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FIDAP Regional Report - April 2007 |
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1. FIDAGH UPDATE The upcoming FIDAGH's Executive Board Meeting will be held on May 15, 2007 in the city of Antigua, in Guatemala. On May 16, 2007, there will be a meeting of the presidents of all HR National Associations. Main points in the agenda will be:
II. REGIONAL OVERVIEW There have not been any significant changes in the region’s political, economic and social situation in relation with the latest report submitted on November 2006.
The regional political instability process will continue growing in 2007 and remain the best scenario for the ongoing confrontation between two political-economic models.
The outcome of the elections in Ecuador and Venezuela clearly confirm the political and economic trend referred to as “a turn to the left wing” which started about eight years ago. Nonetheless, it is noteworthy that Bolivian President Evo Morales’ popularity has begun to decline. Contrary to the privatization trend witnessed in the 90s, the control of formerly state-owned public utility companies is increasingly being regained by the State in several countries.
According to the International Labour Organization (ILO), the economic and labour situation in Latin America and the Caribbean in the year 2006 has shown signs of improvement as far as the key indicators are concerned; nonetheless the goals of welfare and equity are still unattainable.
The Gross Domestic Product (GDP)’s growth by 5,1 % in Latin America and the Caribbean in 2006 consolidates the sustained growth seen in the past four years, with an annual average of 4,4%. According to the forecasts for the year 2007, this trend will continue, but it will be more moderate.
Even though the main labour market indicators have shown a positive performance in 2006, the informality levels remain high and the health protection and workers’ pension programs are still deficient.
According the Economic Commission for Latin America and the Caribbean (ECLAC), in the last four years (2003-2006), Latin America has turned in its best performance in 25 years in economic and social terms. The number of poor in 2006 was similar to 1997, thus regaining the level observed before the Asian crisis. Nevertheless it is important to remark that about 40% of the region’s population is still living in poverty and nearly 15% of the population is extremely poor or indigent (205 million and 79 million, respectively). The reduction in poverty and indigence in recent years is partly thanks to the upswing in economic growth in the region, which contrasts sharply with the decline seen in per capita income in 1997-2002.
ECLAC also informs that there is a positive trend to lower Latin America’s highly inequitable and inflexible income distribution. Several countries have achieved improvements in income distribution in recent years. Although small, these gains at least represent some progress with respect to the rigidity or even the deterioration of distribution in earlier periods. The gap between the poorest and richest groups has been narrowing in most of the countries. The income ratio between the richest 10% and the poorest 40% declined Argentina, Venezuela, Brazil, Ecuador, El Salvador, Panama, Paraguay and Peru. There were no change in Chile and Costa Rica while increases were recorded in Colombia, Dominican Republic, Honduras and Uruguay.
The regional urban unemployment rate fell from 9.5% to 9.0%, while the number of unemployed people in the same area is expected to be around 17.5 million. This reduction in the unemployment rate, was mainly seen in countries whose economies expanded the most in the past three years (Argentina, Uruguay, Panama, Venezuela and Colombia, in that order) and which had had very high unemployment rates before the recovery began. In those five countries, the unemployment rate in 2002 varied between 16.6% and 18%, and by 2005, the rates had fallen by anything from four to a little over seven percentage points. Nevertheless unemployment in Latin America remains high, this is partly due to rising labour-force participation rates, which climbed quickly in the 1990s and has continued to rise in most countries in the past three years, ECLAC said.
III. SUB-REGIONS AND COUNTRY REPORTS
a) Central America and Caribbean FIDAGH
Costa Rica No comments
Dominican Republic No comments
Guatemala Everything is ready for the XX Interamerican People Management Congress, to be held in May 2007. The academic program is enclosed herewith.
After winning a majority in the first round in the presidential elections held in November 2006, the Sandinista National Liberation Front (Frente Sandinista de Liberación Nacional) and its leader, Daniel Ortega, came back to power after sixteen years. In March, the country has officially joined the Bolivarian Alternative for the Americas [Alternativa Bolivariana para las Américas (ALBA)] trade agreement, after a majority of Lower House representatives ratified the initiative proposed by Venezuelan President, Hugo Chávez.
Panama In November 2006, United Nations General Assembly has appointed Panama as the second country to represent Latin America and the Caribbean in the Security Council. Panama was the consensus candidate, after the election contest could not be resolved between the original candidates (Venezuela and Guatemala).
El Salvador Since June, 2006, El Salvador Human Resources Administrators Association [Asociación de Administradores de Recursos Humanos de El Salvador (AARHES)] has been carrying out the necessary statutory procedures to be formally admitted as observer member state to FIDAGH. Nonetheless, this rather new Association has recently reported that it prefers to strengthen itself as a local association before officially joining FIDAGH.
b) Andean FIDAGH
Bolivia
The Government’s political transformation process is under way. There is greater calm in the country and a lesser number of social conflicts. Bolivians migration rate overseas (Europe and USA) is still high. The Government has announced the nationalization of ENTEL (Bolivian’s National Telecommunications Company). The recently enacted labour stability laws have moved companies to create tools to ensure greater reliability in the hiring process and the retention of talented employees; the issues of personnel selection, labour climate assessment and motivation have gained significance. Bolivian Corporate Social Responsibility [Responsabilidad Social Empresarial (RSE)] is acquiring relevance in the companies, in response to the social processes in the country and as a production mechanism.
Colombia
Free Trade Agreement (FTA) and labour agreements negotiations: there are issues regarding the Labour Chapter of particular concern to the Colombian Government, negotiators, Congress members, businessmen and workers. The Agreement is also challenged by United States Democrat Party, which has requested its amendment by the US Government, to ensure that FTA benefits are equally shared. One of the issues to be reviewed is the Associated Labour Cooperatives [Cooperativas de Trabajo Asociado (CTA)], which are viewed by Americans as a labour mediation inter-mechanism or unfair competition practice to be used by Colombian businessmen to reduce their production costs by avoiding their contributions to Social Security. In response to this concern and to the pressure from Colombian trade unions, the Government has reiterated that CTA are bound to be incorporated in a Register, which may be consulted by businessmen before hiring them. This step was appreciated in Washington.
Colombian People Management Association [Asociación Colombiana de Gestión Humana (ACRIP)] has been awarded the “Orden de la Democracia Simón Bolívar en el Grado de Cruz Gran Caballero” Order by the Lower House of Congress for its invaluable service rendered to the Colombian community.
Ecuador On Sunday, November 26, in a presidential election ballotage Rafael Correa, a left-wing candidate was elected President. His accession to the Presidency has stirred confrontations with right-wing sectors and his most significant decision has been to call a Constituent Assembly to promote a socialist political and economic model.
Ms. María Quelal was elected President of the Ecuadorian Personnel Directors Association [Asociación Ecuatoriana de Directores de Personal (AEDPE)]. She has submitted a work plan aimed at the approval of new by-laws and produce a change in the rather deteriorated image of the Association.
Peru No comments
Venezuela Hugo Chávez won the December 3 elections and was thereby re-elected President for the 2007-2012 period. Even though his clashes with US President, George W. Bush, continue, this fact has not had any real impact on the commercial relationship or the country’s economic activity, which currently collects massive tax revenues as a direct consequence of the high sustained oil prices. In January 2007, the Government has decreed the nationalization of the two main public utility companies: the power supply company, which serves Venezuela’s capital city, Caracas, and the largest and most important phone service company in the country. These processes were carried out through a Public Offering of Shares, where the Government seeks to become the controlling shareholder in both companies. Mr. Hugo Urdaneta tendered his resignation to the Board of the Venezuelan People Management Association [Asociación Venezolana de Gestión Humana (AVGH)]. Current Board Vice-Chairman, Yleana Corredor, became AVGH Board Chairman for the remaining period, ending in July 2007.
FIDAGH – SOUTH
Argentina The electoral climate for the presidential elections to be held in October is more pronounced. It is expected that the present Government will remain in office. The actual President, Néstor Kirchner or his wife, a present member of the Upper House of Congress are the expected candidates of the ruling party. The trade surplus has declined as a result of increased fiscal spending for electoral purposes. Instead of addressing the causes of the ever increasing inflation rate, the Government has opted for implementing a strong and not very efficient control system for the basic products prices and replacing the top officers of the institute in charge of reporting the official cost of living indices to the public. The unemployment rate fell to 8.7%, the lowest in the past 13 years (with 1.38 million unemployed people). A reform to the Social Security System has provided more flexibility to the system whereby employees opt between private pension plans (AFJP) and the public (state-administered) pension plan. The tax pressure on lower-income employees has diminished and around 800,000 individuals are thus benefited. Bargaining negotiations with all trade unions at a national level for a salary rise as from the 2nd quarter are becoming difficult amid the electoral campaign and the present inflation rate. Some legislative bills aim at taking labour legislation back to the laws prevailing in 1974. The Government delays the reduction in workers’ compensation amount for unjustified dismissals, which had been provisionally risen by an additional 50%, in an attempt to avoid massive dismissals during the economic crisis.
Brazil After beginning his second term in office, President Lula Da Silva has gained an important victory at Congress, as the ruling party acceded to the presidencies of both the Lower and Upper Houses, which paves the way for the necessary legislative support to carry out the economic expansion plan put forward by Brazil’s President. In his recent visit to Latin America, United States President, George W. Bush, has signed an agreement with Lula Da Silva to promote collaboration between the two countries in the international ethanol market.
Chile In November last year, Michelle Bachelet’s government faced its first crisis, after the alleged embezzlement charges by Chiledeportes, a state-owned entity in charge of furthering sporting activities. This crisis deepened when a Congress commission confirmed that funds formerly allocated to employment programs were eventually used to finance the electoral campaign of the ruling party. In March this year, President Bachelet removed the ministers of the following areas: Presidency, Defence, Justice and Transports, as a result of the acute crisis arising from the implementation of the new transport plan, which affected the population in the capital city and neighbouring areas, and gave rise to innumerable demonstrations and a strong decline in the Gove rnment’s popularity.
The country analyzes the possibility of signing a free trade agreement with the United States, which raises concern among Mercosur’s larger members (Brazil, Venezuela and Argentina), as it might result in a weakening of the block’s position in its negotiations with Washington.
Paraguay No comments
IV. CHALLENGES FOR PEOPLE MANAGEMENT FUNCTION The main challenges to be faced by professionals in people management in the region are diverse in nature and number. Nonetheless, judging from the trends, three areas of attention may be identified:
V. CERTIFICATION PROJECT Argentina’s project, with IDB funding, continues making progress. The main courses of action were explained to WFPMA Board members in Buenos Aires, in November 2006.
VI. 2007 EVENTS
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