CAF presents proposals to foster social mobility in El Salvador

A few days before International Labor Day, CAF—development bank of Latin America—presented in San Salvador its Economy and Development Report (EDR 2022) entitled: Inherited inequalities. The role of skills, jobs and wealth in the opportunities of new generations, which provides a diagnosis and recommendations to foster social mobility in Latin America and the Caribbean with a series of policies and initiatives that can be tailored to each local context.

Lack of opportunities for building human capital, securing good jobs in labor markets and accumulating assets are all key factors behind continued intergenerational inequalities. The report presents abundant evidence showing that opportunities in these three areas in Latin America and the Caribbean among people from families of different socioeconomic levels varies substantially.

This was one of the main themes discussed during the EDR 2022 event, which featured a keynote address by CAF’s representative in El Salvador, Oscar Avalle, and Finance Minister Alejandro Zelaya.

“Two decades ago, El Salvador’s income inequality was very similar to the region's average. But since then, and up to the pandemic, income inequality has been reduced, leaving El Salvador among the countries with the lowest Gini rates. The problem of inequality is multifaceted, and thus, in El Salvador—as in the rest of the region—we must persist in supporting strategic areas such as education and social inclusion,” said Oscar Avalle.

Furthermore, Finance Minister Alejandro Zelaya said: “This is our first event with CAF since our accession. We are working on the needs of El Salvador and Central America, and the report presented today provides a very detailed overview of the region; and we are committed to ending these inequalities and learning how to effectively eradicate them.”

During the presentation of the Report, Lucila Berniell, CAF’s senior economist and co-author of the publication, noted for people with low human capital, entering the labor market does not ensure new opportunities that can offset the inequalities experienced at an early age, and thus, a joint effort between families, the public and private sectors is required.

“Equalizing job opportunities requires largely a reduction of inequalities between regions and different areas within the region’s cities. Different policies can help to reach this goal, such as those that improve basic urban infrastructure and key facilities for the provision of education, health and public safety services, among others,” Berniell added.

The presentation of the EDR 2022, was followed by a panel discussion, featuring CA-5 Consultores Director William Pleitez, and the Dean of Software Engineering and Business of the Higher School of Economics and Business (ESEN), Manuel Sánchez Masferrer, and moderated by CAF’s Director of Socioeconomic Research, Ernesto Schargrodsky.

In turn, Ernesto Schargrodsky added: “Promoting more and better opportunities in early, basic and higher education, together with the closing of spatial and ethnic-racial gaps in education, but also in labor, and the expansion of financial inclusion to reach groups that are currently outside the formal savings channels, are areas of work that can continue to be strengthened to ensure a better future for young Salvadorans."

In terms of the labor market, the Report states that active job creation policies, such as job training programs and internships for adults, help bridge productive capacity gaps among workers and produce valuable information for the job hunting process. Job boards and job assistance programs are also helpful in reducing information asymmetries, by equalizing knowledge about job opportunities.

Download the publication here