isi ad pst i tT ae eee) ee al ok tae INO a tw pe Pars a ks Se eet te igHuman resource management in Latin America I Introduction 2 Industrial relations 3 Human resource management 4 Conclusion Overview In order to analyse human resource management in Latin America, one has to consider the impact on the region of some critical factors, among them: population, economy, globalization and regionalization, privatizations, corporate mergers and acquisitions, and recent changes in the workforce. Another relevant factor in some countries is the development of industrial relations. Taking into account these considerations, this entry first frames the concept of Latin America, and then briefly describes the characteristics of the region. Next, it refers to industrial relations and finally identifies the most important trends as regards human resource management. Given the breadth of the field analysed, only general trends can be identified, and so these generalizations will give rise to important exclusions. At first glance, Latin America gives an impression of unity. But this uniformity fades away whenever it is decomposed into regions and countries. Latin America is made up of those countries south of the Rio Bravo Valley that were colonized by Portugal or Spain. This criterion excludes areas in North America, colonized by Spain — such as California, New Orleans and Florida — and those countries south of this natural frontier that were under English, French or Dutch colonial rule — such as Belize, Haiti, Surinam, etc. Obviously, the concept of Latin America can be split into many subgroups on the basis of several factors: the existence or non-existence of important pre-Columbian cultures; their later cultural developments; the presence of one or more cultures within each national society and their degree of social integration, and so on. However, despite all these differences, Latin American countries share many common features. I Introduction Demography. Latin America extends over an area of 20,500,000 km’. In 1920 the region had 95 million inhabitants and it is estimated that its population will rise to 530 million by 2000. In the 70 years between 1920 and 1990, the number of big cities (i.e. cities with over 100,000 inhabitants) in Latin America increased from 28 to 307, The percentage of people living in big cities also rose in those years from 11 to 42 per cent. This degree of concentration is comparable to that in North America and Europe. No other region in the world has suffered in the twentieth century such mass migration of 138Human resource management in Latin America millions of peasants into big cities. The bigger cities were the main destination for most emigrants, thus creating super cities. At the end of the twentieth century, Buenos Aires, Mexico, Rio de Janeiro and Sao Paulo all have over 10 million inhabitants. This emigration trend obviously had a socioeconomic and political impact on the region. Latin America must now meet the demands and needs of its new urban population. Economy. The gross domestic product (GDP) per capita of the big and medium-sized countries in the region is substantially higher than that of African countries and many Asian economies; however, they are far from reaching the figures of developed countries with free-market economies (see ECONOMIES OF LATIN AMERICA). The wealth of Latin American countries is largely dependent on their agricultural production, a sign of underdevelopment. Paraguay is one of the countries most dependent on this activity, whereas Venezuela, with its oil production, and Chile, with its copper production, are less dependent on agriculture. The region exports a few products — oil, minerals, cereals, tropical fruits — all of them in great demand world- wide although of little added value. The level of investment is low in these countries, Chile with 28 per cent in 1996 being the one with the highest level. For most Latin American countries, foreign debt remains the main obstacle to their development. Globalization and regionalization. There are over 20 commercial agreements in Latin America: NAFTA (North American Free-Trade Agreement) (USA, Canada and Mexico), Mercado Comtin Centro Americano [Central American Common Market] (Honduras, Nicaragua, El Salvador Costa Rica, Guatemala, Panama), CARICOM (The Caribbean Community), Grupo Cuatro [Group Four] (El Salvador, Guatemala, Nicaragua, Honduras), Grupo Tres [Group Three] (Colombia, Mexico, Venezuela) and Mercosur (Argentina, Brazil, Bolivia, Chile, Uruguay and Paraguay). Privatizations, corporate mergers and acquisitions. In many Latin American countries, such as Argentina, Chile or Peru, extensive privatization has occurred, leading to the creation of many new companies, as well as bringing about many corporate mergers and acquisitions. The privatization process shows various degrees of development in the region. There are countries, like Chile, where it is very advanced; other countries, although they have started privatizing their companies, still have a long way to go, such as Argentina; still other countries have only now started the process, like Venezuela. There are also countries, such as Brazil, which have not as yet considered this alternative, although they will soon be forced by economic circumstances to take it into consideration. The creation of new consortiums to take part in these privatizations and set up new businesses, and the emergence of new operation niches, have led to many corporate mergers, acquisitions and both short- and long-term collaborations between different firms in the region. All these changes have brought about a demand for labour, while at the same time causing redundancies. Companies that were originally controlled by the state, but are now in private hands, tend to make part of the existing workforce redundant, while still requiring new staff with higher qualifications. Workforce. The percentage of salaried workers legally employed in Latin America is lower than in the USA, Europe or Japan, but higher than in African countries. In countries such as Argentina, Brazil, Colombia, Chile, Mexico, Peru and Venezuela, this percentage ranges from 60 to 66 per cent of the working population. 139