Cristina Simón. Professor. IE Business School
9 December 2008
Attracting and leveraging talent is the challenge now facing Peru if it wants to keep up the sustained economic growth of the last decade.
There is no doubt that a country´s economic development is linked closely to the evolution of its labour market. The problem that so often arises is the difference in speed of both concepts. At the present time, Peru is a magnificent example of this lack of synchronisation between the economy and the human capital that is there to keep it in place. As a result, a ´talent void’ alert has recently appeared and could slow down the so far unstoppable force that has driven the country down a road of sustained growth for almost a decade.
The continuous progress of an economy generates an often very brusque change in the type of human capital that is required. This need for more intellectual work has become more evident in Peru in detriment of unskilled labour: in 1993, the EAP (economically active population) comprised 50% unskilled workers (with no academic qualifications or with primary education only), but the proportion fell to 26.2% in 2007. This figure clearly shows the shift in employers´ requirements and the need for trained, employable personnel, a concept that was christened with the name of ´talent´ in the United States at the end of the 1990s.
The call to the talent battle is always a good sign for business. It means that the market is evolving and, in its evolution, it discovers that the differentiation factor lies in a set of intangible aspects that correspond to workers. The downside of this discovery is that workers are resources whose development is a complex matter (and not easily managed) and that the generation of a local labour market in line with the demands of the economic system involves a transformation of social systems that takes a good deal of time on even the best-case scenario. Therefore, in such a situation, two parallel strategies would take over: the short-term employment of qualified professionals and the creation of policies to foster the generation of talent in the country itself with a view to future requirements.
Peru´s potential for developing talent in the long term is unquestionable. Let´s look at some of the figures that show this potential. First of all, its demographic situation: according to a recent INEI housing and population census published in 2007, 30% of the country´s inhabitants are less than 14 years of age, whereas only 6.4% are over 65. Consequently, the country´s population is young and has notably improved its level of academic qualification over the last 12 years; at present, 32% have completed a higher education, with half of that figure corresponding to university degrees. Regardless of other considerations, such as the quality of higher education and its impact on the level of access to the labour market, the figures point to a young population with increasing access to qualification systems.
Another interesting figure that shows the bond between social and economic development is the integration of women in the working world. Between 1993 and 2007, the percentage of economically active women has risen from 29% to almost 38%, whereas the number of economically active men has remained constant. Here again, the figure would require a few explanations in view of the type of activity or salary scales for both genders, but whatever the case it suggests a rapid opening-up for talent niches that will undoubtedly contribute to strengthening the labour market in the future.
But, even though this long-term potential is assumed, what can be done to fill the talent void in the current economic climate? Obviously, the country has to compete for immigrants from other countries or encourage the return of those who left the country in the past. Since 10% of Peruvian homes have at least one emigrant, the country has a potential group of workers that could consider redirecting their talent towards the local market. However, the decisions to return could very possibly require improved working conditions and social welfare, as well as a policy for motivating professionals in segments that are key for the new scenario in which Peru is to compete in the near future.