Managing Director & Founder of the Biz Latin Hub Group.
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Understand the key elements and commercial potential of Latin American workforces, and take advantage of these labor resources when you're developing your business in the region.
Regional governments pursue various initiatives to develop further strategies for attracting foreign business and investment. Some examples include countries such as Ecuador and Uruguay that have implemented initiatives to ease market entry processes and the Mercosur trade bloc that has strengthened international connections with groups like the European Union.
However, businesses looking to expand abroad should also consider the characteristics and value of local labor markets in Latin America for supporting business development.
Active Workforces In Latin America
When you're choosing a destination to expand to in Latin America, evaluate working population sizes, the sector specialties of each economy and where the greatest workforce potential is concentrated.
According to the World Bank, annual GDP growth across Latin America and the Caribbean in 2018 was about 1.6%. Though that's not a wholly flattering rate for the region, specific countries demonstrate faster growth rates (rounded up), such as:
• Chile (4.0%).
• Colombia (2.6%).
• El Salvador (2.5%).
• Mexico (2.1%).
• Panama (3.7%).
• Peru (4.0%).
If you look at the population sizes (as of 2018) and active workforce numbers in the above-mentioned countries, figures from the World Bank show a highly active working population in 2019:
• Chile: Population 18,729,160 (percentage in the workforce 81.1%).
• Colombia: Population 49,648,680 (percentage in the workforce 73.9%).
• El Salvador: Population 6,420,740 (percentage in the workforce 63.1%).
• Mexico: Population 126,190,790 (percentage in the workforce 64.4%).
• Panama: Population 4,176,870 (percentage in the workforce 71.4%).
• Peru: Population 31,989,260 (percentage in the workforce 80.6%).
Latin American workforces have been stable and constant in previous years, which provides opportunities to executives looking to do business and employ staff in Latin America.
Workforce Characteristics In Latin America
Larger sectors in Latin America, such as agriculture, industry and services, have historically demanded unskilled and semiskilled labor. However, thanks to new influences in the region, local workforces may be encouraged to specialize. For example, businesses that demand qualified and competitively priced personnel may now be able to find growing and emerging pockets of specialized workers in Latin America.
Key contributors to increased specialization in regional workforces include:
• Incentivizing the development of technology and innovation.
• Strengthening international relationships through efforts like the Mercosur trade blocs.
• New resources and legal frameworks to develop different kinds of businesses.
Certain governments in the region are modernizing their commercial frameworks, which could encourage skilled workers to remain in or return to the region. Political developments and agendas for economic growth can affect the nature of workforce capabilities and employment regulations in each country.
A strong education system and drive for human development can also foster a highly skilled workforce. Vanessa Gibson, manager of investment climate for CINDE, expressed that factors like these enable Costa Rican workers to support the country’s digital transformation.
Colombia’s promotion of its orange economy could position the country as a hub for technological and other creative development. Medellín is commonly considered a global hub for technology and innovative business, and this shift was spurred by the organization Ruta N. I've seen this rebranding and modernization attract developers and other tech-savvy specialists from around the world, which makes it easier for tech businesses entering the market to find the qualified support they need.
For those businesses looking for bilingual proficiency, Statista reported that the Latin American countries with the highest English-speaking capabilities in 2018 (according to the English Proficiency Index) were:
1. Argentina.
2. Costa Rica.
3. Uruguay.
4. Chile.
5. Cuba.
6. Dominican Republic.
7. Paraguay.
8. Guatemala.
9. Bolivia.
10. Honduras.
Due to its proximity to North America, many Central American countries house a significant population of returned migrants who may have work experience from time in the U.S. This offers the region an advantage in terms of understanding the needs and practical organization of North American businesses.
For small businesses looking to source entrepreneurial-minded staff, Chile and Guatemala may be among the most attractive destinations for business development. In 2019, the Global Entrepreneur Monitor (via Consultancy.lat) ranked these two countries among the most entrepreneurial in the world. Working populations that have a strong sense of entrepreneurial opportunity could support your growing business in seeking out potential development strategies and offering creative solutions.
Temporary or longer-term exchanges such as international exchange or migrant worker programs could also prepare future employees in Latin America to understand and meet the demands of local employers.
Advantages Of Hiring Locally
Hiring staff in Latin America can come with the following benefits:
• Reduced employment costs: Hiring staff from abroad may incur additional expenses related to work or residence permits and regulatory costs.
• Understanding the local market: Local staff members offer the added advantage of being more familiar with local language and cultural customs and the nature of doing business in their countries.
• Employment stability: Having local employees can ensure greater stability for the company because local employees have personal ties to the area. Replacing staff members constantly can affect regular operations and involve additional expenses.
Understanding Employment Compliance Requirements
To hire employees in Latin America, businesses must navigate local labor laws to understand their obligations as employers. It is also crucial to do the research and understand the best location to find qualified staff for your business needs.
Latin America shows great potential for continued success and economic growth due to unsaturated markets, technological development and a commitment to modernize legal frameworks to support foreign business. Take advantage of the workforce potential in Latin America to enter these growing markets and develop your business internationally.
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