Executive summary

Human capital is a key determinant of success for individuals and economies alike. Literacy and numeracy are key foundations for higher-order cognitive skills, while solving problems in technology-rich environments is increasingly important, as information and communications technology (ICT) spreads into all aspects of life. Despite remarkable recent increases in enrolment and educational attainment, the countries of Latin America and the Caribbean (LAC) lag behind in skills development among both secondary school students and the wider adult population. Young adults are still struggling in the labour market, while employers report skill shortages are a barrier to business. As countries in the region seek to shift their economies into higher value-added activities to escape the “middle-income trap”, they will need to improve the skills of their working-age population across the board.

This report uses data from the first cycle of the Survey of Adult Skills, part of the Programme for the International Assessment of Adult Competencies (PIAAC), conducted in 39 countries and economies, including four in Latin America: Chile (2014-15) and Ecuador, Mexico and Peru (2017). It has also drawn on data from the Programme for International Student Assessment (PISA), which surveyed 15-16-year-old students from 79 countries and economies including 10 in Latin America: Argentina, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Mexico, Panama, Peru and Uruguay. These data have been supplemented by results from the World Bank Skills Towards Employability and Productivity (STEP) survey of adults living in urban areas of Bolivia and Colombia, using a comparable literacy assessment to PIAAC, although the results are not from a representative sample of the whole adult population.

The Survey of Adult Skills found that adults (16-65-year-olds) in Latin America performed well below those in most other countries taking part, including the four other middle-income countries. In literacy and numeracy, the four participating LAC countries lie near or at the bottom of the rankings whatever measure is used. In the case of problem solving in technology-rich environments, substantial shares of their populations did not have the ICT skills needed to complete the assessment at all.

The region is benefiting from the recent expansion in access to education, however. More highly educated younger adults (16-24-year-olds who have gone on to tertiary education) score better than those who left school without completing upper secondary education by a larger margin than their peers in OECD countries. Skill levels in the participating Latin American countries tend to increase linearly with age, from 16-24-year-olds to 55-65-year-olds, reflecting the very recent expansion of upper secondary attainment in the region. Gender gaps in skills development are also closing – although women lag further behind men in numeracy than the OECD average, the gap is below the OECD average among 16-24-year-olds in Chile and Peru.

Young adults in the region are struggling in the labour market; they are twice as likely to be unemployed than those aged 25 and over, a gap that has only widened since the turn of the century. This may be because their education is not equipping them with the right academic skills, but the problem may equally lie with non-academic aspects. Teenagers with clear and realistic expectations about their future careers, and the qualifications needed to attain them, have a better chance of making the right decisions about the type and level of attainment to aim for, and ultimately benefit in terms of pay and job satisfaction if their qualifications and occupation are well matched. However, many 15-year-olds in LAC countries are struggling to form clear career expectations, with those who do largely concentrating on a few, largely professional jobs. School career guidance is patchy across the region, with 15-year-olds less likely than those in the OECD to have had the chance to explore potential career options with employers, or gain valuable experience through part-time work, internships, or volunteering. Schools can help students form realistic plans for the future through engaging with employers to provide career guidance activities and building a culture of critical reflection. Girls and students from the most disadvantaged backgrounds would seem to have the most to gain from more effective career guidance based on international good practice.

Although girls in Latin America outperform boys in reading in PISA, irrespective of their socio-economic status, this advantage does not translate into better labour-market outcomes. Although higher-skilled women at the top of the earnings distribution earn about the same as similarly skilled men in Latin America, women in the region generally enjoy lower returns to their literacy skills than their male peers. Family background – both socio-economic status and parental education – and expectations have an impact on skills development for girls and boys alike.

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 – can have a lifelong impact. Those with lower reading skills are more likely to move in with a partner and have children earlier, particularly among girls. In contrast, staying on in school longer is associated with delaying parenthood. Latin American countries have much higher teenage pregnancy rates than the OECD average, and this is especially the case for girls with lower reading 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 outcomes for themselves and the next generation.

Low skill levels among adults in Latin America may be holding the region back economically. Countries in the region have fewer workers in high value-added sectors and skilled occupations. Adults with lower skills are less likely to work in the formal sector or in skilled jobs. Improving the skills of all workers will require greater investment in adult training, but currently the region lags behind the OECD in the provision of organised training activities. This is largely due to lower participation rates among informally employed workers and those in industries with low levels of research and development (R&D) intensity, both of which form a much larger share of the workforce than the OECD average.

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