Skills in Latin America

By Andreas Schleicher
OECD

Editorial

By Andreas Schleicher
OECD

Better skills, better jobs, better lives

Everywhere, skills transform lives, generate prosperity and promote social inclusion. And if there is one lesson the 2008 global financial crash taught Latin America, it is that we cannot simply bail ourselves out of an economic crisis or solely print cash to stimulate growth. A much stronger bet for countries to grow and develop in the long run is to equip more people with better skills. This enables people to collaborate, compete and connect in ways that drive their lives and countries forward. While formal education has expanded rapidly in much of Latin America over the last decade, the region still lags far behind in terms of labour-market knowledge and skills. This has become a major constraint for economic and social development in Latin America, as this report shows.

What people know and what they do with what they know has a major impact on their life chances. On average, workers scoring highly in OECD’s Survey of Adult Skills have a median hourly wage more than 60% higher than those who score poorly. Those with low literacy skills are also more than twice as likely to be unemployed. This impact goes far beyond earnings and employment. In the countries surveyed, individuals with poorer foundation skills are far more likely than those with advanced literacy skills to report poor health, to believe that they have little impact on political processes and to not participate in associative or volunteer activities.

So in one way, skills have become the global currency of 21st-century economies. But this “currency” can depreciate as labour markets evolve and individuals lose skills they do not use. For skills to retain their value, they must be continuously developed throughout life.

Furthermore, the toxic coexistence of Latin American graduates who cannot find good jobs, and employers in the region who say they cannot find the people with the skills they need, underlines that more education does not automatically translate into better economic and social outcomes. To convert education into better jobs and lives, we need to better understand which skills drive outcomes, ensure that the right skill mix is learned at the right time and help economies to make good use of those skills.

The essential starting point for that is to better anticipate and respond to the evolution of skill demand in societies. The dilemma for educators today is that the kind of skills that are easiest to teach and test, are also the skills that are easiest to digitise, automate and outsource. Put simply, in a world where Google and ChatGPT seemingly know everything, people are no longer rewarded for just having knowledge but for what they can do with what they know. Government and business in Latin America need to work together to gather better evidence about skill demand, present and future, which can then be used to develop up-to-date instructional systems and to inform education and training systems.

During the past few decades there have been major shifts in the economic underpinnings of countries in Latin America. In the past, education was about teaching people something. Now, it’s about making sure that individuals develop a reliable compass and the navigation skills to find their own way through an increasingly uncertain, volatile and ambiguous world. These days, we no longer know exactly how things will unfold, often we are surprised and need to learn from the extraordinary, and sometimes we make mistakes along the way. And it will often be the mistakes and failures, when properly understood, that create the context for learning and growth. A generation ago, teachers could expect that what they taught would last for their students’ lifetimes. Today, schools need to prepare students for more rapid social change than ever before, for jobs that have not yet been created, to use technologies that have not yet been invented, and to solve social problems that we don’t yet know will arise.

Conventionally our approach to problems was breaking them down into manageable bits and pieces, and then to teach students the techniques to solve them. But today we create value by synthesising the disparate bits. This is about curiosity, open-mindedness, making connections between ideas that previously seemed unrelated, which requires being familiar with and receptive to knowledge in other fields than our own. If we spend our whole life in a silo of a single discipline, we will not gain the imaginative skills to connect the dots where the next invention will come from.

The world is also no longer divided into specialists and generalists. Specialists generally have deep skills and narrow scope, giving them expertise that is recognised by peers but not valued outside their domain. Generalists have broad scope but shallow skills. What counts increasingly are the versatilists who are able to apply a depth of skill to a progressively widening scope of situations and experiences, gaining new competencies, building relationships and assuming new roles. They are capable not only of constantly adapting but also of constantly learning and growing, of positioning themselves and repositioning themselves in a fast-changing world.

OECD’s Learning for Jobs analysis also shows that skill development is far more effective if the world of learning and the world of work are linked. Compared to purely government-designed curricula taught exclusively in schools, learning in the workplace allows people to develop “hard” skills on modern equipment, and “soft” skills such as teamwork, communication and negotiation through real-world experience. The data also suggest that hands-on workplace training is an effective way to motivate disengaged youth to re-engage with education and smoothen the transition to work. Countries with effective school-work programmes reduce school dropout rates by offering more relevant education and second-chance opportunities, and by offering work experience to young people before they leave education.

But learning the right things is just one part of the equation. It is equally important for young people to develop a good understanding of how and where skills can be put to good use. This report shows that students are often confused and uncertain when it comes to career pathways. This is not surprising. The rise of digitalisation and automation, the marketisation of post-secondary education and training, green economy initiatives, and the fallout from the COVID-19 pandemic, have all led to a rapidly changing demand for skills. At the same time, labour markets have become more complex and harder to navigate. But the report also provides clear answers to how public policy can address this challenge. It highlights three broad groups of predictors which relate to the means by which career-related human, social and cultural accumulations can be enabled. This is about providing opportunities for children and youth to explore the future, such as through guidance activities that enable students to engage with people in work and to reflect on and discuss their emerging perspectives. It is also about opportunities for youth to experience the future, such as through first-hand experiences of workplaces like volunteering and part-time employment. And it involves thinking about the future, which relates to a range of attitudes that reflect more mature career thinking linked to educational decisions which OECD data show is enhanced through participation in exploring and experiencing work activities. The report shows that in most Latin American countries young people have had very limited access to effective career guidance provision by the age of 15. The career aspirations of students are commonly highly concentrated, frequently bear little relationship to actual patterns of labour-market demand and reveal consistent patterns of concern in relation to lower achievers and students from more disadvantaged social backgrounds. Engagement with people in work through career guidance systems is often limited. All this needs to change, not only to facilitate smooth school-work transitions, but also to motivate young people to learn what matters for their future. Young people cannot be what they cannot see, and they often make the most important career decisions not when they leave school, but when they start school. This is the moment when children decide whether investing time and energy in learning is worth it and which subjects they will take seriously. To aid this, schools need to help students understand their talents, the skills where they can really improve, and the most important skills for work and life. Girls and students from the most disadvantaged backgrounds have the most to gain from more effective career guidance. Some countries also have effective active labour-market measures, such as counselling, job-search assistance and temporary hiring subsidies for low-skilled youth; they link income support for young people to their active search for work and their engagement in measures to improve their employability.

As the report shows, the choices made by young people at the start of their adult lives – whether to stay in education, and when to cohabit or start a family – often have a lifelong impact. Those with lower skills are more likely to move in with a partner and have children earlier, particularly among girls. Latin American countries have much higher teenage pregnancy rates than the OECD average, and this is especially the case for girls with lower skills. Women of all ages are also much more likely to be single parents than men, although the link with proficiency is less clear than in OECD countries. Supporting young women to stay in education and make sound choices in their transition to the labour market will help them achieve better work outcomes for themselves and the next generation.

Ambitious education and training provide the central foundation for a successful career in later life but are only a part of skills development. Working-age adults also need to develop their skills so that they can progress in their careers, meet the changing demands of the labour market and don’t lose the skills they have already acquired. But, as the report shows, this is more of a challenge in Latin America than in OECD countries because intergenerational skill differentials are often very large. To improve skills, a wide spectrum of full- or part-time adult-learning activities needs to be available: from work-related employee training, formal education for adults, second-chance courses to obtain a minimum qualification or basic literacy and numeracy skills, language training for immigrants, and labour-market training programmes for job seekers, to learning activities for self-improvement or leisure.

There are many ways to dismantle barriers to participation in continued education and training. First, increase people’s motivation by making the benefits of adult education and training more transparent. Governments can provide better information about the economic benefits (higher wages, increased employment opportunity and productivity) and non-economic benefits (including boosted self-esteem and increased social interaction) of adult learning.

Second, less-educated individuals can be unaware of education and training opportunities or may find the available information confusing. A combination of easily searchable, up-to-date online information could help this, as well as personal guidance and counselling services to help individuals define their own training needs and identify appropriate programmes. Information about possible funding sources would also benefit individuals.

Third, clear certification of learning outcomes and recognition of non-formal learning are also incentives for training. Transparent standards, embedded in a framework of national qualifications, should be developed alongside reliable assessment procedures. Recognition of prior learning can also reduce the time and cost involved to obtain a given qualification.

Fourth, it is important to ensure that programmes are flexible and relevant to users, both in content and in how they are delivered to adapt to adults’ needs. A number of countries have recently introduced one-stop shop arrangements, with different services offered in the same institution. This approach is particularly cost effective as it consolidates infrastructure and teaching personnel and makes continuing education and training more convenient. Distance learning and an open educational resources approach have significantly improved users’ ability to adapt their learning to their lives.

All this being said, building skills is still the easier part; far tougher is providing opportunities for young people to use their skills, as the last chapter of this report highlights. In many Latin American countries, employers may need to offer greater flexibility in the workplace. Labour unions may need to reconsider their stance on rebalancing employment protection for permanent and temporary workers. Enterprises need reasonably long trial periods to enable employers giving youth who lack work experience a chance to prove themselves and transition to regular employment. The bottom line is that unused human capital represents a waste of skills and investment. As the demand for skills changes, unused skills can become obsolete, and skills that are unused during inactivity are bound to atrophy over time. Conversely, the more individuals use their skills and engage in complex and demanding tasks, both at work and elsewhere, the less likely that skills will decline due to aging.

But even developing skills and making them available to the labour market will not have the desired impact on the economy and society if those skills are not used effectively. This report shows that skills mismatch is a serious challenge that is mirrored in people’s earnings prospects and in their productivity. Knowing which skills are needed in the labour market and which educational pathways will get young people to where they want to be is essential. Skills mismatch on the job can be a temporary phenomenon: sometimes, for example, the demand for skills takes time to adjust to the fact that there is a larger pool of highly skilled workers available. Thus, not all types of skills mismatch are bad for the economy. Skills surpluses, which can result from an underuse of skills in specific occupations, can serve as a skills reserve that may be used in other, more advanced jobs and for building knowledge economies over the long term. However, the mismatch between workers’ skills and their tasks at work can adversely affect economic and social outcomes. The underutilisation of skills, in specific jobs in the short to medium term, can be a problem because it may lead to skills loss. Workers whose skills are underused in their current jobs earn less than those who are well matched to their jobs. They also tend to be less satisfied at work. This situation can generate higher employee turnover, which is likely to affect a firm’s productivity. Underskilling is also likely to affect productivity and, as with skills shortages, slow the rate at which more efficient technologies and approaches to work are adopted.

Successful entry into the labour market at the beginning of a professional career has a profound influence on later working life. The “scarring effects” of a poor start can make it difficult to catch up later. Strong basic education, in conjunction with vocational education and training programmes that are relevant to the needs of the labour market, tend to smooth the transition from school to work; so do hiring and firing rules that do not penalise young people compared with other groups, and financial incentives that make it viable for employers to hire young people who require on-the-job training. Such policies can help to prevent skills mismatch and unemployment later on.

Finally, none of this will work unless skills become everyone’s business. Countries need to take a hard look at how learning is funded. Put simply: who should pay for what, when and how. Governments can design financial incentives and tax policies that support post-compulsory education and training. Education systems need to foster entrepreneurship as well as offer vocational training. Employers can invest in learning while labour unions can work to ensure those investments lead to better-quality jobs and higher salaries. And individuals must take better advantage of learning opportunities when they are offered

Many Latin American countries are still fighting a recession in the aftermath of the pandemic, but the cost of low skills is high, and the equivalent of a permanent economic recession. That is why it is vital for governments to invest in education and work with partners to raise standards. Policy makers must not let children slip through the cracks. A lack of focus on improving education will only lead to a rise in human, social and economic costs – and permanently leave children, families and communities worse off.