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Peru - Economic growth creates staff turnover issues

02 January 2013

Economic growth is seldom perceived as an impediment to companies’ growth, but in Peru employers are struggling to retain their talent, according to the Peruvian periodical El Comercio.

“Previously, people would only leave an employer following dismissal; but now they are changing job to find better working conditions”, says Manuel Cubas, president of the executive search consultancy Cornerstone Lima, summarizing the change that has taken place in recent years.

Workers change job to find a better work environment or better pay prospects; and the country's economic growth has exacerbated this situation. According to Cubas, the increase in the number of companies has led to greater employment opportunities, especially among the workforce with low to medium salaries.

Ernesto Rubio, manager of Right Management, said the country's economic growth, coupled with a shortage of skilled staff, has created a situation where companies have to “fight” to retain their staff, because the increase in staff turnover is starting to impact on the performance of businesses.

According to Cubas, staff turnover can compromise a firm's productivity by as much as 10% to 30%. In this regard, Adolfo Gonzales, managing partner of Rate Worldwide, is adamant that “former employees take some of the company’s know-how with them when they leave, and it can take three to four months to find a suitable replacement, depending on the nature and complexity of the position.”

Staff turnover in the services sector has increased considerably in recent years. Rubio estimates that some years ago the turnover in this sector was 20% and it has now reached 50%. For Alfredo Garcia, general manager of Sodexo Peru, staff turnover in the service sector can even reach 75%.

This new situation has forced companies to implement ad hoc strategies to retain their workers. Employees do not only look at the pay when changing job: training opportunities, working environment and facilities also weigh significantly in the balance.

Staff shortages in the mining sector have been present for some years. However, it has worsened in the last decade, since the increase of large projects in the country. By contrast with the rest of the Peruvian job market, the biggest reason for changing job in this sector is the wage factor. 

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