Latin America, Caribbean faces critical skills gap, IDB study finds

Despite well-intentioned efforts, many government programmes fail to provide Latin American and Caribbean children and adults with the skills they need to thrive, the Inter-American Development Bank’s (IDB) 2017 flagship study finds. On the other hand, a shift towards evidence-based policies could provide the region with a much-needed skills windfall that boosts productivity and economic growth.

In a statement issued from its Mexico City, Mexico office, the IDB said, “While the region spends on average about the same percentage of GDP (gross domestic product) on education and skills development as more developed nations, the results fall well short. The average Latin American and Caribbean student is more than one year behind what is expected based on the region’s level of economic development. Only 30 percent of children in third and fourth grade in Latin America and the Caribbean meet the minimum benchmark for math proficiency, compared to 66 percent for nations with similar levels of development and 93 percent in developed nations.”

Learning Better: Public Policy for Skills Development takes a critical look at government efforts to improve skills acquisition from birth to adulthood. The study identifies certain programmes that are more effective and often cheaper than others. More successful programmes include those that improve the quality of interactions at home and at school, provide incentives for young people to stay in school, and help businesses foster a learning environment in the workplace, among others.

“A person who has had access to good stimulation in the early years, good quality schools, university and employment in a formal firm has a big leg up on life,” said IDB Vice-President for Sectors and Knowledge, Santiago Levy. “Governments can do a much better job at improving the lives of those that have had none of those advantages. It is a big challenge but with a big pay-off in terms of growth and equity if we get it right.”

To help policymakers identify successful evidence-based skills programmes, the IDB launched the novel SkillsBank website (www.iadb.org/skillsbank) to review and systematize the evidence on how to promote skills at different stages of the life cycle. It presents evidence on programmes that have been effective in promoting skills development in childhood and adolescence in a very accessible format for policy makers.

Skills development in the region is not only low when compared to the rest of the world, but unequal within countries. In the early years, children from low income families are exposed to fewer words and more negative feedback than their wealthier peers. Parenting programmes have been shown to help the most in closing this gap and they tend to be cheap: gaps in cognitive skills can be cut in half at a cost of about $600 per child-year.

The region spends about $80 billion a year on primary education but only 13 rigorous evaluations have been implemented to see if the programmes work. Reducing class size from 25 to 20 students can boost yearly learning by 15 percent, and extending the school day from four to seven hours by 10 percent, but both programmes are expensive, increasing spending by about 20 and 60%, respectively. On the other hand, programmes that provide lesson plans to teachers and motivate students directly are both effective in promoting skills development and cheap.

During adolescence, programmes that offer incentives to keep kids in school are effective. Overall, each year of additional schooling translates into wages that are 9.6 percent higher (the returns for each year of higher education are 16.6 percent).

Hiring teachers competitively and providing incentives to improve pedagogical practices also offer promising results. Carefully designed interventions can also promote the development of socio-emotional skills among youth, reducing risky behaviours and setting up young people for greater workplace success.

In higher education, the book urges governments to balance access and quality. For those who cannot attend college, apprenticeship programs have been shown to work well.

For adults, the key is ensuring as many workers as possible have access to larger firms that operate in the formal sector of the economy. These firms provide more work training and salary growth that is three times higher than for workers in smaller, often informal, firms. Apprenticeship and initiatives to train young people with skills that are in demand are effective ways to help disadvantaged youths access jobs in globally competitive firms.