Opinion: Latin America’s prosperity depends on bridging the skills gap

In Latin America, people aged 15 to 24 make up the largest generation this region has ever seen, according to the United Nations. If properly prepared for their careers, they could contribute to tremendous economic growth — a demographic dividend. Yet, a recent report from UNESCO found that young people often miss out on relevant, quality technical and vocational education and training, or TVET, leaving them without the practical real-world skills they need to get and keep a job. These skills gaps occur when the pace of change in the private sector outpaces TVET systems’ responses. And today, the industry is changing faster than ever as four economic megatrends rock the region.

Bridging the skills gap by providing relevant, real-world experience in the classroom through disruptive methods of developing technical, life, and higher-order thinking skills is a vital element of a holistic approach to TVET that the Caterpillar Foundation and International Youth Foundation have supported in 14 countries. The program, known as EquipYouth, takes an ecosystem approach to align TVET curricula and training practices with industry needs. We heard a demand for this cross-sector approach loud and clear at events linked to the U.N. General Assembly last week.

Since 2016, we have supported TVET systems in Brazil, Mexico, Panama, and Peru to develop the practical, real-world skills the industry demands. In these countries, 85% of the participants completed the training, 63% of graduates secured employment, and 92% of employers were satisfied with the graduates.

Bridging a rapidly widening skills gap

If young people today don’t gain the skills they need to get good jobs, Latin America will miss out on the opportunity for economic growth provided by its largest generation entering the labor market. Although this generation of young people is the region’s most educated, the majority of firms in the region struggle to fill positions. Consequently, young people face an unemployment rate that’s triple the rate of older adults.

TVETs in Latin America struggle to bridge the skills gap due to three challenges. First, they generally serve students who are challenged both academically and financially, leading to high dropout rates. Second, TVET instructors often lack both the pedagogical skills and industry expertise necessary to teach the foundational skills students need. Lastly, there’s a lack of accountability in data reporting on graduation rates and employment.  

Latin America is undergoing four economic megatrends that are exacerbating the skills gap: digital disruption, energy transition, artificial intelligence, and nearshoring, which is the practice of outsourcing business processes to nearby countries. What this means is that workers are no longer in jobs that only involve repetitive tasks — they must manage complex automated systems, too. That requires critical, higher-order thinking skills that are best acquired through experiential learning. This is why we’re training TVET instructors to incorporate project-based learning methodologies into their training programs so that students tackle real-world problems eight hours a week.

The rise of two megatrends — digital disruption and AI — means delineating tasks between humans and machines. Humans excel in adaptability, common sense, and creativity. EquipYouth therefore develops life skills such as persistence, communication, teamwork, and self-confidence — skills vital for navigating workplace transformations. For instance, imagine a young person working on a production line, identifying an opportunity to improve energy efficiency. In this scenario, they will not only have to document the proposed solution but also persuade managers and other decision-makers to adopt it.

Building a bridge to opportunity in Brazil

We're already seeing how our approach builds a bridge to opportunity in success stories such as Clarissa’s, a 2021 EquipYouth graduate from Fortaleza, Brazil. Clarissa, 19, participated in EquipYouth while studying at the State School of Vocational Education. As part of her training, she was hired to work as an apprentice at the flour mill Grande Moinho Cearense in 2022. At the same time, she took classes in teamwork and understanding emotions, rounding out skills that would prove invaluable in preparing her for college and the workforce. “In the class on being a good team player, we did a group project where we had to make a sustainable shelf. I learned about sharing and trusting the work of others, rather than overloading myself with too many tasks,” Clarissa told us. She and her teammates presented their work at a contest held by the Federation of Industries and Companies of Ceará, where it was voted among the top three projects.

Today, Clarissa balances a job, contributes to her family’s income, attends college, and envisions a future where she can make a lasting impact. “This for me was a great achievement, and it helped my family a lot because I could contribute to the expenses at home,” she said.  Equipping young people with the necessary skills they need to succeed in the workforce doesn’t just transform individuals; it changes communities and economies. Clarissa's sentiment sums it up: "We are young with an immense future waiting for us." Investing in this potential can craft a promising story for the entire region.