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Guatemala Labor Market Assessment LAC REGIONAL WORKFORCE DEVELOPMENT PROGRAM Guatemala Labor Market Assessment NOVEMBER 2016 This report was produced for review by the United States Agency for International Development (USAID). It was prepared by FHI 360 for the LAC/RSD Regional Workforce Development Program, Cooperative Agreement number AID-0AA-A-15-00076, which is made possible by the generous support of the American people. The data in the report are compiled from a variety of sources, and the views expressed do not necessarily reflect the views of USAID or the United States Government. The use of non-discriminatory language or that which constrains gender is taken into consideration in the LAC Regional Workforce Development Program, made possible by USAID. This document has deferred the use of terms associated with traditional masculinity, understanding the importance of using inclusive language for potential beneficiaries of this program. Guatemala Labor Market Assessment 2 CONTENTS EXECUTIVE SUMMARY .......................................................................................................................5 ACRONYMS ........................................................................................................................................8 ACKNOWLEDGEMENTS .................................................................................................................... 11 OBJECTIVES OF THE PROGRAM ......................................................................................................... 12 PURPOSE OF THIS LABOR MARKET ASSESSMENT .............................................................................. 13 METHODOLOGY ............................................................................................................................... 14 LIMITATIONS OF THE ASSESSMENT ................................................................................................... 19 SOCIOECONOMIC CONTEXT .............................................................................................................. 19 PRINCIPAL DEMOGRAPHIC TRENDS ................................................................................................................. 19 MACROECONOMIC CONTEXT ......................................................................................................................... 21 PUBLIC POLICY: HOW DOES POLICY IMPACT OPPORTUNITY? ............................................................................... 23 SOCIAL CONTEXT ......................................................................................................................................... 25 EDUCATION ................................................................................................................................................ 28 GUATEMALAN YOUTH: STRENGTHS AND CHALLENGES ........................................................................................ 30 LABOR MARKET CONTEXT ............................................................................................................................. 34 PRODUCTIVITY ............................................................................................................................................. 36 CHARACTERISTICS OF ENTREPRENEURSHIP ........................................................................................................ 38 ANALYSIS AND SECTOR SELECTION ................................................................................................... 39 STAKEHOLDER MAPPING ............................................................................................................................... 40 SECTOR SELECTION ....................................................................................................................................... 43 VALUE CHAIN ANALYSIS ................................................................................................................... 54 BUILDING A VALUE CHAIN MAP ..................................................................................................................... 57 COLLECTING THE INFORMATION ..................................................................................................................... 58 SECTORS, SUBSECTORS, PRODUCTS AND SERVICES IDENTIFIED ............................................................................. 59 AGRICULTURE: LEGUMES AND VEGETABLES VALUE CHAIN .................................................................................. 60 Guatemala Labor Market Assessment 3 MANUFACTURING: TEXTILES AND APPAREL VALUE CHAIN .................................................................................. 68 MANUFACTURING: CHOCOLATES, CANDIES, BAKED GOODS AND OTHER PROCESSED FOODS VALUE CHAIN ................ 79 MANUFACTURING: NON-ALCOHOLIC BEVERAGES VALUE CHAIN .......................................................................... 89 SERVICES: TOURISM VALUE CHAIN .................................................................................................................. 97 CONCLUSIONS ............................................................................................................................... 110 A COMMITMENT TO ECONOMIC AND HUMAN DEVELOPMENT ............................................................................ 110 ANNEXES ....................................................................................................................................... 112 ANNEX A: GUATEMALA INTERVIEW GUIDE FOR SECTOR ACTORS ........................................................................ 113 ANNEX B. ELECTRONIC SURVEY .................................................................................................................... 117 ANNEX C. STRATEGIES FOR GUATEMALA ........................................................................................................ 120 ANNEX D. IDENTIFIED POSITIONS, SKILLS, AND ATTITUDES BY SECTOR................................................................. 123 BIBLIOGRAPHY ............................................................................................................................... 131 Guatemala Labor Market Assessment 4 EXECUTIVE SUMMARY The LAC Regional Workforce Development Program (RWDP) is strengthening the capacity of select two- and three-year tertiary technical education programs in Honduras, Guatemala, and Jamaica to provide market-relevant, quality training to disadvantaged youth for increased employment. RWDP works to build target institutions’ capacity by (1) improving curriculum design and pedagogy, (2) providing professional development opportunities for faculty and staff, and (3) enhancing labor market bridging services to help students find gainful employment after graduating. The Program has designed and conducted a baseline assessment to examine the labor markets, and in particular, market demand for skills, in each of the countries in which the Program is working. This evaluation of each country’s labor market analyzes economic trends and patterns and identifies growth sectors. The study looks at the demand for technical education graduates, and the supply of qualified workers in selected growth sectors. It entails significant use of a value chain framework, a tool that is designed to be adopted by local stakeholders and identify and understand ongoing demand for the types of skills provided through technical education at the tertiary level. The goal is that this assessment will not only help technical training institutions in Guatemala revamp their offerings, but also, more generally, will help decision-makers understand what the demand for skills might look like in the future. FHI 360’s labor market assessments identify priority skill needs by working backwards from market demand. A traditional labor market assessment is based on detailed occupational mapping, but in Guatemala – as in many other developing countries – this approach is not viable due to data limitations. The process of gathering and analyzing data to properly select growth sectors, identifying and interviewing key informants in those sectors, and validating information with experts can take a significant amount of time, but is indispensable for conducting analysis based on sound quantitative and qualitative evidence. First, we undertook desk research and quantitative analysis to answer questions about the overall economic context and employment trends and briefly reviewed relevant policies. We then conducted a rigorous sector selection based on quantitative and qualitative data, choosing five priority sectors as a starting point for the assessment (vegetables and legumes, textiles and apparel, processed food, non- alcoholic beverages, and tourism). In our case, the selected five sectors were not merely the top-ranked ones; rather, rankings ranged from 1 to 11. That the five selected sectors are among the top eight is well within the desired ranking range. We then focused our attention on mapping business owners in these sectors to prepare for a set of interviews conducted by FHI 360. Next, we conducted primary research to analyze the priority value chains - those that have been identified as generating employment now and in the future – interviewing representatives of 29 organizations in the target geographical region. During this phase, we honed in on the skills demanded by employers that can be developed within the context of two- and three-year technical degree programs, as these are the focus of the project. We paired this analysis
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