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Private sector

Better skilled employees

by Sabine Balk

In brief

The Hospital Sirio Libanes (HSL) in Brazil now successfully trains its own staff internally.

The Hospital Sirio Libanes (HSL) in Brazil now successfully trains its own staff internally.

Lack of skilled labour is a huge challenge for companies in emerging markets and developing countries. The Association of European Development Finance Institutions (EDFI) wants it to be tackled.

EDFI has published a comprehensive report with theoretical insights and various examples of good practices. It was co-authored by experts from the Boston Consulting Group and the DEG, an EDFI member and KfW subsidiary, which supports private-sector development.  

According to the EDFI publication, creating productive and sustainable jobs is a major contribution to fighting poverty and boosting development. One problem, however, is that companies often cannot find people who have the expertise needed in poor world regions. This “skills gap” means that people have either not been trained at all or have been trained the wrong way.

A lot of countries do not provide their young people with the skills businesses require, so private-sector companies should train people themselves, EDFI recommends. According to the report, too many companies shy away from that task. Managers fear the costs they know, but they cannot assess the benefits, which often only become apparent in the long run. The EADI report is an attempt to convince them that there is a win-win situation for enterprises and employees if companies address the skills gaps.

The benefits for companies are:

  • a better qualified, stronger motivated and more loyal workforce,
  • increased labour productivity,
  • better product quality,
  • more innovation and
  • an improved reputation.

There are also lots of benefits for employees and even for society. People with more skills find better jobs and earn more money. They also have better career prospects. Strong private-sector companies, moreover, foster economic development, and thus benefit the country and society as a whole, as the authors highlight.  

Good practices

The EDFI publication discusses hands-on methods for assessing the costs and benefits of skills training. It also provides recommendations for identifying and closing skills gaps step-by-step. It can serve as a practitioner’s guide.  

According to the authors, it is crucial for companies to proceed in a structural way. They need to draft detailed personnel plans, adopt specific training courses and form dedicated training teams in each department. Some companies have successfully implemented measures this way, and the EDFI authors insist that others can do so too.

One company described is the Hospital Sirio Libanes (HSL), a private hospital operator in Brazil with headquarters in Sao Paulo. Its reputation is excellent, so it has no difficulty in attracting qualified doctors, but it used to struggle to recruit and retain low- and medium-qualified staff like nurses or catering and cleaning staff.  

HSL has invested in systematically assessing skills needs and providing training accordingly. It even runs graduate courses and hosts distance learning platforms. In addition, the hospital has invested in a multi-disciplinary qualification centre, in which new and existing staff is trained to work effectively in teams.

To address its relatively high attrition rate among low-skilled staff, HSL initiated a neighbourhood qualification project. It trains people from the local area in catering, hygiene or other relevant skills. HSL’s education and research institute partly runs the programmes. For its respective efforts, HSL relied on loans from the DEG and other finance institutions.

According to the EDFI publication, the hospital’s approach is very successful. HSL has no problems to find qualified auxiliary staff any more and can fill most positions internally. In the eyes of EDFI, a very positive aspect is that HSL contributes to the development of the local community. The “benefits clearly outweigh the costs” for HSL, the authors write.

Sabine Balk

DEG-Report: Bridging the skills gaps in developing countries.

“Let´s Work Partnership” to create more and better private sector jobs: