Guatemala Jobs Diagnostic

Building back better’ has become a popular theme guiding the world’s post-Covid19 recovery efforts; in few middle-income countries this appears to be more pressing than in Guatemala. Over a decade of lackluster growth and stagnating productivity improvements have led to an acute shortage of quality jobs, the effects of which started to show well before the Covid19 pandemic. By applying the World Bank’s jobs diagnostics methodology and drawing on both micro- and macro-level data covering the period 2004–18, this report casts light on Guatemala’s most pressing structural jobs challenges. The report first documents Guatemala’s labor market symptoms, including high levels of informality, declining labor earnings, low female labor force participation, rising emigration, and limited internal migration. The symptoms are then analyzed in-depth to identify what drives Guatemala’s poor labor market performance. The report finds that insufficient formal job creation, a lacking dynamism in the formal sector, and low quality education in rural areas are key drivers of Guatemala’s labor market outcomes. The report concludes by proposing a set of key strategic priorities to unleash Guatemala’s jobs potential.