal flexibility (freedom to dismiss, procedures, costs). The employment regulation index shows the average of the other three indexes. Each of these indexes uses a scale of 0 to 100. Higher figures equal more labor regulation.
Labour Regulations Index
Region |
Hiring Flexibility |
Employment Conditions |
Dismissal Flexibility |
Employment Regulations |
East Asia and Pacific Rim |
45 |
60 |
30 |
45 |
Europe and Central Asia |
52 |
81 |
39 |
57 |
Southern Asia |
39 |
68 |
39 |
49 |
Middle East and North Africa |
40 |
66 |
35 |
47 |
OECD |
49 |
58 |
28 |
45 |
Latin America and Caribbean |
56 |
79 |
48 |
61 |
Source: World Bank
Recent cases of bribes accepted by Congress members in Brazil show that corruption continues to be an issue in the
region.
Chile continues to be the country that is making the greatest progress, while Venezuela continues to oppose world trends.
The Dominican Republic-Central America Free Trade Agreement, commonly known as DR-CAFTA, was approved by the US Senate on June 30, 2005 by a vote of 54-45. It was approved by the House of Representatives on July 28, 2005, by a narrow margin: 217 to 215 votes.
The agreement, includes the US and Central American
countries Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Neighboring Central American countries that are not participating in the agreement include Belize and Panama, Haiti, and Cuba. Negotiations between Panama and the United States are under way with regard to a bilateral Free Trade Agreement, and Belize is a member of the Caribbean Community (CARICOM). Haiti was granted certain trade preferences with the US in accordance with the Haiti Economic Recovery Opportunity Act of 2003 (HERO Act).
Enforcement of the DR-CAFTA depends on approval by the legislatures of other parties involved. El Salvador, Guatemala and Honduras have also approved the agreement. Nicaragua, Costa Rica, and the Dominican Republic have not voted on the agreement yet.
The agreement’s purpose is to establish a free trade area similar to the North American Free Trade Agreement (NAFTA) which currently encompasses the US, Canada and Mexico. DR-CAFTA would also be a step towards the Free Trade Area of the Americas (FTAA), which would include South American and Caribbean countries (with the exception of Cuba) as well.
Key aspects of the DR-CAFTA are the following:
(Extracted from Wikipedia)
o Services: all public services are to be open to private investment.
o Investment: governments commit to granting firm guarantees to foreign investment.
o Government procurement: all government purchases must be open to transnational bids.
o Market access: governments pledge to reduce and eventually eliminate tariffs and other protectionist measures.
o Agriculture: duty-free import and elimination of subsidies on agricultural products.
o Intellectual property rights: privatization of and monopoly over technological know-how.
o Anti-dumping rules, subsidies and countervailing rights: governments commit to eliminating protectionist barriers in all sectors.
o Competition policy: national monopolies are to be dismantled.
o Dispute resolution: transnational companies shall have the right to sue countries before private international courts.
o Environmental protection: the enforcement of environmental laws and improvement of the environment.
o Labor standards: the enforcement of the International Labor Organization's key labor policies.
o Transparency: the reduction of government corruption.
o Test-data exclusivity for pharmaceutical corporations
Some believe that progress regarding regional and bilateral free trade agreements will help to build a richer and less pyramid-based Latin American region. Others are very critical of such agreements, forecasting a deepening of the crises. Nevertheless, the design of such agreements continues to progress.
To view the table of 'Main Economic Indicators' for the FIDAGH region please click here
FIDAGH:
A Board meeting was held in Cali, Colombia, where new members were elected for the November 2005- October 2007 period:
President Paúl Rosillón |
Venezuela |
Vice President Horacio Quirós |
Argentina |
Secretary-Treasurer Leovigildo Canto |
Panama |
VP Central America and Caribbean Area Fryda Castillo |
Nicaragua |
VP Andean Area Adriana Alarcón |
Colombia |
VP South Area Miguel Ropert |
Chile |
Immediate Past President Cássio Mattos |
Brazil |
President of Advisory Board Eladio Uribe |
Dominican Republic |
To obtain full support and cooperation, national HR associations were asked to adapt their rules, so that FIDAGH Board members are also Board members of their respective national associations.
FIDAP has become FIDAGH: Federación Interamericana de Asociaciones de Gestión Humana (Interamerican Federation of Human Resource Management Associations). The name had changed a few years ago, although the original acronym, FIDAP, was preserved. The domain for the website under construction will be fidagh.org.
The FIDAGH Regional Congress (CIGEH) which takes place every two years was held in Cali, Colombia from 25-28 May . It was organized by the Colombian Association - ACRIP. This CIGEH was the first to be genuinely regional as opposed to national with a degree of foreign participation.
The Oscar Alvear Urrutia (founder of FIDAP) Award, created to reward those who have contributed most to human resources management in the region, was granted to Carlos Aldao Zapiola, former WFPMA President. Other Oscar A. Urrutia awards aiming to reward organizations showing excellence in human resource management initiatives were granted to the company Ron Santa Teresa (Venezuela) and to Fundación Chile (Chile).
The 2007 FIDAGH Regional Congress - CIGEH, will take place in Guatemala. There are plans to organize three subregional congresses during even numbered years, but taking into account the dates of the WFPMA Congresses (so there is no clash in dates).
Devaluations that have weakened certain currencies, as well as the economic crises and problems that affect national economies' make it difficult to obtain the necessary funds to support the FIDAGH operation.
FIDAGH Central America and Caribbean:
Costa Rica: Parliament has been discussing the approval of a Fiscal Contingency Plan in order to reestablish macroeconomic balance with regard to public finance, thereby providing an optimum framework for production growth and social welfare. High cost of living has led business to adopt a range of restrictive measures, including cuts in staff and reduction in the number of new hires. In any event, many companies will continue to abstain from establishing branches within the country and creating new jobs, as long as the Government’s definitive opinion of the DR CAFTA remains unknown.
Dominican Republic: The revaluation of the Dominican peso constrains the performance of companies that receive revenues in American dollars, such as those involved in tourism and industry (maquiladoras). The Government, the opposition and the business sector are currently debating the consequences of the DR-CAFTA on each sector, and the replacement of tariffs.
Guatemala: Guatemala has experienced macroeconomic stability during the first half of 2005. An important factor was the coordination between monetary and tax policies. Guatemala is expected to grow by 3.2% this year. This could be the start of a period of steady growth if macroeconomic stability continues and productive investments are made. Some obstacles for Guatemala are external and political factors. The population of Guatemala is questioning economic and political policies, which are not expected to change in the short or medium term. The President is making controversial decisions regarding sensitive issues. These issues include mining and the Free Trade Agreement. This has resulted in violence and confrontation with certain sectors. The Government has not stimulated a constructive debate on the matter, causing social discontent to grow and putting Government authority at risk.
Panama: An important tax reform is affecting business activity. The Reform will be in effect as of 2006, but it has already caused an increase in the basic family budget (canasta básica).The steady rise in oil prices also affects the cost of consumer goods. Social security reforms increase contributions, delay retirement age and make entertainment expenses taxable as well as external consultancy.
Andean FIDAGH:
Colombia: National Congress has approved immediate presidential reelection, which must be ratified by the Constitutional Court. This process has shaken the political agenda and relegated other national issues such as tax reform, social security reform and State modernization. The Justice and Peace Law was approved, allowing paramilitary members’ re-entry into civil society, as well as the disarming of these illegal groups, with which discussions have been held since Alvaro Uribe’s administration took office. The constitutional law that regulates social security, thereby allowing the national tax office significant savings, was reformed. Pension limits were reestablished, collective negotiation on the matter was limited, June’s collection was affected, special and tax-free regimes were suppressed, and the transition regime was modified. Unemployment, which hit 12.5% in the year 2004, is decreasing.
Ecuador: National elections campaign: mayors, provincial governors and town councillors. A sentence was issued in England by which the State is obliged to return US$75,000,000 to OXI oil company, for losses resulting from the Added Value Tax charged for its activities. Ecuador has started its defence, alleging the nullity of such sentence. Retired pensioners from the Ecuadorian Security Institute received a pension increase. The government is assessing a law that may allow to regulate the activities of outsourced personnel companies, which add up to 3,500 companies in Ecuador, although only 120 have been legally authorized.
Peru: Although the economy continues to grow, exports increase, private investment rises and inflation remains under control. The presidential image continues to deteriorate and there remain many unresolved political and social aspects. The new General Labor Law will remain on the National Congressional Agenda for the second half of 2005.
Venezuela: Waters continue to divide between government and opposition. There is also constant verbal confrontation between representatives of the Venezuelan government and the those of the US government. There have been many legislative changes in labor (Labor Law, Social security, Welfare), the penal system, the market, the Central Bank, foreign currency control, etc. The population is split practically 50/50 on these changes, creating an atmosphere of permanent controversy and judicial instability. A cooperatives plan was created and a Co-management Law was passed (which was very controversial and greatly criticized by business). The exchange rate has remained stable for over two years. There has been a recent law that penalizes illicit exchange, implying penalties including jail sentences, for those that commit infractions. Oil prices remain high, which has allowed a large amount of public spending. Despite this, the problem of unemployment and sub-employment remains.
FIDAGH South:
Argentina: The economy continues to grow at a steady pace, and unemployment continues to drop, although at 15% it is still very high. The return of an 11% inflation rate constitutes a warning. Compensation costs for work-related accidents have increased by 75%. A new work accidents law is being assessed. Wage hikes resulting from government decisions and union pressure have caused a significant increase in labor costs. This has affected productivity; salary increases have tripled industrial production. Corrective decisions are not expected in the short term, due to the next Congressional election in October.
Brazil: The evidence supporting corruption between the governing party (PT) and allied parties for the approval of government projects is leading to political instability, although it has not yet affected the economy. Interest rates remain very high at 19.75%. This exerts a regulatory influence on inflation, although it does not support the economy, which has been growing at a moderate pace. Unemployment remains high: 15%. If the political crisis is controlled, unemployment will decrease. The leader of the main union (CUT) was proposed as Labor Secretary. Collective agreements have been signed by different unions (metal, food and business unions)
Chile: The presidential campaign for the December 2005 elections has begun. The government coalition candidate, Michelle Bachelet, heads the polls. Chile continues to attract investment. Trials have become faster due to judicial proceedings reforms regarding labor.
Paraguay: The economy is improving, the stand-by agreement with the IMF is still in effect and agreed aims are being met. Nevertheless, there are social demand for greater investment in health and education. Inflation has started its upward spiral due to the increase in gas oil prices. Political studies are assessing the new Public Official Law, named “civil service career”. Such officials haven’t received a raise or new benefit in the past nine years. AMCHAM has greatly promoted the signing of an ethical pact by national companies, with the aim of “achieving a country that is serious, reliable, predictable and above all, internationally respected.” The purpose of the pact is to change the country’s current economic policies, to adopt new efficient and competitive policies, so that the country may project a positive image on an international scale.
Uruguay: The country is currently investigating the events related to those arrested and kidnapped during the military dictatorship of the '70s and '80s. An International Monetary Fund delegation congratulated the government for the way in which the country’s economy is progressing. Negotiations regarding Salary Councils (Consejos de Salarios) involve a broad range of opinions and different approaches toward compromise. Parliament is examining a “Union Law” that is receiving strong opposition from the business sector.
CHALLENGES FOR THE HUMAN RESOURCES FUNCTION
Some challenges include talent retention in the face of high unemployment, and adaptation to the new demands resulting from the DR-CAFTA.
This agreement undoubtedly constitutes a firm step towards the creation of an Inter-American free trade zone which will have a significant impact on economies and job markets, as well as on Human Resources management in the organizations of involved countries.
In efforts to adapt, Ecuador is currently revising its unlimited HR outsourcing process, and income tax for Panama employees is finally being made more similar to the rest of the world. Andean countries are preparing for future trade agreements under discussion.
HR COMPETENCIES CERTIFICATION
In Peru, the agreement between APERHU and the Universidad del Pacífico was signed. The aim is to create a program for International Certification of Professional Competency in Human Resources, with the support of FIDAGH.
OTHER COMPETENCIES PROJECTS
In Argentina, a viability study for labor competencies development is under way, also including the certification of human resources competencies. This is a joint project by ADRHA and business as well as union organizations, which has already received a positive opinion from the Inter American Development Bank, which is assessing the possibility of financing the project.
Costa Rica’s Public Education Ministry is participating in a School Management and Certification Project for the Development of Labor Competencies of Second Level High School Education, with the general aim of developing key and certified labor competencies among youths, allowing a successful transition from secondary school to the working world.
EVENTS
Argentine Human Resources Association (Asociación De Recursos Humanos de la Argentina –ADRHA)
IV National Human Management Congress - April 2006
Brazilian Human Resources Association (ABRH)
CONARH 2006 – August 25 to 28, 2006
Regional Congress FIDAGH South - September 2006 - Florianopolis - Santa Catarina
Chilean Human Resources Executives Circle (Círculo Ejecutivo de RRHH de Chile - CERH)
PERCADE 2005 – “Human Development: Lets Open New Doors“- August 24, 25 and 26, 2005
Next PERCADE 2006 - July 2006
Dominican Association of Administrators of Human Management (Asociación Dominicana de Administradores de Gestión Humana - ADOARH)
Next National Human Management Congress - July, 2007
Columbian Human Management Association (Asociación Colombiana de Gestión Humana - ACRIP)
X International Human Resources Management Symposium – Human Management Globalization or Dehumanization - September 7 to 9, 2006 - Hotel Las Américas - Cartagena
Human Resources Managers Association of Guatemala (Asociación de Gerentes de RRHH de Guatemala)
Next Human Management Congress - July, 2006
Nicaraguan Human Resources Executives Association (Asociación de Ejecutivos de RRHH de Nicaragua AERHNIC)
I Central American and Caribbean Human Management Congress – People as the Center of a Region without Barriers – June 21 to 23, 2006
Panamanian Association of Human Resources Professionals (Asociación de Profesionales de RRHH de Panamá - ANREH)
VI National Human Resources Congress – Active Human Resources Makes a Difference in Results – August 25 and 26, 2005
Peruvian Human Resources Association (Asociación Peruana de RRHH - APERHU)
XIV National Human Management Congress – The Challenge to Reinvent Ourselves – September 28 and 29, 2005
Uruguayan Personnel Managers Association (Asociación de Dirigentes de Personal del Uruguay - ADPU)
X National Congress – Human Management in the Current Business Scenario – October 13 to 15, 2005
Venezuelan Human Resources Association (Asociación Venezolana de RRHH - ANRI)
I Latin American Congress for Regional Best Practices – November 14, 15 and 16 2005
Next Inter-American Human Management Congress - CIGEH 2007 -Guatemala 2007
