Economy

Unemployment in El Salvador

A recent Elmundo article reported that the global economic crisis is not the only reason that El Salvador has high levels of unemployment (the official unemployment rate in 2010 was 7.2%, but that doesn’t account for high levels of underemployment, people that have given up on finding work, or workers in the unstable informal market). They quote Marco Penado of Manpower El Salvador who said recently that the Salvadoran workforce does not match the needs of the current labor market. A similar article published last summer on elsalvador.com reports similar concerns voiced by the Salvadoran Chamber of Commerce. Penado says students are not graduating with the skills and experience that human resource managers are looking for, claiming that university students are more interested in the humanities rather than engineering or other technical skills. He also believes that too few Salvadorans speak English, and that in a globalized world defined by trade agreements, corporations that operate in El Salvador require employees that speak English.

In June 2010 the Chamber of Commerce held a job fair that hosted 8600 job applicants and 22 companies looking to fill 300 positions. According to the Chamber, the applicants did not have the formal training or English proficiency to qualify for the positions offered. The jobs being offered included industrial and mechanical engineers and technicians, accounting, skilled sales associates, program analysts, and computer or lab technicians. Carmen Aída Muñoz, the director of the Salvadoran Chamber of Commerce said that El Salvador’s universities and technical institutes are going to have to adjust their curriculums and standards so that they meet the demands of the businesses that have the jobs. Otherwise El Salvador will not be able to compete with labor pools in other countries.

Manpower El Salvador provided a list of the top ten positions that companies in El Salvador are struggling to fill due to a lack of skilled workers:

1. Skilled labor positions such as certified carpenters, welders, electricians, and plumbers

2. Sales representatives

3. Technicians

4. Engineers of all kinds, from information and computers to electrical and telecommunications

5. Accountants who are bilingual

6. Managers and executive managers

7. Skilled workforce, or workers with some level of technical training

8. Motorists

9. Mechanics with formal technical training

10. Business Administrators

The Salvadoran labor market is a little more complex than these articles suggest. It would be nice if solving the country’s unemployment problem were as easy as redesigning university programs and teaching English. The reality is that most Salvadoran youth, especially from those from rural or poor urban communities, do not receive the academic foundation necessary to get into universities. Even if they did, most are unable to afford tuition for a 5-year university or the 3-year technical school programs.

And just because someone has an engineering degree from the university does not mean they can get a job. After reading the El Mundo article, we checked in with some of our Salvadoran friends who report that a lot of engineering students are getting teaching certificates because there are not a lot of jobs for graduates – even those who speak English – and teaching may be the only employment opportunity for them.

Though some university curriculums may be in need of reform, solving El Salvador’s unemployment issues will require a more thorough analysis of the economy and educational system. It will also require the government and citizenry to commit to addressing the social justice issues that keep most Salvadoran youth from getting the kind of formal technical skills and English proficiency that large international corporations are looking for.

 

Economy, Elections 2009

Impacts of the Global Economic Crisis in El Salvador

Since 1992, the political right has aligned itself with the US and pushed a neo-liberal agenda in El Salvador. This has resulted in free trade agreements, the deregulations of markets, and the privatization of banking, telecommunications, and other important sectors. While Salvadorans with the capital to take advantage of these neoliberal policies have benefited significantly, many have not. Economic stagnation, inequality, and a lack of gainful employment continue to characterize El Salvador’s economy.

Now, in addition to these chronic problems, El Salvador faces the effects of the global financial crisis, which are only just beginning to become apparent.  It’s estimated the 10-12 thousand jobs have been lost in the last 4 months. The predictions for growth in GDP range from the government’s optimistic 3% to JP Morgan’s prediction that GDP will actually fall by 0.5% (See article in El Faro for more info in Spanish)

Economic analysts predict that the worst impacts will be felt in 4 main areas: 1) decline in the value of the dollar, 2) contraction in the credit market, 3) a decline in the demand for Salvadoran exports resulting in unemployment, and 4) a decline in remittances from Salvadorans abroad. Click here for further discussion of these in the full article.