Challenges to improving the quality of human capital in Panama

The amount of time parents spend with their children, the quality of education and a reduction in the school dropout rate, as well as quality jobs for young people treading their first steps in the job market, are basic cornerstones to develop the skills of Panamanians, according to the 2016 Economy and Development Report (RED) "More skills for work and life" presented today by the Development Bank of Latin America (CAF) and opened by Luis Ernesto Carles, Secretary of Labor and Labor Development of Panama.

Skills are acquired throughout life, but the foundations are laid in the first two decades, and even before birth. Skill building is a cumulative process in which relationships between the family, school and the workplace benefit greatly from an environment with an appropriate physical and social infrastructure. A quality infrastructure that ensures basic public services, such as water, sanitation and safe public spaces, not only adds to parents' efforts to raise their children, but also helps families prevent and mitigate the effects of adverse shocks (climatic, economic, or violence) that could otherwise interrupt or seriously hinder the development of skills for life and work.

Luis Ernesto Carles, Secretary of Labor and Labor Development of the Republic of Panama, said that the state echoes the ILO's planning guidelines, undertaking to introduce public policies that encourage the promotion of generally decent jobs, as well as opportunities to ensure young workers have access to worthy jobs in which their rights are respected.

"The challenges of developing skills for life and work must be addressed immediately, because skill building is a slow and continuous process that starts very early in life and, fortunately, never ends. CAF supports countries by not only providing funding, but also by drafting a public policy development agenda that drives progress in this area," said Susana Pinilla, CAF representative-director in Panama.

Income inequality in Panama, which is among the top five Gini index countries in Latin America, is one of the factors that creates major challenges to improving human capital. There is a skill gap between children from different social and economic backgrounds before they start school, which is associated with fewer skill building resources among the most vulnerable families.

For example, according to UNICEF MICS surveys, only 8% of children under the age of five in low-income families have three or more children's learning books in the home, while the figure for children whose mothers have post-secondary education is 48%. It is worth noting the low figures for this indicator in Panama at all income levels. For example, the figures for Argentina are 46% and 82%, respectively. Unfortunately, the difference in quality between public and private schools does nothing to help close these gaps during school years.

"Strengthening early development of skills requires an improvement in the quality of education from early infancy. Providing high quality education opportunities at this stage is essential, especially to complement the efforts of the most vulnerable families in building their children's skills, and to level the playing field from the earliest age, laying the groundwork for fairness," said Fernando Álvarez, Chief Economist in the CAF Socioeconomic Research Department

Another determining factor in boosting productivity is to start off on the right foot in the world of work, because it takes young people in Latin America a long time to get a quality job, mainly because they tend to leave school early to enter the informal market. This is dangerous, because the region's informal sector does not offer opportunities for building work skills, as seen in the findings of the 2016 RED.

"Moreover, for employees (including formal employees) there is a major difference between the skills that workers have and those actually needed for the job. Specifically, only 53% of workers in Panama City believe that they have the skills and experience necessary for the jobs they do (vs. 57% for other Latin American cities). In addition, 24% of workers feel that they are under-qualified, or that they do not have the necessary qualifications for their job. The figure for other cities in Latin America is 19%. Lastly, 13% of workers consider themselves over-qualified for their job (a figure similar to that for other cities in the region)," added Alvarez during his presentation of the RED. This discrepancy not only threatens worker productivity, but also learning skills in the workplace.

The report's presentation also included a debate on the public policy reforms needed to bolster the role played by different forms of training, which not only imply challenges for educational institutions but also organization in the home and the workplace, as well as providing basic social infrastructure services that impact skills building for human capital in Latin America.

The debate featured comments by Melissa Wong Sagel, Director of the Organization of Ibero-American States (OEI); Jose Antonio Frías Guerrero, National Director of Curricular and Educational Technology; Hernando Rodriguez, Director of Employment at the Department of Labor and Labor Development; Alvaro Ramírez-Bogantes, ILO Specialist in Enterprise Development and Vocational Training, and Bibiam Díaz, education specialist of the CAF Vice Presidency of Social Development.