A Better Education System Will Lift Millions Out of the Informal Sector – BRINK – Conversations and Insights on Global Business

The size of the informal sector is a major determinant of how quickly — or slowly — economies can grow and provide economic opportunities for their inhabitants. In Latin America, unregistered work is an important source of employment for millions of people. But many people struggle to make the transition to the formal sector because of a lack of educational opportunity.

Moving Out of the Informal Sector

Learning and skills development are essential components of any transition to the formal economy, as they improve people’s skills and consequently their employability. 

Currently, in Latin America, the graduation rate at the secondary level stands at approximately 60%, a tragedy that has been exponential during the pandemic. 

The combination of low levels of schooling in some countries, mainly in secondary education, with limited training possibilities, results in a large share of the population only being able to access low-skilled jobs, which are constantly threatened by automation. Nowadays, more than 150 million workers are informal throughout Latin America.

Given this scenario, quality education and employment needs to be high on the public policy agenda in Latin America and elsewhere. My book, No Work: Employment in Latin America in the Context of Poverty, Education, Technology and the Pandemic, explores how to build any education system to provide opportunities to the half of Latin Americans who today lack formal and quality jobs.

The implementation of professional internships can guarantee students a basis of professional skills and corresponding knowledge for a better and more effective insertion into the world of work.

We Need a Transformation of Education

As education is currently designed, it is difficult to think of it as a factor contributing to reducing the informal sector. It is for this reason that the need for a transformation of education systems is becoming increasingly evident. 

We have to think about — and build — systems that prioritize learning the skills and competences of the future in order to avoid situations such as the large number of young people and adults who, due to lack of training, have lost many job opportunities. 

Taking this reality into account, there are a number of recommendations to address this problem. 

Firstly, the implementation of a credit system, as is the case in Canada, which makes it compulsory to complete 18 of the 30 credits required for graduation in core subjects, such as mathematics, language, natural sciences and social sciences, with the possibility of completing the remaining credits in other disciplines linked to different employment paths. This would allow students to have the complementary knowledge and skills necessary to successfully run their own business or to perform more competitively in their chosen economic sector.

Secondly, the inclusion of technology in the classroom from an early age is one of the most effective ways to train not only workers with 21st century skills but also citizens who are already familiar with digital technology. 

For example, the digital transformation in the classrooms that I carried out during my tenure as minister of education of the province of Buenos Aires involved the distribution of 3,100 mobile digital classrooms that contained different digital tools, such as tablets, notebooks, portable server, projector, mobile digital screen, speaker and microphone. We also distributed 30,000 robotics kits containing different parts, screws of different lengths, nuts and sensors to build a robot, generating familiarity with new technologies from the earliest years. 

Think About Education As Part of the Workplace

Thirdly, re-skilling and training are key to boosting future economic growth, and at this point, the participation of the private sector becomes fundamental because, in addition to its innovative capacity, this sector is essential to cover the needs that the public system does not offer or is unable to provide. 

Such is the case of Chile, which, through a public-private partnership, managed to train 16,000 unemployed, low-income and middle-class people to enter the formal labor market.

Fourthly, incorporating professional training and connections to the labor market that enhance human capital and ensure their personal and professional growth. As is the case of Colombia, where a Technical Training Programme was implemented thanks to an alliance between a civil organization (ACDI-VOCA), an international organization (USAID) and the Colombian government, which allowed for labor inclusion and the improvement of the quality of life for the most vulnerable population. 

Finally, the implementation of professional internships that guarantee students a basis of professional skills and corresponding knowledge for a better and more effective insertion into the world of work.

A Springboard for Social Mobility

Education in the regions must once again become the springboard for social mobility, and this will only be possible with a major transformation and innovation of education systems. In short, quality education, together with the human capital it generates, benefits individuals and societies.

Today, talking about education should be synonymous with talking about work. Let us stop thinking about education in isolation from what happens on the labor market.

Faced with the challenge of reducing the informal sector and generating more and better jobs, all actors have a role to play. The state must ensure the conditions so that the private sector, the largest generator of employment, can be successful, and education is the key for this to happen.

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