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Severance pay as venture capital

While economists and politicians argue over how best to reduce unemployment, people like Mónica Lomé and Carlos Alberto Ramoda of Buenos Aires, Argentina, are helping to solve what remains one of Latin America's most daunting problems.

The two met while employed at a private health insurance company in the 1980s. "I was his secretary for 10 years, and that's how we came to know each other," Lomé recalls with a smile. "Eventually we got married." In 1995, in a wave of corporate downsizing that followed the introduction of market-oriented reforms, Mónica and Carlos Alberto were laid off. Like most long-term employees, they received significant severance packages.

"Finding yourself out of work after years of depending on a single company poses both a problem and a challenge," Ramoda said. He and Lomé saw it mostly as a challenge, so they decided to use their severance pay as start-up capital for a clothing firm.

There was only one problem. Lomé and Ramoda knew plenty about health insurance, but little about running a business. What they needed was professional training.

Then they learned about a microenterprise project that is part of a broader Program to Support Productive Reconversion. Carried out by Argentina's Ministry of Labor and Social Security, through its Employment and Labor Training Office, the program has been financed with the help of the IDB.

Lomé and Ramoda were able to choose from among some 6,000 public and private business training institutions that had been selected through international open bidding, and settled on a program that offered 120 hours of instruction in business planning, accounting and management for small enterprises. By paying a nominal fee, they could also consult an expert on questions about their particular business. As such, they joined the 2,255 microentrepreneurs benefitting from the program.

Today, Lomé and Ramoda are building their business and working the trade fair circuit, where they exhibit merchandise and make agreements with manufacturers and retailers.

Like other first time business owners, they still have a lot to learn. But they're employed, and are optimistic about the future.

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