Pier to Dominica Island
Until 2019, Eastern Caribbean states successfully kept tourism at the heart of their economic models.
With almost two-thirds of the workforce comfortably absorbed by the industry, most governments delayed the diversification of their economies away from tourism. Under this approach, the demand on the education system was focused mostly on producing a workforce with specialized technical skills needed in the hospitality industry (such as for chefs, hotel clerks and tour guides). During economic downturns, unemployed workers would often migrate, especially to the United States, and send remittances back home. The model seemed to be crisis-proof too.
Nevertheless, this economic model is increasingly risky and unsustainable. The COVID-19 pandemic hit the region’s tourism sector hard and contributed to a rapid rise in unemployment, especially among young workers. Tourism-dependent countries in the Eastern Caribbean were the most affected globally and face a high risk of a slow recovery.
The tourism industry's recovery will depend on the speed of vaccinations and regaining the confidence of travelers concerned about their health and being stranded overseas. A great majority of those who lost their jobs during the pandemic are at high risk of becoming long-term unemployed. While they will require new skills, higher education institutions are ill-equipped to meet these demands. At the same time, the measures imposed by governments on international migration since the onset of the pandemic will likely have lasting consequences. The mobility of some groups, like refugees and migrant workers, is likely to be much more restricted.
A shortage of skills is becoming a development challenge for Eastern Caribbean States
The tourism-centered economic model also contributed to a general stagnation of the higher education sector. In St Lucia, only 42 percent of all students apply for higher education due to limited capacity, while fewer than 10 percent of all adults in the Eastern Caribbean have completed higher education courses. That is very low by middle-income country standards and indicates critical skills shortages in the region. As a result, a significant number of workers are underqualified - about 57 percent in St Lucia in 2019, for example. In 2020, during the COVID-19 pandemic, 27 percent of the job openings in St Vincent and the Grenadines required higher education. Over half of the positions that opened were not filled due to insufficient applicants with the required skills, as the below figure shows. In 2017 and 2018, less than 2000 students (about 3 percent of the adult population) were enrolled in post-secondary education. Having an inadequately educated workforce ranks as the second-biggest business obstacle identified by firms in Grenada and St Vincent and the Grenadines , and almost 40 percent of firms in St Lucia see the skills and education of workers as a hindrance to competitiveness.
Reasons for difficulties in filling job openings in St Vincent and the Grenadines, 2020
Source: Government of Saint Vincent and the Grenadines and Project Coordinator of the Human Development Service Delivery Project (2021).
Successful Island economies owe their success to investments in human capital
Eastern Caribbean states could draw some lessons from island states that have transitioned from middle to high-income nations. These successful island states have a common denominator: a model of development anchored in human capital development and the provision of high value-added services, such as financial services. Some of the wealthiest island economies in the region, like Bermuda and the Cayman Islands, have diversified away from tourism and ventured into providing services such as offshore banking and insurance. Of course, the development of such value-added industries requires a high-skilled workforce.
Another island economy that stands out for its success is Singapore. Since independence in 1965, the country's GDP has grown by an average of 7.4 percent per year, placing it amongst the wealthiest economies in the world. In the early 1970s, most of Singapore’s workforce was illiterate, the economy produced a few essential goods, and the island was vulnerable to economic shocks and fluctuations in international commodity prices. The government’s development strategy sought to transform the country from being labor-intensive into being technology and capital intensive, with human capital development becoming essential to the economy. Since then, Singapore has focused on developing a highly-skilled workforce. Singapore's skilled workforce has contributed to developing export-led industrialization, the provision of high-value services, innovation, and attracting FDI.
Expanding opportunities to access post-secondary education
Eastern Caribbean states should expand higher education opportunities, especially by providing more affordable and diversified options for secondary school graduates to continue their studies. Also, while many countries in the region offer technical courses and vocational certificates, known as Caribbean Vocational Qualification (CVQs), most target blue-collar workers. Higher-level CVQs, which target autonomous, specialized, and professional workers, are not yet offered at scale in the region. Training institutions in Eastern Caribbean states should increase and diversify their academic, technical, and vocational education and training programs that lead to higher-level qualifications.
The cost of post-secondary education is a major barrier to reversing the lack of highly skilled workers in the region. In particular, the tuition fees for an Associate Degree, the most common tertiary degree offered in national colleges in Eastern Caribbean states, is about C$2,000 (Caribbean dollars) per year. Students and their families generally absorb tuition costs, which represent 15 to 20 percent of the wages of an average worker in a country like St Lucia. Governments in the region could work on finding ways to ease the financial burden of the students and their families, by developing needs-based financial aid schemes.
Efforts to provide high-quality remote learning must continue. A recent COVID-19 Rapid Response Survey to National Colleges from East Caribbean States, conducted by the World Bank in collaboration with the OECS Commission, indicates that the pandemic has forced national colleges to shift to virtual learning modalities. Nonetheless, survey respondents indicated that more than 25% of all college students do not have connectivity or access to adequate learning platforms. OECS countries should continue to invest in the development of their digital economy and ensure that students enrolled in post-secondary education have access to high speed, low cost, and reliable broadband. Moreover, the education system needs to ensure that every individual is digitally literate and able to access remote learning modalities, not only to succeed with their college education but also to access other lifelong learning opportunities necessary to thrive in the economy of the future. Countries like St Lucia and St Vincent and the Grenadines have made significant investments to expand internet connectivity and remote learning opportunities. National colleges should capitalize on these investments to scale up remote learning programs.
Finally, it will be important for the National Colleges to cope with the direct consequences of the pandemic. New college entrants will be less academic ready due to the learning losses arising from school closures and more prompt to drop-out from their studies. To cope with this, National Colleges will need to revamp student services for support and remediation, counseling, and career services.
Ultimately, it will be imperative for Eastern Caribbean countries to invest in expanding post-secondary education opportunities to develop a more highly skilled labor force equipped with technical, digital, and entrepreneurial skills. Investment in boosting workforce skills for a more diversified economy will be critical for the Eastern Caribbean in the post-covid era.
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