Oscar Corvalán V.

The purpose of this paper is to report on the challenge posed to adult education and skills training by the large numbers employed in small and medium-sized enterprises, SMEs, in Chile, by reference to the experience of a particular economic niche in one region of the country. Since the 1990s, Chile has invested large sums in education. But today’s adult workers need new learning opportunities to make up for the education that they missed at school because of the lack of investment in education by the Military Government in the years 1973-1989. Both SMEs and so-called micro enterprises, which employ fewer than 5 workers and have sales not exceeding 50 thousand US dollars a year, are the major source of employment in developing countries. Despite the low productivity in such enterprises, the people employed in them have little opportunity for education or training. Besides reviewing the challenge posed to adult education in the country, this article describes an example of SME training in La Araucanía Region in Chile, where the greatest percentage of the indigenous population is concentrated and which has the highest indices of poverty despite the richness of its natural and cultural resources. The enterprises in question are concerned with tourism, which is a developing industry given the decline in agricultural employment. The methodology used emphasises management training and the teaching of relevant knowledge. Oscar Corvalán V. is Director of ITUR (Instituto Eurochileno de Turismo), Universidad de La Frontera, Pucón, Chile. 

Adult Education and Skills Training for Small and Medium-sized Enterprises in the Tourist Industry in one Region of Chile

1. A Brief Outline of Adult Education in Chile 

Education for young people and adults has the complex task of responding to the needs of a heterogeneous population. Hence, teaching approaches have to take this diversity into account. The potential demand is huge. According to the 1992 census, 4,527,148 persons aged 15 years and over have 8 years of education or less, and 1,995,578 have between 9 and 11 years of formal schooling. That means that 70% of the population aged 15 years and over have not completed basic and secondary education.

However, the actual demand for adult education (AE) is low, only reaching 155,930 students in 1998, most of whom were under 25 years of age. The information available suggests that 77% of those gaining qualifications via this route were young people aged between 15 and 24 years who were looking for means of easing their integration into society and the labour force. In fact 64,500 persons aged 14-17 years drop out of the formal school system each year, 72% of whom belong to the poorest quintile of Chilean society.

Adult education in Chile currently provides a range of options for starting and/or completing school education. It offers a second chance to those young people and adults who were not able to complete their formal education for various reasons. Adult education is a way of acquiring and strengthening the knowledge and skills needed to respond better to the requirements of today’s world, both at work and in everyday life. Anyone aged 15 years or over may take advantage of it.

Most of the establishments providing adult education belong to local authorities and are free. There are around 1200 establishments offering this type of education in the country. Eighty of them, known as Integrated Adult Education Centres (CEIAs), run classes solely for young people and adults in three shifts: morning, afternoon and evening. The others are conventional schools that provide “third shifts” in the evenings for young people and adults. Special, more flexible programmes have also been developed recently alongside traditional adult education.

Basic education in Chile lasts 8 years. It is followed by secondary education (Educación Media), which lasts 4 years, the first two of which are common before there is a split between Scientific Humanistic Education on the one side, and Technical Vocational Education on the other. Young people and adults may complete basic and/or secondary education, or they may join Special Basic and Secondary Education Programmes for Young People and Adults.

Scientific and Humanistic Basic and Secondary Education

Vocationally oriented Basic and Secondary Education

Special Compensatory Basic and Secondary Education Programmes for Young People and Adults

Basic education for young people and adults lasts three years and comprises three levels:

● Level 1 –
● Level 2 –
● Level 3 – Basic yrs 1-4 Basic yrs 5-6 Basic yrs 7-8

There are two forms of secondary education for young people and adults, one lasting four years and one, two years.

Adult Basic Education (ABE) and Elementary Technical Adult Education make it possible to complete studies up to Secondary Year 2 while taking vocational training at the same time. The curriculum contains three areas: the common or general education area, the technical or skills area (e.g. courses in mechanics, carpentry or tailoring) and the additional activities or personal development area (craft workshops, drama, aerobics, folklore, etc.). Technical Vocational Adult Secondary Education offers the two 2-year cycles of adult secondary education at the same time as a secondary vocational qualification (e.g. secretarial, executive or book-keeping skills).

The Special Compensatory Basic and Secondary Programme is aimed at young people and adults who are working and want to complete their basic or secondary education through a flexible system, without fixed hours and with a content that matches their educational needs. The Compensatory Work Skills Programme, jointly run by the Ministry of Education, the Ministry of Labour and the Solidarity and Social Investment Fund (FOSIS), provides an opportunity to complete basic and secondary education for people aged between 18 and 40 years who are unemployed.

 

 

In line with the Educational Reform launched in the 1990s, adult education has recently initiated a process of curriculum revision. The AE reform seeks to create a curriculum that will provide a solid basic education for adults as a foundation for the acquisition of specific knowledge and skills that meet the requirements of increasingly complex, globalized living conditions.

This year, 2002, the Government of Chile launched the Lifelong Education and Skills Programme “Chile Learns More”, the purpose of which is to provide opportunities to catch up with education and to improve the skills of low-paid workers and young Chileans.1 The aim of the programme “Chile Learns More” is to improve Chileans’ current levels of education, skills and employability. As has been pointed out, about 70% of people aged 15 years and over in Chile have not completed basic or secondary education, although 40% of the population are economically active.

Similarly, the programme sets out to improve secondary and higher technical education, as a basis for enhancing human resources and productive development. The aim is to create a national Lifelong Education and Skills Training System which will meet the country’s social, cultural and economic needs in the context of globalization.

The following goals have been set for 2002:

  • At least 8000 persons completing second chance basic or secondary education

  • Model projects in Regions V, VIII and the Metropolitan Region linking work skills training and second chance education, allowing people to catch up with school education at the same time as they receive training in work skills

  • A pilot distance education project to develop a new methodology using information technologies for second chance education: 1000 people are expected to use this method

  • Four model projects linking technical training, involving technical vocational schools, technical training centres, vocational institutes, universities and the productive sector, covering 3240 students and directly related to regional economic development (Regions III, VIII, IX and X)

  • A pilot experiment certificating employability skills (900 persons) in tourism and in gas and electricity (1600 workers)

  • A pilot project addressed to 200 technical skills organizations to improve skills provision based on work skills

  •  Design of a public information system about the labour market and training provision, and creation of a programme website

  • Activities for SMEs to promote use of tax relief for work skills programmes and second chance education for their workers

The target groups to benefit from these initiatives are: a) low-skilled workers and job-seekers who need to improve their levels of literacy, academic education and work skills; b) young people who need to find a job with suitable technical training; and c) workers in employment who need to upgrade their technical training.

2. Description of Chilean SMEs 

The main indicators used in Chile to define small and medium-sized enterprises are: i) number of workers, ii) capital invested, iii) monthly or annual sales; and indicators of relations with the rest of the economy, such as: a) access to formal or bank credit, b) use of major industry technologies and c) access to markets outside the locality or the country.

Various typologies have been devised around the SME performance indicators, generally based on sales turnover, given the strict control exercised in Chile by the Internal Taxation Service. According to the definition of the Production Promotion Corporation (Corporación de Fomento de la Producción, CORFO), micro enterprises are those with sales of under US$50,000 per year, small enterprises have sales between that figure and US$250,000 per year, and medium-sized enterprises are those managing to achieve sales of up to one million dollars per year.

Table 1: Distribution of employment (in thousands of workers) in Chile, by size of enterprise

 

No. workers

In %

Cumulative %

Micro enterprises (1-4)

2,024

38.8

38.8

Small enterprises (5-49)

1,836

35.2

74.1

Medium enterprises (50-199)

653

12.5

85.6

Large enterprises (200 or more)

505

9.7

96.3

No information

194

3.7

100

Total

5,212

100.0

 

Source: CASEN 96

Micro enterprises together with small enterprises provide 74% of the total number of jobs in Chile. Hence the importance of considering the level of education and skills of their workers. Both categories provide work for nearly 4 million workers throughout the country, while large enterprises provide employment for just over half a million workers.

Micro enterprises are strongly represented in all fields of economic activity in the country, but almost half of them comprise self-employed workers concentrated in the retail sector, perhaps with two or three employees, selling articles from larger enterprises. In second place are micro and small enterprises in the agricultural sector, and these are followed by transport and personal services; catering comes next, and then micro and small industrial enterprises.

Table 3 shows the regional distribution of enterprises by size. In 1997 there was a total of 432,431 micro enterprises and 78,805 small enterprises in the country. Of that total, there were 24,723 micro enterprises and 3,545 small enterprises in Region IX, La Araucanía, accounting for approximately 5% of the overall total in the country.

Table 2: Number of enterprises by economic sector and size
Chile 1997

SECTOR

MICRO

SMALL

MEDIUM

SMEs

LARGE

TOTAL

Agricultural production

54,174

8,150

522

8,672

121

62,967

Agric. services and hunting

1,444

430

49

479

18

1,941

Forestry

2,380

847

118

965

41

3,386

Fishing

1,223

338

89

427

74

1,724

Mining, oil and quarrying

966

396

80

476

97

1,539

Manufacturing industry

26,605

9,650

1,927

11,577

1,211

39,393

Electricity, gas, water

530

88

28

116

72

718

Construction

15,407

5,509

1,109

6,618

587

22,612

Retail

179,320

28,125

4,337

32,462

1,765

213,547

Catering

22,355

3,184

296

3,480

62

25,897

Transport

33,727

7,202

754

7,956

234

41,917

Financial services

7,329

2,615

341

2,956

166

10,451

Technical and prof. services

21,954

5,913

741

6,654

230

28,838

State social and institutional servs.

4,830

858

120

978

49

5,857

Entertainment

3,640

568

83

651

26

4,317

Personal and domestic services

33,407

3,457

169

3,626

41

37,074

Other activities

18,347

1,343

92

1,435

15

19,797

No information

4,793

132

15

147

5

4,945

TOTAL

432,431

78,805

10,870

89,675

4,814

526,920

Source: CORFO

The importance of micro and small enterprises in the country is such that no adult education or vocational training programme can ignore them, especially as it is the skills required to prosper in them which most workers need. Thus any strategy to improve the competitiveness of the country, to modernize labour relations or to increase the productivity of the labour force must necessarily concern itself with raising adults’ levels of education and improving the skills of workers

Table 3: Number of enterprises by size and region
Chile 1997

REGION

MICRO

SMALL

MEDIUM

SMEs

LARGE

TOTAL

I Tarapacá

14,776

1,834

213

2,047

67

16,890

II Antofagasta

12,650

2,291

273

2,564

103

15,317

III Atacama

7,619

1,142

108

1,250

33

8,902

IV Coquimbo

17,647

2,373

236

2,609

70

20,326

V Valparaíso

43,528

7,343

793

8,136

245

51,909

VI O’Higgins

23,864

3,582

346

3,928

91

27,883

VII El Maule

35,250

3,996

376

4,372

116

39,738

VIII El Biobío

48,672

7,394

811

8,205

254

57,131

IX La Araucanía

24,723

3,545

333

3,878

90

28,691

X Los Lagos

31,447

5,095

450

5,545

197

37,189

XI Aysén

3,256

439

47

486

15

3,757

XII Magallanes

5,014

1,032

130

1,162

28

6,204

Metropolitan Region

150,001

38,464

6,734

45,198

3,500

198,699

No information

13,984

275

20

295

5

14,284

TOTAL

432,431

78,805

10,870

89,765

4,814

526,920

Source: CORFO

in small enterprises.2 In most developing countries, large and small enterprises are two different worlds that do not mix, despite the interests that they have in common. If the proprietors of small enterprises are successful, this means that more people will: i) provide products and services for local markets, ii) buy and exchange products and services at a business level, iii) be better educated and able to work more efficiently, iv) develop enterprises that buy products and technologies locally, encouraging cooperation between businesses, v) take on responsibilities and succeed in acquiring property, and vi) create a more stable political and social environment through their work.3 

With the aim of encouraging the development of small enterprises, the Production Promotion Corporation, CORFO, and the Technical Cooperation Service, SERCOTEC, developed a series of programmes that were strengthened in the 1990s. The first of these bodies concentrated on small and medium-sized enterprises, providing development projects, PROFOS, to foster collaboration and skills for managers of small and medium-sized enterprises. SERCOTEC, on the other hand, focused on micro enterprises, supporting them with access to credit and new markets, as well as with skills training and the development of sales strategies. Besides skills training programmes for the managers and workers of small enterprises, other schemes have been run in Chile: a) technical assistance and development of “clusters”, by type of product or service provided, b) credit and access to capital networks, c) sales promotion, and vertical integration to facilitate access to markets, and d) development of entrepreneurial skills. 

Although the incomplete data that are available do not make it possible to calculate the cost-effectiveness of these schemes, it is possible to draw some useful lessons for training policies. First, it is clear that the issue of collaboration between small enterprises is crucial if they are to gain access to new customers and to credit. Since this requires a change to the individualistic culture of small entrepreneurs, education and skills training are indispensable. Secondly, it is established that education and skills training for current and future workers in small enterprises cannot be provided in isolation from other support programmes such as technical assistance, sales development and marketing. Furthermore, the experience of programmes providing support for SMEs clearly demonstrates that it is necessary to apply a new concept of adult education emphasising training and the development of vocational and other skills. 

In reality, the range of skills required in a small enterprise is much greater than what is needed in a large or moderately large enterprise. On the other hand, international experience of support for small enterprises, either via the organization of so-called “Industrial Districts” in Denmark and Italy, or via Local Support Centres in the United States, suggests that a genuine change of culture has to come about if micro entrepreneurs, small entrepreneurs and their workers are to work collaboratively. This cannot be achieved without adult education and skills training programmes clearly setting out the skills that each person needs to acquire. 

The globalization and structural changes to their economies from which Latin American countries are suffering also require well thought-out programmes of lifelong education and skills development, without which the vast majority of workers will remain on the margins of social and technological change and will be forced into underemployment or unemployment. The effects of international integration on SMEs clearly suggest that their workers cannot do without a major updating of their skills and the development of career projects that make best use of the few opportunities that globalization offers them. Small enterprises, which used to produce for the local market, are now being transformed into suppliers of parts for articles produced thousands of kilometres away, as a result of further changes in world trade and the new role required of SMEs. The opportunities and problems of the subcontracting work offered by some large companies also call for considerable retraining of workers and the learning of new work skills.

 

3. Small Enterprises Working in Tourism 

The case of the small enterprises associated with tourism reveals features that distinguish these SMEs from others. Although they do not have to work with a large company as part of a chain, or export goods to the standards required by the demanding markets of the industrialized countries, the service quality demanded by international tourists means that small enterprises working in tourism need considerable ongoing education and skills training.

The tourist system is in fact made up of the supply of and consumer demand for tourist goods and services within a specific geographical area, under the influence of the tourist market operators facilitating interaction between supply and demand. The latter include travel agencies and transport operators. But typical tourism activities also include micro and small enterprises providing accommodation and catering (restaurants), leisure and recreation, cultural and sporting activities, retail trade and crafts. Moreover, wherever the tourist industry flourishes, the building industry is also busy since each of the tourist services needs buildings, infrastructure and facilities. The various means of transport require repair and maintenance services. At the local level, accommodation services are at the core of tourist services, providing hotels, motels, camp sites, resorts, guest houses, cabins and serviced apartments. All of these tourist services are based ultimately on natural resources, such as sites of natural beauty, and on cultural sites created by human ingenuity.4

Small enterprises can enter or expand within the tourist industry provided that they offer services of good quality. New trends in international tourism enable interested travellers from distant countries to have access to local natural and cultural resources, which are converted into tourist products and competitive tourist destinations. Mass tourism has given way to adventure tourism, ecotourism and special interest tourism.

The development of world tourism is marked by a greater variety of destinations and an increase in adventure travel, which calls for such features as: different surroundings, untouched nature, exercise, guidance, and new natural and cultural resources, all in a safe environment. In this situation, total quality is a management tool that needs to be learnt.5

In the light of these changes, some regional universities, such as the Universidad de La Frontera, situated in La Araucanía Region, some 800 kilometres south of the national capital, have recently launched training and updating courses at all levels in fields related to the development of the regional tourist industry.

As part of this process, a course was provided in tourist business management for a sample of enterprises from the pre-Andean lakes region. This taught a great deal about the potential social, economic and personal development of those connected with the tourist industry.

A wide variety of enterprises provide services for tourists. Hence, when groups of small enterprises from the communes of Pucón and Villarrica were invited to take part in the skills development and updating programme for tourist businesses, those attending came from the following sectors: agricultural production of foodstuffs without fertilizers, repair of transport equipment, real estate, craftwork, retail trade, hotels, communication, construction, information technologies, food products, health, personal services, catering and transport.

Table 4: Sample of micro enterprises taking part in tourism management courses, 2002 Communes of Pucón and Villarrica, Chile

Table 4. Sample of enterprises

Participants.

Type of business

Frequency

Sectors

Tourist agency

4

Agriculture

Agriculture

3

 

Agro-camping

2

 

Motor cycle hire, machinery

2

Repair

Real estate, brokerage

3

Real estate

Crafts

5

Crafts

Plant and flower crafts

2

 

Automotive workshop

5

Repair

Bazaar

6

Retail trade

Cabins

18

Accommodation

Lodgings

2

 

Camping

6

 

Hotel

6

 

Beauty centre

1

Personal servs.

Telephone call centre

3

Communication

Furniture

4

Construction

Stone-laying

1

 

Contractor

3

 

Timber

3

 

Electrician

1

 

Metal structures

1

 

Door and window manufacture

2

 

Computing

1

Info. technology

Photographer

2

Communication

Design and publicity

2

 

Distrib. of food products

12

Food

Supermarket

2

 

Chocolate factory

1

 

Homeopathy

1

Health

Printing

1

Services

Laundry

1

 

Bookshop

1

 

Restaurant

7

Catering

Taxis and transport

5

Transport

Total

119

 

Source: Itur, 2002

 

All of them shared the need to redefine their businesses in the light of the decline in agricultural production, pursuing the growth prospects offered by the tourist industry.

The content of a theoretical and practical programme lasting some 100 hours was organized in thematic units looking at: a) tourism as an economic activity, including the tourist system and the role of public and private bodies involved in tourism, b) management of small enterprises and the administrative cycle, including the drafting of budgets and programmes, c) design and marketing of tourist products, including pricing and marketing strategies, d) finance as applied to micro enterprises, and e) preparation and presentation of local tourism development projects.

In addition to the skills relating to the various aspects of managing small enterprises, micro entrepreneurs gained an awareness of the need to band together and organize in order to develop new offers of tourist services and to reach new customers and markets.

At the same time, they were able to appreciate the dangers posed to the development of local tourism by the inorganic and disorderly growth of cities, and by contamination of the water supply and the indiscriminate use of forests as a source of energy for heating.

The issue of coordination between public sector and private sector organizations emerged clearly in the discussions and the practical work associated with the skills training course, as a result of which a new dialogue began between the local and regional authorities and the groups of small entrepreneurs formed in each commune.

Conclusion

Years ago, adult education and skills training for workers ceased to be a mere adjunct to the school system and transformed themselves into a complex area of knowledge and educational practice that calls for multidiciplinary learning and specialists in education and the world of work.

There is a need to define the skills required to function effectively in the complex world of products and services provided by small enterprises, where micro entrepreneurs must simultaneously study the market, design the product, sell it, draw up budgets, seek funding, deal with local and national authorities, attend to customers and check on the quality of every operation.

The mystique prevalent among those running micro and small enterprises often leads them to work ineffectually. Lack of methods and techniques to calculate the costs of their products and services sometimes means that they set prices according to demand or the prices charged by competitors. Frequently, self-employed micro entrepreneurs are not covered by national social security legislation and, together with their employees, have problems gaining access to health services and credit, with the result that small entrepreneurs systematically pay a proportionately higher price than large companies.

On the other hand, the education and training required mean that arrangements have to be made to increase mobility of labour and to provide lifelong education for workers in small enterprises. The changes which Latin American countries are experiencing as a result of globalization and the integration of international markets require governments to set up national systems of training with the relevant mechanisms for certification and quality control of learning.

While progress has been made in defining technical and technological skills, there is still a considerable way to go in defining and measuring communication skills, cultural skills and general education skills, which form the basis for the development of constantly changing technical skills.

Lifelong education and skills training for current and future workers in small enterprises, who account for three quarters of the workers in the country, will require educators to work alongside the social scientists who are monitoring developments in the economy and practices in the world of work.

Notes

1 The programm has a budget of 150 million dollars, 75 of which are a World Bank loan. The remainder is financed from taxation and private sources.

2 Corvalán V., Oscar and Peluffo A., M.B. Formación profesional y sector informal urbano en el Cono Sur, in Manfred Wallenborn (ed.) Sistemas de Formacón Profesional. Mannheim, ZGB,1997

3 Brugger et al. Forjadores de Porvenir: la pequeña empresa en el desarrollo. 1994:26-7.

4 OMT-WTO. Introducción al Turismo. OMT. Madrid. 1998:50ff.

5. Ibid. p. 387.

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