Support Village Voice News With a Donation of Your Choice.
Guyana’s rapidly expanding oil sector has the potential to profoundly transform the economy. Oil production is currently above 300,000 barrels per day (bpd) and is projected to reach 720,000 bpd by 2026. The International Monetary Fund estimates Guyana’s commercially recoverable petroleum reserves at about 11 billion barrels, the third largest in Latin America and the Caribbean and one of the highest levels per capita in the world. The “oil boom” is driving strong economic growth with overall real GDP growth estimated to average over 25 percent in the period 2023-26.
The fast-changing economy will not only potentially deliver significant development benefits but also pose challenges. A key challenge will be the impact on Guyana’s labor market and the skills gap. In the oil sector, the demand for the skilled labour needed to support the fast-growing sector will be in short supply. The International Labour Organisation (ILO) estimates that in the next five years in the oil and gas value chain the skilled labour in strong demand is likely to be engineering professionals, risk (environmental and occupational health and hygiene), management professionals, ships’ deck crews and related workers), physical and engineering science technicians (as opposed to professionals), finance professionals and mining and construction workers. Notably, 81 percent of the occupations where demand is strongest require a higher technical or a higher degree of education and training. However, information technology skills including transferable to the oil sector are in greater supply, but skills gaps remain, albeit smaller.
The number of graduates from Guyana’s tertiary and vocational training institutions is significantly below the numbers needed for the skills in greatest demand. The ILO identified expertise in health and safety and risk management to be the least acquirable qualification given the current capacity of the tertiary and vocational institutions. In addition, the supply of graduates from welding, metal work and mechanical engineering are in limited supply.
The Table indicates that the number of graduates in disciplines to support the oil industry in 2020/21 was 317 whereas the ILO survey estimated that the number of engineering professionals needed in a year is about 209 and the number of physical and engineering service technicians would be 113.
The data indicates significant investment to upgrade Guyana’s tertiary and educational institutions (including increasing the number of teachers/training professionals) will be key to closing skills gaps, increasing local content as the oil industry expands and spreading the development benefits. The government’s stated development plans (financed by oil revenues) prioritise strengthening the education sector and substantially increasing the supply of skilled workers including university graduates.
Discipline | Number of graduates
(2020/2021) |
Bachelor of Engineering Applied and Exploration
Geology |
31 |
Bachelor of Science Civil and Environmental
Engineering |
53 |
Bachelor of Science Electrical Engineering – | 21 |
Bachelor of Science Engineering | 12 |
Associate of Science Applied and Exploration
Geology |
27 |
Associate of Science Electrical Engineering | 20 |
Associate of Science Industrial Engineering | 17 |
Associate of Science Mechanical Engineering | 36 |
Associate of Science Mining | 2 |
Associate of Science Petroleum Engineering | 27 |
Total graduates in disciplines linked to
the oil and gas industry’s needs over the next five years |
172 |
Bachelor of Science Chemistry | 21 |
Bachelor of Science Environmental Science | 3 |
Bachelor of Science Environmental studies | 20 |
Associate of Science Civil Engineering | 72 |
Associate of Science – chemistry | 17 |
Associate of Science Physics | 1 |
Associate of Science Architectural and Building
Technology |
22 |
Associate of Science Civil Engineering | 72 |
Diploma in Technology Architecture | 1 |
Master of science Env Management | 10 |
Total graduates other partially related
disciplines |
145 |
Total all | 317 |
The “growth dividend” of the oil industry is fueling broad based economic expansion and there is rapidly growing demand for skilled labor across the economy but limited supply. Therefore, closing significant skills gaps is not only an oil sector challenge but economy wide.
Guyana’s low supply of skilled labour reflects the country’s weak education indicators, particularly low secondary school enrolment ratios. Overall, Guyana’s skills gaps are directly related to limited development gains as the country’s human development index is lower than the median for the Latin American and Caribbean region and for middle income countries. A World Bank Report indicates that prior to 2020 by age 18, children in Guyana can expect to complete 12.1 years of pre-primary, primary and secondary school but when years of schooling are adjusted for quality of learning, it is only equivalent to 6.7 years: a learning gap of 5.4 years. In addition, the labour market in Guyana has typically been polarised. Research indicates that labor mobility between industries is limited reflecting the industry-specific skills and occupation-related skills.
Given the acute nature of the skills shortage public policy will need to be focused on two broad areas: First, to fill the specialized labor gaps in the short-term Guyana will need to implement open labor market policies to re-attract the Guyanese diaspora that migrated and attract foreign professionals. Encouraging the return of skilled expertise in the diaspora experience from other countries indicates a multi-pronged approach could be helpful. Establishing a Ministry of Diaspora Affairs to coordinate and implement programs for developing and supporting networks among professionals in the diaspora and locally and encouraging joint ventures with local businesses.
Another immediate policy step would be adjusting the labor market regulations, thereby opening the labour market to countries of the Caribbean Community (CARICOM) to facilitate the free movement of labour. The government has expressed its commitment to regional economic integration and Guyana adopting a policy of free movement of labor with CARICOM countries. A related but important requirement is ensuring an efficient, timely immigration process for the granting of work permits.
However, a flexible labour market policy will need to be extended beyond CARICOM and to the rest of the world given the size of the skills gaps as the economic expansion takes hold. The Gulf countries faced similar challenges with a “booming economy” driven by the energy sector and policymakers can find good examples of migrant worker programs implemented to tackle skills shortages, for example, Kuwait.
Second, as stated earlier, oil revenues can support higher levels of public investment in the social sectors, particularly in expanding the number of educational institutions at all levels including vocational while simultaneously improving their quality.
Public policy can also support developing skilled labor via supporting the private sector to formalize ongoing (or introduce) traineeship schemes, particularly with foreign companies operating in the main economic sectors, particularly, the oil sector. One policy option is the Government can agree with private sector stakeholders the skill areas and number of trainees per year that will be supported in the annual budget.
In conclusion, Guyana’s fast growing oil sector is driving unprecedented economic growth that is resulting in a significant increase in the demand for labour, particularly skilled labour. Closing skills gaps over the medium to long term is a priority of development policy and vital to supporting stronger long term growth. Policy options include flexible labor market policies including adjusting labour market regulations to allow greater use of foreign skilled workers from CARICOM and other countries together with incentives to re-attract the diaspora. In addition, sustained investment in increasing the number and quality of educational and training institutions over the medium to long term will be key to closing skills gaps, increasing local content and ensuring inclusive growth.
——————————-
About the author
Dr. Meredith Arnold McIntyre has been an economist for over 30 years with a variety of Caribbean regional institutions including the Caribbean Development Bank, Organization of Eastern Caribbean States and the Caribbean Regional Negotiating Machinery. Dr. McIntyre also worked for the International Monetary Fund (IMF) on countries in Africa and the Caribbean, including leading IMF country team missions to Guyana. Dr. McIntyre has published a book and a variety of articles on issues in macroeconomic and trade policy in small states. He is currently an Associate, Manchester Trade Ltd and a Fellow with the Caribbean Policy Consortium.