The Role
of Skills in Productivity Gains in the Tourism Sector-
A View from the Private Sector
in St. Lucia
Presentation of Results of Hotel Survey & Background Paper
By: Theresa Beltramo
Overview
of Presentation
Macroeconomic
Overview & Role of Tourism
Results
of the Hotel Survey
Social
Contract Needed- The Way Forward
Main Messages
Slowing
growth . . .
Per Capita Incomes (PPP) 1975-2004
Services main growth driver. . .
Tourism plays key role in economy
Increasing competition in tourism market
Recent
High Growth is a
Window of Opportunity00/font>
39%
15%
4.9%
4.3%
St. Vincent & the
Grenadines
39%
19%
5.0%
4.0%
St. Lucia
11%
4%
4.9%
6.4%
St. Kitts and Nevis
24%
9%
0.9%
-3.0%
Grenada
56%
17%
3.1%
3.5%
Dominica
13%
4%
3.8%
5.2%
Antigua & Barbuda
Youth
Adult
2005*
2004
Unemployment Rate (latest
year)
GDP Growth Rate (IMF)
Section
II
Macroeconomic
Overview & Role of Tourism
Results
of the Hotel Survey
Social
Contract Needed- The Way Forward
Main Messages
Hoteliers
agree that Skills of workers are not adequate00/b>
Top Skills
missing include00
Ability
to Learn
Entrepreneurship
Skills or Self Initiative
Soft Skills
Professional Skills- in particular Management and Chefs Skills
Other
Feedback from Hoteliers in SL
Some skills training exists00/font>
Source: Ministry of Education,
St. Lucia Statistical Yearbook 2005.
Total
Enrolment In NELP for Academic Year 2004-2005
Labor Market Mismatch
Level of Education Among Hotel Staff
Deepening
the impact of Tourism
Cruise
- $
Enclave,
All-Inclusive $$
Island as a
destination $$$
Unskilled
labor and poor physical infrastructure
Value-added
High quality
labor, physical infrastructure and security (destination management)
Few backward
and forward linkages
Wide variety
of tourism services: restaurants, entertainment, tours
Output
Required inputs
Quality of inputs
Section
III.
Macroeconomic
Overview & Role of Tourism
Results
of the Hotel Survey
Social
Contract Needed- The Way Forward
Main Messages
Social
contract needed00/font>
Human Resource Development Needs Assessment Survey UWI
Do youth embrace tourism00/font>
If you
remember anything, remember this00
Macroeconomic
Overview & Role of Tourism
Results
of the Hotel Survey
Social
Contract Needed- The Way Forward
Main Messages
Main
Messages
Hoteliers in SL point to a skills mismatch Some skills training exists in SL put is too basic to meet the hotel sector00 needs and would benefit from accreditation on a regional level. Skills gained in secondary school must be relevant to the world of work. The rural issue A social contract is needed
Thank You
Good Afternoon Ministers of Education, Heads of delegation, regional training institutes, and development partners00/font>
It is certainly my pleasure to be here on behalf of the World Bank team and to discuss with you the case study of St. Lucia I prepared as a background paper to the wider Skills Enhancement study Andreas spoke about.
Further it is my hope that the data presented can provide a sketch of the labor market needs of hotels in St. Lucia to begin to process of development of CVQs. Like the Minister from Guyana I like to set the stage with the macroeconomic fundamentals of the industry. During 1970 to 2000, we have seen that economic growth in the Caribbean has been relatively high. However, as you can see from this slide, the rate of growth has been declining. Of course, performance is heterogeneous across the region with high growth rates in TT , and low growth in Haiti, Guyana, Jamaica and for the OECS after a strong decade of growth in the 1980s, sharp decline since the early 1990s. Per capita GDP growth in the Caribbean slowed: from 4.3% in 1970s, to 2.1% in the 1980s to 1.7% in the 1990s. Not only has productivity growth in the LAC region been slow, particularly in comparison with the Asia-Pacific region, but also with respect to performance within the region from 1980 forward. In SL Growth averaged 7.5% per annum during the 1980s, as tourism and banana production took off, but has slowed to less than 2% per annum, since 1990. While tourism continued to grow, agriculture and to a lesser extent manufacturing shrank in absolute terms. The Caribbean countries have experienced high volatility in growth performance due to vulnerability to external shocks. In particular, recurrent natural disasters and reliance on tourism and mining have resulted in the region having higher growth volatility than Latin America in each of the last three decades. Slowing growth has been the result of declining productivity, falling FDI relative to GDP, erosion of trade preferences and external shocks. This presentation will focus on how skills enhancement can mitigate declining productivity. Another characteristic of the Caribbean economies are high relative wages. Given high wages, most Caribbean countries are unlikely to be competitive in labor-intensive manufacturing or traditional agriculture in more open trade regime, and would need to move to higher-end services.Services have been the most important source of growth in the Caribbean, with an average growth rate of almost 5 percent per year during 1961- 2000. As a result, services share in GDP increased from 50 percent in the 1960s to 62 percent in the 1990s.
Has the curriculum been adjusted accordingly to equip students for this changing economic environment? Based on discussions I had with hoteliers here in St. Lucia, several hotel managers/owners felt that the role of tourism in driving economic growth was not really understood by society. Thus, I wanted to point out how large a role tourism plays in the economy of SL and the wider OECS. The numbers in this table produced by the WTTC claim that when you count downstream industries Travel and Tourism make up just under half of total GDP and employment in SL. The graph above what is noted as the T&T industry- or travel and tourism industry and employment represents direct GDP or employment and the other T&T economy figure is an estimate of both the indirect and direct industries associated with tourism IMF asserts that tourism in SL accounts for three-quarters of exports. Thus, given the forecasted growth in the tourism sector, the country00 present boom in the industry, and the ratification by the House of Assembly on February 9, 2006 for the approval of St. Lucia to enter the CSME; skills enhancement in the tourism sector is even more relevant in the near and medium term future. Introduce GraphTourism Price Competitiveness Index (TPCI)
shows the tourism price index across countries where the index value
of '0' shows the least price competitive country and '100' represents
the most price competitive country. It is computed using the Hotel Price
Index and Purchasing Power Parity Index. Caribbean average based on
available data and includes Antigua, Bahamas, Barbados, Belize, Dominica,
DR, Jamaica, St. Kitts, St. Lucia, St. Vincent, Trinidad and Tobago.
2. CARICOM region has lost market
share in tourism to other destinations. With decline in transport
costs, long haul destinations have become increasingly attractive, thus
adding competition for the region. To exacerbate the problem,
the WTO now describes the beach resort tourism product as approaching
the mature/saturation stage for the product life cycle. Thus demand
for the traditional tourism sun and sand product has become very
price elastic.
This said, the OECS given its physical and cultural assets, is in a good position to capture a growing market share. Already, there are several success stories in capturing the tourism niche markets, including St. Lucia00 Jazz Festival, Dominica00 Creole Musical Festival, and world-renowned diving market, yachting in St. Vincent and Grenadines and Antigua and Barbuda, and Barbados00 upscale resort Sandy Lane.
But to support these niche tourist markets, skilled workers is critical._____________________________________________
N.B.: WTTC: World Travel and Tourism Council. WTTC's Competitiveness Monitor tracks a wide range of information, which indicates to what extent a country offers a competitive environment for Travel & Tourism development.
Economic activity in St. Lucia has picked up since 2003 and growth exceeded 5% in 2005, and 2006 growth is expected to exceed 5%.
Growth driven by robust tourism growth, the call for a doubling of hotel rooms on the island from 4517 to 9000. IMF has a lower estimate of 1100 new rooms by early 2007, an increase of 30% of current stockThis is a window of opportunity to address among other issues, the underlying causes of low productivity growth.
* GDP Growth rates come from the IMF
and represent Real GDP (factor cost). Unemployment Rates vary from around
the region and represent the most recent year available: Antigua (1991),
Dom (2001), Gren (1998), SKN (2001), SL (2004), SVG (2001)
Data drawn from Core Welfare Indicators Questionnaire (CWIQ) Survey at end of 2004, the Department of Statistics of St. Lucia surveyed over 1300 households, using the CWIQ survey methodology, and issued a summary report that contains indicators of households
As input to the paper I wrote analyzing the skills produced and demanded in St. Lucia by the tourism industry, I surveyed hotel managers and/or owners generally about the obstacles to further growth, the skills set of their employees, how much if any they spent annually on training of their employees, and what skills, if any, were needed to grow the tourism sector.
The sample of the survey was 28% of the total hotels on the island and were drawn from both Souffriere and Castries. The hotels ranged in size from hotels which had 11-369 rooms, and included a wide range of tourism products from all inclusive to the villa market.
Unilaterally, hoteliers cited limited skilled labor as a key missing link to growth in the tourism sector. Hoteliers cited skills as missing links at all levels of skilled labor from what are deemed as lower skilled workers such as room attendants to highly skilled workers such as managers. To be scientific, you might think say this is just one survey, but importantly, this report from hoteliers in St. Lucia is widely supported by other studies cross-sectorally in the OECS, to cite three A recent paper in 2004 which surveyed OECS firms cited the Shortage of Skilled Labor as the number one constraint to improving competitiveness. (source: Madsen, Bent (2004). According to a survey of 24 export firms undertaken for the OECS Export Development Unit, the education level of labor was ranked as the largest obstacle to growth. in Grenada in a diagnostic exercise of the investment climate, the shortage of skilled labor was cited as the number one constraint to increasing competitiveness by firms. From this Investment Climate Assessment, the key skill shortages were found in industrial engineering and managerial skills.Madsen, Bent (2004). 00nd of Project Evaluation of the OECS/EDU Export Capability Enhancement Program,00 GFA Management. Hamburg, Germany.
The general consensus was that four key areas should be focused on: (i). soft skills; (ii). the ability to learn; (iii). entrepreneurship skills or self initiative; (iv). professional skills, in particular, management and chefs00skills. I included entrepreneurship skills separately instead of under soft skills because of the emphasis from hoteliers.2. Managers and Chefs emerged as the top two ranked skilled workers hardest to find in St. Lucia. There is a derth of international or regionally accredited training programs in the OECS. Additional skills that were cited by hoteliers as hard to find included: Accountants, Bartenders, Housekeeping, Maintenance, Marketing, and Security. In order to address this gap in demand, particularly for chefs and managers: it would make economic sense for providers to develop training programs regional in scope to make use of economies of scale. This model will allow the training programs to remain competitive and cost-effective.
One potential model could be for the OECS to work together to divide the skills needed for the hotel sector per position per island and then offer the training on a regional scale. In this case, Antigua and Barbuda could develop a training center for culinary arts, and Dominica a training program for waiters, etcetra.
Based on the Government of St. Lucia Educational Statistical Digest, published June 2005- The Table above summarizes the skills training that exists, particularly for youth. Please note though I did include the NELP to be inclusive of all the skills training happening in SL, they were not included into the training provided for secondary age students. The table points out that of the 17,610 secondary school age population in the 2004/05 academic year in SL, 14.5% of students were not enrolled in either Secondary or Senior Primary School. 35% of the 14.5% of students not enrolled were not engaged in any formal skills training program available on the island. Overall, this represents 9% of students of secondary school age population (12-16 yrs of age) who in academic year 04/05 went without any formal skills training and secondary education. The implications for this negative trend are wide and a recent 2002 World Bank Study on youth in the Caribbean found that in St. Lucia as a result of youth unemployment GDP was lowered by 1.3% annually Not only is there not enough training being offered on the island to meet this potential pool of demand, the training being done is ad hoc, not coordinated, has done very little to no formal evaluation of labor market outcomes and according to the private sector is too basic to fit their needs. Given the region00 plans for greater integration and the large percentage of tourists (74%) coming from Europe, Canada, and the US, instituting internationally accredited regional TVET standards for the tourism sector would increase the competitiveness. The Government of St. Lucia has taken important first steps to beginning the process of equipping society with the appropriate skills to remain competitive. Particularly, the government has put an emphasis on education as seen by the prioritization of secondary education for all, and prioritized skills training with the induction of the NSDC. Yet critical obstacles to increasing competitiveness continue to lie in the low level of skills of the workforce. As pointed out by another colleague, secondary education for the majority of the population seems to be the end of a large portion of society00 educational training. With only an estimated enrolment in tertiary of 12% in St. Lucia and on average 11% across the OECS, for the majority of the population the skills gained in secondary school must serve them for the world of work.Source: Government of St. Lucia Educational Statistical Digest, June 2005. Note that the NELP program is not included as skills training for youth because it is aimed at adults. It is included in this chart for statistical accuracy.
I wanted to put this up as an example, to say show that a diverse amount of skills training exists in St. Lucia. Like other islands in the OECS St. Lucia has the NELP which provides adult education programs. But with the CSME right around the corner, none of these programs are accredited and I would guess that these programs being offered follow from the supply side of the equation, instead of responding to core competencies employers need for the world of work. Given the average for 2004 of the total formally employed population of St. Lucia (62,251 persons)- the NELP is providing academic and skills training to a little over 2% of the population. However, given that 9% of secondary school age youth neither attended secondary school or skills training, the potential demand for retooling as adults is far greater. Before I explain this slide, I first want to point to the following. Colleagues at the CDB held a panel discussion with Caribbean labor union officials in advance of the 2006 Caribbean Forum for Development entitled, 00roductivity Enhancement and Skills Development for the New Economic Climate in the Caribbean.00 Out of this Caribbean wide forum which gathered trade union executives, directors of worker training colleges, officials from Ministries of Education, and industry reps- the key concern emerged that the Caribbean was adapting slowly to the shift in labor markets which reduced the dependence on human labor for repetitive tasks and increased the demand for new skills in the services industries. Particularly, an key insight came out, 00n the midst of high unemployment, there are job vacancies, but in areas demanding specialized skills.00/font> Critical to note is that every hotel owner/manager I spoke to in SL did some kind of training for their employees. Every hotel from 11 rooms on up did training of employees. The averages above do not include Sandals because they would skew the data. Incidently Sandals, the international hotel chain on the island, requires managers to do 45 hours/year of training and line staff 120 hours /year. If one assumes that an employee works 8 hours a day, 120 hours/year is exactly 15 full time days of training per year. This is all staff. When I think of my own professional development I am far behind the Sandals average. I think this demonstrates an important aspect of international standards for the tourism industry and that to deliver a successful tourism product skills training of all staff is imperative. Let me caveat to say that I asked hotel owners/managers to estimate their training budgets. This said, and taking Sandals out of the average, the training budget per employee ranged from US$340 for large hotels located in Castries per annum to $91/employee for small hotels in Souffriere. Most, of this training, was done ad hoc by hotel managers and is not standardized to international TVET qualifications. Another important point that can be linked from the table above to what managers/hotel owners shared about their hiring practices, that given the skill deficits for all types of workers in hotels, poaching employees was common practice. Essentially, the larger, more up scale hotels poach employees from lower hotels and this cycle is never ending. Further this work strengthens one point made in the introductory remarks that disadvantaged groups should be targeted specially when designing skills enhancement programs and LLL. Clearly the needs in Souffriere are different than in Castries. Souffriere00 hotel industry which is constituted mainly by family owned businesses spend less than one/tenth what hotels in Castries do on training and take the longest time to recruit a skilled worker (5.4 weeks).Table 8: Education Outcomes in the OECS
Here I asked the hoteliers to estimate what percentage of their staff had these different levels of education. Again what strikes me about this table is 1).the difference between Souffriere and Castries 2). The minimal level of employees that have some training in tourism related fields. Given tourism00 large role in the economy employing some 47% of total people employed in SL in industries both directly and indirectly involved with tourism- why is there so little accreditated trained staff? Further, please note that these education levels measured include hotel owners and/or managers. which have a much greater probability of having some tertiary education. Thus, it would be interesting to do a more in depth account of education among hotel staff.If qualified labor and physical infrastructure
are poor and security is weak the only economically feasible tourism
service is cruises. Of course the value added captured by a small
state as a result of this type of tourism would be relatively low.
A notch more developed tourism sector would be the all inclusive hotels
which use some local labor and provide basic infrastructure inside the
facilities.
At the other extreme, when high quality
labor, physical infrastructure and security are abundant, a wide variety
of tourism services could develop, allowing the country to diversify
its tourism products and develop greater backward linkages to the rest
of the economy.
The recent, 00uman Resource Development Needs Assessment Survey: St. Lucia00undertaken by UWI, to identify the jobs and skills needed for future development of the CARICOM countries and to assess the gaps between current education programs and future program needs; surveyed employers, students, and providers of education and skills training for all sectors. While the interviews were not focused on the tourism and hospitality sector, their findings are relevant for this discussion.
Management skills were the only skills that employers, students, and providers of education were able to reach a consensus on as skills key to the future development of St. Lucia. Both employers and providers of skills training and education cite hospitality skills for tourism as necessary to future economic development for the island. Importantly, students do not include hospitality and tourism skills as among the top five skills critical to development (see Table 13). More research is needed to better understand why students do not see the hospitality and tourism sector, the leader in economic growth, as critical skills for the future. These results reporting the tripartite view of employers, students, and providers of skills, point to an important overarching theme that accompanies skills enhancement in the tourism sector-- that is it is critical for all factions of society to build consensus on the skills needed for the country00 continued development.Here I wanted to drive home the high levels of unemployment again despite economic growth.
In SL which had 5% growth in 2005 it was also plagued by 39% youth unemployment. The ILO estimates that youth on average are between two and three times the rate of adult unemployment the world over. Both Antigua and Barbuda and Dominica have a youth unemployment rate more than three times the rate of overall unemployment. Consultations with youth must continue and efforts such as advertising the wages of hotel managers and staff in the newspaper may help incentivize youth to see tourism as a viable and desirable job. Initiatives like the Bahamashost program may be worth exploring After a strong decade of growth in the 1980s, per capita income growth has been slowing in the OECS. Slow growth is partially attributed to low productivity Sea and Sand tourism product is reaching maturation in the market and is very price elastic and faces increasing low wage competition. Given high relative wages, most Caribbean countries are unlikely to be competitive in labor-intensive manufacturing or traditional agriculture in more open trade regime, and would need to move to higher-end services. The recent high growth in the region, as well as the WCC is an opportunity to increase productivity and more inclusive growth by increasing the pool of skilled labor appropriate for the demands of the world of work. Hoteliers in SL unilaterally claim that there is a lack of skilled labor available for all types of jobs from low, medium, to high skilled. Skills training exists on the island, but it needs to be strengthened, accredited and demanded by the private sector. Skills gained in secondary school must be relevant to the world of work. The needs of Souffriere are different than Castries and thus approach to skills training in rural areas will have to be different than skills training in the capital given the lower level of existing skills base in the rural communities. In order to maximize productivity all factions of society need to embrace tourism as a growth sector.download Let0 0AP0/a>File Format: Microsoft Powerpoint - View as HTML
