Private Sector Job Prescription

One of the more interesting developments from the recent Summit of the Americas in Cartagena, Colombia, was the presentation to leaders of recommendations from the private sector on ways to advance hemispheric development and job creation. No matter what the political leanings of any individual government in the region, leaders continue to struggle with issues of sustainable economic development and the need to unlock the job creation potential of their economies for new market entrants.
 

Some countries have been able to do this better than others, but none have been able to do it without the participation of the private sector. Even Cuba has bowed to reality and has begun to allow its citizens to engage in small, for-profit ventures as a way to lessen the burden on the state.

Whereas governments are comfortable discussing these issues at meetings of leaders, including Summits of the Americas, less often do they reach out specifically and directly to the private sector in order to gain a better understanding of the policies that can actually be implemented to encourage the broad-based job creation that each nation seeks. As a result, governments sometimes produce policies that do little to address the needs of the private sector—and then wonder why results aren’t more favorable.

For their part, the private sector in much of Latin America has not traditionally been as public spirited as their North American counterparts, preferring to view government as a way to protect markets and enforce market share rather than as an impartial referee that seeks the broadest public good through a transparent, even-handed dialogue.

In Cartagena, the private sector tried a different approach, presenting to governments the product of a working group organized under the auspices of the Americas Society/Council of the Americas, which offered support and recommended action on five priority areas.

These include ways to address the yawning skills gap between students graduating today and the demands of modern labor markets; policies designed to create a new climate for innovation; the need to promote labor market flexibility; the need to encourage small and medium-sized enterprises as an engine of job creation; and, finally, the need to share best practices across borders.

In so doing, private sector leaders sought a middle ground between an unproductive adversarial relationship with governments and an unjust corporatist approach which locks governments and favored companies into an economically stultifying embrace.

They also committed to engagement for the longer term, agreeing to work with governments on ways to promote the broader economic good. For example, it’s one thing to say that education must be improved—and it must—but quite another to put real resources behind the effort. The private sector understands that without cooperation with governments to overhaul curriculums in order to prepare students for the jobs that exist—as well as improved teacher training and the opportunity to put learning to work through scholarships, internships, and applied learning—the effort is doomed to fail. The private sector knows how to innovate and does do so effectively around the world.

But without policies that encourage innovation, including intellectual property protection, incentives for research and development, and less onerous provisions to start a business or to wind up a business in the case of failure, innovation from Latin America will continue to lag.

Without more flexible labor codes, businesses will continue to under-employ, leaving millions of potential workers at the mercy of informal markets without the protections of the state or the potential for sustained economic gain. And so on.

Public-private partnerships to build hemispheric economies go well beyond the traditional emphasis on corporate social responsibility that often dominates such conversations. While important, it can only be a small part of the agenda.

Much more crucial, and effective for the long-term development of Latin America, is the potential for sustained job creation that can only come from an updated partnership between the public and the private sectors, and the sharing of practices that work. In Cartagena, this conversation has now begun.

Eric Farnsworth is the vice president and Washington office head of the Americas Society/Council of the Americas.