Colombia: Steady Economic Growth Results in Positive Employment Outlook

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Recent economic information regarding Colombia shows growth in the second quarter exceeding expectations. Amid falling commodity prices, a boom in the construction industry prevented a greater slowdown in the broader economy. Expansion of the gross domestic product (GDP) was also higher than analysts had initially anticipated year-over-year with a 0.6% growth from the previous quarter. Colombia is set this year for its slowest economic expansion since 2009 as a result of falling oil, coal, coffee and gold prices globally. Despite a contraction in manufacturing output, expansions were noted in the mining and agricultural sectors along with a rise in construction output.

Colombian employers report hopeful hiring intentions for the October-December 2015 time frame. While 19% of employers expect to increase staffing levels, 6% forecast a decrease and 74% anticipate no change. This resulted in a Net Employment Outlook of +13% overall, according to the Manpower Employment Outlook Survey (MEOS). With the data adjusted to allow for seasonal variation, the Outlook stands at +14%. Hiring prospects remain relatively stable, when compared with the previous quarter, but declined by 6% year-over-year.

“The Employment Outlook in Colombia is changing in terms of specific sectors and regions, but Colombia’s general outlook is relatively stable. This is good, because, even though a lower GDP is expected this year in the country, employers are still reporting positive hiring intentions. As a matter of fact, mining is a sector that has been affected by the current low prices of oil, gas and coal in Colombia, but its Net Employment Outlook, which was -4% last quarter, has improved and now stands at a cautiously optimistic +7%”, said Ms. Rosalba Montoya Pereira, Director of ManpowerGroup for the Andean Zone of South America. “Additionally, approximately three-quarters of the sector’s employers intend to keep their current workforces intact through the end of the year, suggesting that many are willing to ride out the current slump in commodity prices, at least through the end of the year."

Mauricio Cardenas, Finance Minister to Colombia, has repeatedly stated that industry and agriculture will benefit from the 23% depreciation of the peso over the past year, helping to revive growth and offset reduced oil exports. Analysts are cautiously optimistic regarding growth and hiring for the remainder of the year. Despite the falling export prices, Colombia showed larger growth than other major economies in the region, such as Mexico, Brazil and Chile, while tying with Peru at 3% expansion. However, the reduced value of the peso has resulted in a surge in the price of imported goods that in turn triggered an accelerated annual inflation of 4.74% in August, the fastest rate since 2009.

All nine industry sectors forecast workforce gains for the fourth quarter. Those labor markets with the strongest Net Employment Outlooks include public administration, education, finance, insurance and real estate. Fishing and agriculture, construction and wholesale trade and retail all report optimistic hiring plans at 10% or higher. However, noteworthy declines are forecast in the transportation and utility sector as well as the construction sector, quarter-over-quarter. Despite weakness in the majority of sectors year-over-year, improvement and strengthened hiring plans are forecast in the final quarter of the year in four sectors (including mining), which is promising news for many employers throughout the region.

ManpowerGroup’s Talent Shortage Survey 2015 results showed talent shortages have become more of an issue in Colombia. Roughly 47% of employers surveyed reported a lack of talent, an increase of 10% year-over-year. For the first time since the survey's inception in 2006, employers in the region cited skilled trades worker positions as those which are the most difficult to fill. Those positions were followed by technicians, sales representative, administrative staff and drivers, in that order. The perception that talent shortages have a high impact on the ability to meet client needs is strongest in Brazil (32%) and followed closely by Colombia (29%) according to the survey's findings. In terms of people practices, employers are most likely to be offering further training and development opportunities to existing employees, though the most widely-used approach is to develop new skills, followed by enhancing existing skills. Meanwhile, roughly 20% of employers throughout the region are seeking to utilize non-traditional recruiting practices to address the talent shortage, and this approach is becoming increasingly popular.