Executive summary

In Latin America, as across the globe, globalisation and rapid technological change, together with demographic developments are reshaping skill demands and supply in all countries. These trends are expected to continue in the coming years at an increasing pace. Technological progress, in particular, is profoundly transforming the world of work and, in turn, the skills demanded by employers. This poses challenges but it also creates opportunities for Latin American and the Caribbean (LAC) countries in the near future. While many jobs could be “technically automatable”, automation may not be yet economically attractive or viable for many firms in LAC economies, as costly investments in advanced technology are usually out of reach to most entrepreneurs, especially for small and medium-sized enterprises (SMEs) in the region. Similarly, labour is still a cheaper option than automation in the region. This leaves room for policy makers in LAC countries to anticipate the potential change and react accordingly.

Forecasts, however, predict that it is only a matter of time before LAC countries will widely adopt new technologies, potentially affecting millions of jobs and workers in the region. As digital technologies gradually spread across the region, online learning offers a significant opportunity to leverage broadband network access to spread knowledge in a cost-effective way. Massive Open Online Courses (MOOCs), academic courses offered online often provided at no cost, aim at large-scale interactive participation from around the world. These, however, face challenges of implementation in the region. Evidence shows that individuals who are more likely to participate in open education in Latin America, as across OECD countries more broadly, are mainly young, educated and skilled workers. This situation potentially leaves out the most vulnerable and the low skilled most in need of receiving training. More effort is needed to strengthen the ICT skills of disadvantaged groups and to create suitable options for them to use digital technologies for learning.

Demographic dynamics have important implications on skills demand and supply. Population ageing is likely to put considerable pressure on education and training systems as it increases the need for individuals to maintain and update their skills over the life-course in the context of longer working lives .In Latin America, a large proportion of the region’s population is still young and this creates a demographic dividend. This window of opportunity, however, may be closing soon as the number of young people is expected to fall after 2020.

Against this backdrop, evidence presented in this report highlights how LAC countries need to boost participation in high-quality training and, especially, in adult learning where countries in the region are lagging particularly behind. Participation in adult learning in the region is more than 10 percentage points below the OECD average. Non-participation in adult leaning is particularly worrying. Approximately 57% of adults did not participate – and did not want to participate – in adult learning activities (compared to the OECD average of 49%). In addition, in LAC countries, the incidence of adults’ participation in training varies considerably depending on socio-economic backgrounds and/or on the employment status of the individual. The participation of women in learning activities is lower than that of men across the countries in the region.

In Latin America, smaller firms are also less likely to provide training to workers than larger firms. Data from the Survey of Adult Skills (PIAAC) show that only 40% of workers in SMEs participated in training, compared to 69% workers in larger firms. While a similar pattern can be found in all other countries participating and across OECD countries, in Latin America the gap in training provision between small and large firms is almost twice as high as the OECD average.

Boosting the participation of individuals and firms in adult learning calls for a holistic approach and for the recognition that the different actors that are involved in adult learning may respond differently to specific sets of incentives. Failure to engage each actor of the system with targeted interventions can hinder the overall participation and promote an unequal participation in adult learning.

Policy intervention aimed at fostering employers’ engagement in training should, for instance, raise awareness about the benefits of training amongst employers and help them identify their own skills needs and potential funding opportunities (i.e. tax incentives, levies or subsidies) that could be leveraged to provide training to their workers.

Policy intervention should also be aimed at building the capacity of employers to provide truly relevant training to their workers and to understand and plan on what skills will be needed in the future. Employers, especially those operating in the small firms in LAC countries, lack the resources to carry out sophisticated workforce planning exercises and to provide training accordingly. Governments, therefore, can act in both cases by supporting and targeting specific firms with subsidies to build skills development capacity and reduce training costs while also strengthening their efficacy.

Finally, policy makers should consider setting up well-designed financial incentives to boost engagement in training, aiming to strike the right balance between the support to firms and individuals, on the one hand, and the prevention of potential deadweight losses, on the other.