Latin America has no capacity for rapid recovery from the pandemic

Latin America lacks the capacity for rapid recovery from the brutal impact of the coronavirus on the economy, says the secretary general of the International Organization of Employers (IOE), Roberto Suarez Santos, who takes on the role of spokesman for the business community in more than 150 countries.

He also denounces that first in Venezuela and more recently in Nicaragua and El Salvador, "the most representative business organization is systematically intimidated", and regrets that the liquidity that companies need so much is not reaching them, which could end up asphyxiating them.

With a hundred years of existence behind it, the IOE defends entrepreneurial freedom from Geneva and represents - together with States and trade unions - one of the three pillars on which the International Labour Organization (ILO) is based.

Spaniard Suárez Santos analyses the new way of working that has been forced by the pandemic and argues that regulations must be adapted to the changes that are already here.

You recently met virtually all of the leaders of business organizations from across Ibero-America. What are the biggest concerns they expressed about the impact of COVID-19?

The situation of the Latin American countries is very diverse. It is necessary to take into account the strong informality in several of them and the fact that not all of them have sufficiently developed social protection systems, so that for some it is much more difficult to face emergency situations in employment.

This has been confirmed by all the presidents of business organisations, but the biggest concern now is the lack of early recovery capacity.

Despite the fact that the crisis is hitting Latin America with delay, the capacity to react is very limited and to this must be added the threat - to a greater or lesser degree, depending on the country - to business activity. There is a strong populist and protectionist trend that is very worrying.

In which countries is this anti-business discourse spreading?

This is from before COVID-19. Venezuela is a specific country where entrepreneurial activity is systematically persecuted and threatened. There, being an entrepreneur is an adventure, entrepreneurship is being killed, but now the situation is worse.

In other countries, such as Nicaragua or El Salvador, the most representative business organization is systematically intimidated or ignored by the authorities, with a policy of selecting the companies most similar to the regime. Then there are other countries, where, without reaching these levels, policies are far from favouring a rapid recovery.

What can governments do to accelerate recovery in the post-COVID-19 period?

There's a lot of uncertainty. We make predictions, but we don't really know if there will be a second wave of the virus or if we will have a vaccine, and on the other hand the attitude of many governments is not responsible.

It is important to implement policies so that liquidity reaches companies and workers, but in general this is not happening. In many countries liquidity mechanisms have been put in place, but they are subject to a thousand requirements and procedures, which is going to cause big falls in the gross domestic product.

Recovery will depend on major structural changes, such as employment policies to train certain workers, such as young people or the long-term unemployed; or policies to promote a transition to formality in the case of Latin America.

From the dialogue you have had in recent weeks with Spanish employers, how do you see the future of the Spanish business sector?

Lately there have been initiatives that somehow undermine the capacity of social dialogue to generate efficient responses and this is a concern that they have shared with us.

On the other hand, the situation in Spain is very much linked to the European reality, with a policy of the European Central Bank that tends to generate liquidity, although we must be careful with the effects of debt in the medium and long term. A certain amount of fiscal rigour is important and we are not sure that this is the pattern being followed in countries like Spain.

In the case of Spain, as in other countries, the essential thing is to act quickly in certain sectors that are being brutally affected by the crisis, and to generate industrial development policies that compensate for the loss of the fall in production, and also in the services sector.

Is there an estimate of how many companies could close in the world and more specifically in Europe and America as a result of the coronavirus?

When the ILO (International Labour Organization) published its data on job losses, we asked it to provide data on disappearing companies. There is one data that is quite shocking, that must be taken with caution and according to which 436 million companies in the world are facing closure. More than half of them are closely linked to the textile sector and to large-scale trade. Another fact is that small companies and self-employed workers represent the largest percentage of this total.

The WHO has asked countries not to rush back to normality to avoid a second wave of the virus. How does your organization assess this risk?

The first thing that we entrepreneurs have said is that health is the main value. Having said that, it is important to bear in mind that in the medium term there must be effective de-escalation, with a sectoral approach. There are sectors whose recovery is key to employment and social welfare, and knowing which sectors are key depends very much on each country and even on each region of a country.

Are the most affected sectors of the economy being efficiently helped to recover?

From a global perspective, liquidity is not reaching the companies, although there are important efforts. We are in contact with financial institutions so that the money reaches the real economy, the companies and, therefore, the employees.

From the point of view of employers, how do they see the changes in the way of working that have been forced by this pandemic? What do they think the work will be like in the future?

We see the acceleration of changes that were already taking place. No responsible of any company would have been able to implement policies of digitalization or remote work as this pandemic has done. Overnight, and without anyone having foreseen it, we have all become necessarily digital. The concept of place and time of work has been relativized, today it is possible to work remotely and at the same time be very productive. The problem is that many of the regulations we have are not prepared for this and neither is the infrastructure, connectivity or digital media.

As far as time is concerned, goal-oriented work is going to be the trend. I am not interested in knowing how many hours you have worked, but that we reach an agreement, with you as a worker, on the goals you have to meet this month or week. How you organize yourself is your freedom and your autonomy.

And the right to disconnect?

That's important too. Disconnection policies are very healthy and necessary. I apply it in my organization. The best way is to establish guidelines that we should all follow: on weekends, starting at a certain time. Now there are very sophisticated digital mechanisms to measure and track productivity, which obviously have privacy challenges that must be managed, as well as human resources, because we must be careful with how we measure individual productivity to avoid comparisons and a bad work climate.