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38 D+C  e-Paper  August 2016 Sustainable development Investment in skills training pays off Small and medium-sized enterprises (SMEs) create jobs and income. They are the foundation of well-performing economies. Bruno Wenn of DEG, the German development finance institution, explained in an interview with Dagmar Wolf why investment in vocational training matters, taking Brazil as an example. Interview with Bruno Wenn Why do so many medium-sized Ger- man companies choose São Paulo as a business location? There are long-established links. Many companies already have a presence in São Paulo. The legal system is in place, the German chamber of commerce is there, the German Club and the German com­ munity in general. This infrastructure is especially beneficial to SMEs that want to enter the market. Notaries, lawyers, tax accountants and other professional ser­ vice providers understand German com­ panies. Other places in Brazil, however, lack this kind of infrastructure, so compa­ nies have to start there from scratch, and that would be more expensive. What are the major obstacles your clients face in Brazil? One thing many companies complain about, is the lack of infrastructure – espe­ cially outside São Paulo. This applies to roads, power and water supply, sanitation and waste management, for instance. There is also a lack of qualified workers. Red tape and legal uncertainties are also challenges, partly because the laws are unclear. For example, it is currently being discussed to raise the legal working age from 16 to 18. But what are young people supposed to do after leaving school at 16 or 17? Large companies can run skills training workshops for apprentices, but smaller companies usually cannot do so. If there are too few skilled work- ers, aren’t companies interested in training young people? They actually have to train them, because Brazil’s state-run education system does not provide people with the professional qualifications that companies require. You need an appropriately trained work­ force to meet the quality standards Ger­ man products are known for. If someone cannot draft a construction blueprint, she or he normally will not be able to read that kind of document either, and thus will not be able to build the machine correctly. If companies want to sell high- value goods, they need high-quality production, plus high-quality after-sales services. When something doesn’t work properly, they need to send support fast, and only a competent colleague will be up to the task. Moreover, support services are often provided online today. Comput­ ers are used to identify the problem, and repair means to fix the software. These are additional challenges, and the staff of small workshops in rural areas must be put in the position to rise to them. Do companies train people beyond their own need? Well, it is often hard to retain people with good skills. That is no different in Brazil than anywhere else in the world, so it makes sense to train people beyond one’s own needs. And if mechanics that have been trained by Bosch, the car compo­ nent manufacturer, later start their own business, Bosch can benefit: they’ll be potential clients. Is training on the job needed at all levels – for low-skilled workers and university graduates alike? Yes, it is. The reason is that workers’ knowledge has to match current needs at all levels. In many emerging markets and developing countries, the governmental education system basically delivers theo­ retical knowledge. In Germany, practical competence is valued as well, and that is something special. Where it is not com­ mon to teach practical skills, companies have to assume the responsibility for making sure their employees are capable of rising to their jobs’ challenges. So Brazil does not link theory and practice in the way that Germany’s vocational training system is famous for? Well, the SENAI (Serviço Nacional de Aprendizagem Industrial – the national training service for industrial apprentice­ ship) offers vocational training courses in manufacturing and advanced training programmes for more experienced staff. It is partly controlled by the government and cooperates with universities. But it does not run courses for all economic sec­ tors, and SENAI training is not a general requirement for employment. The great advantage of Germany’s dual system is that the practical part of the train­ ing takes place on the job. So far, that is hardly done in most emerging markets and developing countries. Companies that want to invest in these markets have to be enterprising and might want to cooperate with others on training. In India, Don Bosco Mondo, a Catholic out­ fit, is a good partner. In cooperation with companies, it develops training courses – to the benefit of both low-skilled young­ sters and employers. What role does DEG play in terms of promoting vocational training? brazil São Paulo