Latin America seeking more formal employment for youths

Work informality finds a worrisome breeding ground among low income youths in Latin America:  while at a regional level 47 percent of workers are informal, among youths from vulnerable families this percentage reaches 60 percent. 

Facing this reality, in past years several governments of the region have developed different public policies with the objective of generating more and better employment for youths.   It is estimated that since 2008 65 work training programs have been created.

Among these newly created initiatives is the Programa Primer Paso (First Step Program -PPP, for its acronym in Spanish), implemented in the Province of Cordoba, Argentina, seeking to  improve the employability levels of youths between the ages of 16 and 25, and offer them the opportunities of a first formal employment opportunity. 

The PPP, in contrast to other initiatives, is a program for apprentices that does not require additional training to the learning generated by the experience of daily practice. Contracts last 12 months for twenty hour of work per week. Youths receive a salary for their work, supported by public financing.

In 2012, the selection process was carried out by means of a raffle through the public lottery, as demand exceeded the vacancies by far. This enabled the government of the province, together with  CAF, Development Bank of Latin America, to carry out an experimental impact evaluation of the program. 

Selected individuals were part of the treatment group while those who did not have the opportunity of participating in the PPP were part of the control group.  Focus groups, interviews, and a survey to 1,000 of the 24,000 applicants to the program were carried out  for the evaluation. In addition, administrative data related to the formal employment registry was used, together with the salaries declared before the national tax authority (AFIP, for its acronym in Spanish). 

Results indicate that the PPP generates significant improvements in the quality of life of youths. A year after finishing the apprenticeship,  the fraction of those benefitted by the program that were registered  as "formal workers" was 40 percent higher when compared to the non-beneficiaries. In addition, the former earned salaries that were 6 percent higher than those who were not part of the program. This shows that this type of program may achieve significant benefits in a short-term even when there are important challenges to maintain the long-term effects.