South American Continent

Regional Analysis
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Regional Analysis
Introduction
Over the past decade, the South American continent has established itself as a promising region for IT start-up companies looking to relocate and take advantage of the burgeoning talent base and favorable business climate. As a result, venture capital investment in Latin America has grown steadily, and high-growth tech companies have started expanding into South America and setting up talent hubs in different cities. This report will conduct a comparative international management analysis of three cities in three different Latin American countries for a tech company looking to move into the continent. The information will analyze Sao Paulo (Brazil), Buenos Aires (Argentina), and Santiago (Chile), with a special focus on four specific HR and IT infrastructure issues: legal obligations and concerns affecting human resource and labor relations, labor and management relations, the competence of workforce, and technological infrastructure. While many other factors that any company looking to expand into a new region must consider, this report will only consider the four factors since they are the most relevant for the three chosen areas.
Body
Legal Obligations and Concerns Affecting HR and Labor Relations
Sao Paulo (Brazil)
There are several minimum employment terms and conditions that all employers must observe when hiring in Sao Paulo. These include legal national minimum wage (usually $208) or the minimum wage stipulated in Collective Bargaining Agreements, 30-day vacation together with extra vacation pay, which is usually a third of the salary, maximum working hours of 44 hours per week, and eight hours per day, a mandatory 13th salary which is equal to one month’s pay that is paid after the year, and overtime pay that must also include at least half over the regular salary. Other minimum terms and conditions that must be observed include mandatory monthly deposits of 8% over the worker's monthly salary to the Unemployment Severance Fund (FGTS) (this amount can only be withdrawn under special instances established by law such as during dismissal of an employee without cause) (Fukijawa, 2016). Other minimum employment terms and conditions include thirty to ninety days pre-notice period before work termination and severance payments after resignation and termination of the employment relationship, even if by mutual agreement.
Overtime is restricted to two hours per day. Still, workers are exempt from overtime pay if they perform work that is not compatible with set working hours and are finished within the employing company's facilities. Employees are also exempt from overtime pay if they are in a trust position or work from home. Work on a holiday is paid at twice the regular pay. All employees who have been employed for a year can take their leave on three separate occasions, where one of the periods must be at least two weeks, and the other two leaves must be a least five days. However, employees cannot apply for annual leave two days before a weekend or holiday (thirteen national holidays in a year). Workers can also cash a third of their annual leave and even receive a holiday bonus in lieu (Guitti, 2017). They are also entitled to sick days where the employer pays the full salary for the first fifteen days before social security pays for additional sick leave days (up to $1,168). In Brazil, mandatory employee benefits include medical and dental care, disability, lump-sum death benefits, retirement and pension plans, and personal time off, including maternity and paternity leave. Auxiliary employee benefits may include life insurance and disability.
Female employees are allowed up to 120 days of paid maternity leave. They can apply for an additional four weeks on medical grounds (two weeks before delivery and two weeks after birth). Although maternity leave is paid equal to regular wages, the employer can claim payment by deducting social security payments (Papayaglobal, 2021). Employees enrolled in Empresea Cidada (a government scheme) can have up to 180 days of maternity leave. Fathers can apply for paternity leave of up to five days under the same compensation arrangements, although those enrolled in Empresa Cidada can extend their paternity leave to twenty days (Ribeiro & Bertanha, 2021). It is also a cultural behavior for employees to sue their employers and make easy money. Brazil is one of the countries with the highest number of labor claims worldwide, mostly because Brazilian labor laws are complicated and tend to protect the employee.
Buenos Aires (Argentina)
In Buenos Aires, employment contracts are recommended but are not legally required. However, they must meet the country's labor standards and may be influenced by collective bargaining agreements. Argentina's compensation laws require that every employment agreement meet the minimum wage of $224 per month and pay their employees thirteen times a year. The thirteenth payment is a bonus that all local workers are entitled to and paid in two semi-annual installments every year (ILO, 2019). Workers can only work eight hours a day, and because of the country's six-day work week, 48 hours every week: any work exceeding 9 hours a day or 48 hours a week is considered overtime. Overtime hours must not exceed three hours per day or thirty hours per month. Argentina's compensation laws also dictate that employees must receive half payment over regular pay for overtime during weekdays and an additional full pay over regular pay for overtime during weekends and national holidays. There are fifteen public holidays, and all workers must receive a day off (L&E Global, 2020). Moreover, Argentine employees are entitled to paid time off together with maternity and paternity leave. Workers who have worked for more than half a year can request two weeks of annual vacation leave, those who have worked for over five years can request three weeks leave, while those with between ten and twenty years of service can have a month's leave.
All employers must provide health insurance to their staff: this is often organized by labor unions and covered by private companies. The health insurance should cover everything outlined by the PMO (Compulsory Medicare Program), including medication, maternity and child plans, medical appointments, exams, dental plans, surgeries, and etcetera. Employers must contribute 6% to this plan while workers give 3% on top of their base salary (LexisNexis, 2021). Employees who have worked for less than five years of continuous service can request three months of paid leave, while those with over five years of service can have up to six months of paid sick leave. Sick leave is doubled for employees with dependents. In addition, female employees can have up to 90 days of maternity leave, usually split into two: 45 days of time off before delivery and 45 days after childbirth, although this is not required.
Workers are encouraged to take at least 30 days of maternity leave before birth and are given full salary, family allowances, and other benefits. Fathers can only take two days of paid paternity leave. All employers must comply with the stipulated termination process laws: all terminations must be justified, and notice must be given fifteen days before the end of the probation period, thirty to sixty days if the employee has been with the organization for less than five years, and two months before due termination date if the worker has given five years of continuous service (ShieldGeo, 2016). Employees are entitled to one month's severance pay for every year of service. Still, if employment is terminated for economic reasons, then the severance pay is reduced to half a month's salary for every year of service.
Santiago (Chile)
Chilean labor laws allow for three different types of employment contracts: individual labor contracts (those between an employer and employee), collective labor agreements (collective labor contracts and collective labor agreements), and special contracts for specific labor relationships in certain industries and sectors. An employment relationship can exist without any written contract as long as the fundamental aspects of an employment relationship concur (GPA, 2017). However, the employment contract must be drawn no later than fifteen days after the commencement date, or it is assumed that the terms and conditions of employment are those claimed by the employee. Chile's compensation laws dictate that employers must pay their workers at least the minimum monthly wage of $460 and conduct annual employee reviews and raise their salary accordingly (Globalization Partners, 2021). Although Chile does not oblige employers to pay the 13th-month bonus, some employers give the bonus bi-annually, the first installment on September 18 and the other during Christmas.
All bonuses provided to employees must be given in the local currency. One such bonus is the annual "legal gratification" bonus usually paid to employees on a monthly basis: employers are allowed to lower the base salary if they wish to give the bonus. Employers are also required to pay other social security contributions, such as unemployment insurance, which is also financed by employees and the government (BizLatinHub, 2020). In addition, employees are entitled to other benefits, including health insurance covering medicine, dental attention, medical care, and hospitalization. Other benefits include time off during public holidays (Chile has fourteen national holidays), six weeks of maternity leave before childbirth, and twenty-four weeks after birth (L&E Global, 2019). In addition, the specific health insurance institution often pays maternity leave that the female employee is affiliated with. The father is also entitled to a paid paternity leave of five business days. In addition, workers can request fifteen paid vacation days a year if he is given more than a year of service. The typical workweek is five days (9 hours a day) and 45 hours per week: anything more is categorized as overtime: employers cannot extend the day by more than two hours or ten hours a week.
Compensation for overtime and work done during holidays and non-working days usually has a surcharge not less than fifty percent over regular pay. Workers are also entitled to a paid sick leave of one month: employers pay for the first three days of illness, and the medical system takes care of all salaries starting on the fourth day. All employers must follow due process when terminating employment. Employers must notice one month before dismissal by writing a letter to the employee stating the cause for termination. The letter must be filed by the Chilean Labor Ministry and signed by the employee (Papayaglobal, 2021). In addition, the employer must prepare a severance agreement (if the employee has served for at least a year) reiterating the cause of termination and the amount to be paid out to the employee. All workers are entitled to one month’s salary for every year of their employment up to eleven years: after the first year of employment, the worker has a right to an extra month of severance pay if they have worked for at least six months of the following year. The severance agreement has to be signed within ten days after termination.
Labor and Management Relations
Sao Paulo (Brazil)
The primary sources of employment law in Brazil are the Labor Code, the Brazilian Federal Constitution, and other ancillary norms. Employment interactions in Brazil are also guided by regulations outlined under Collective Bargaining Agreements, usually negotiated by unions representing both employees and employers or directly implemented between employers and their employees. These contracts usually define the yearly wage increase by classes and rights related to employees' benefits (Ribeiro & Bertanha, 2021). Brazilian employment relations are also directed by employment agreements and amendments, labor and social security statuses, along employers' internal guidelines and regulations. Only those workers who are subject to the Brazilian Labor Code's definition of an employee are protected by the employment legislation. Generally, there are several categories of employees who have additional protection under employment laws, including pregnant employees, employees with labor-related disorders, directors of Employees' Unions, employees waiting to retire, representatives of the Labor Accident Prevention Committee (CIPA), and employees with special needs.
Collective Bargaining Agreements may also outline other categories of employees who are subject to special protection. The Labor Code discriminates regular employees (those subject to work journey control) from high-level workers (those not subject to work journey control and hold offices of trust). Overall, all workers are equally protected by the employment laws depending on the specificities of their employment agreements (Fujikawa, 2016). Collective Bargaining Agreements are conducted by Unions representing employees and those representing employers or by an employer and the Union representing its employees to carry out particular labor conditions surplus to those outlined by the Brazilian Labor legislation. Collective Bargaining Agreements have the same gravity and importance as the Brazilian labor law, and all employers must fulfill all provisions or face administrative and contractual fines.
Buenos Aires (Argentina)
Argentina has several employees' and employers' associations, although employees can choose to affiliate. The Argentine government only grants official recognition to unions with the most employees, and only these can participate in collective bargaining agreements (ILO, 2019). The main responsibilities of associations are to represent and make petitions on behalf of individual workers and ascertain employers are complying with labor regulations and collective bargaining agreements regarding represented workers. Employers can organize their union, separate from the union of non-management workers. Union delegates are protected by law, and employers cannot demote, suspend, sanction, or even change contractual agreements to their detriment (LexisNexis, 2021).
Furthermore, their employment cannot be terminated without justified cause until one year after their term expires. For an employer, they enforce disciplinary action against a union delegate. The same protection is given to union delegate candidates, but who are not elected until half a year after the election.
Santiago (Chile)
Most trade unions in Chile are company trade unions (all members work for the same employer) and inter-company trade unions (members work for two or more employers) are not as commo...