Leveraging Data to Build an Efficient Labor Market in Central America

The economies of Central America (El Salvador, Guatemala, and Honduras) face multiple labor market barriers, including economic stagnation, labor market inefficiency and segmentation, and gang violence. These barriers are forcing workers to seek opportunities elsewhere and are placing those that stay at greater risk. Central America’s weak labor market information systems contribute to the region’s high poverty rates and socio-economic distress because the lack of accurate, timely, and transparent labor market information makes it difficult to identify job opportunities and properly train the workforce to be able to fill them to support economic growth.  Students and job seekers do not always know what jobs are in demand (including in what regions) and what education/skills/qualifications are needed for those jobs; education and training providers do not develop classes and programs that directly fulfill the existing demand for workers; and employers are often not able to identify and hire qualified workers.  Lack of labor market information also impedes government agencies, international donors, and policymakers from crafting and implementing effective labor market policies designed to increase employment.  Central American governments’ pursuit of ambitious policies for employment creation will have limited effect without comprehensive data.