Beyond tourism: A policy framework for economic diversification and job creation in the Caribbean

The Caribbean is a mesmerising archipelago of over 7,000 islands, islets, coral reefs, and cays. Renowned for its warm tropical climate, vibrant cultural tapestry, and spectacular natural beauty, it encompasses 16 sovereign states and 20 dependent territories. The Caribbean Community (CARICOM) serves as the primary body for economic and policy integration among English, French, and Dutch-speaking Caribbean, while the Organization of Eastern Caribbean States (OECS) advances deeper cooperation among its Eastern Caribbean participants. 

Yet underlying this beauty lie persistent economic and labour market challenges. This article focuses on two: an over-reliance on tourism, where one in three jobs is low-paid and seasonal, and tightening labour supply compounded by youth unemployment and informality. In April 2025, CARICOM Labour Ministers convened in Georgetown, Guyana, for the 34th Special Meeting of the Council for Human and Social Development (COHSOD), placing these concerns at the top of their agenda and discussing solutions tailored to the region’s unique context. 

Breaking the tourism reliance trap 

In 1950, the Caribbean Nobel Laureate Sir Arthur Lewis warned in his seminal paper “Industrialisation by Invitation” against the region’s overreliance on agriculture, arguing that transitioning low-wage farm labour into higher-value manufacturing was the most effective way to diversify the economy, create jobs, increase productivity, and sustain growth (Lewis, 1950). Although the Caribbean’s economic structure has since evolved, the risk of single-sector dependence remains yet highly pertinent. 

Today, tourism accounts for approximately 33 per cent of the Caribbean GDP, directly employing 18 per cent of the labour force and indirectly sustaining another 43.1 per cent (Figure 1). With one million [1] of the region’s 2.3 million [2] workers dependent on tourism for their livelihoods, the Caribbean finds itself in a “tourism-reliance trap.” 

Although tourism is a major employer, most jobs in the sector remain precarious, low-paid, informal, and highly gender-segregated. Without timely intervention, the sector will continue to fall short of providing sustainable and decent jobs. Improving working conditions in the sector itself is necessary but insufficient: strategic investment in agribusiness, renewable energy, the digital economy, and manufacturing is essential to diversify the economy and create more and better employment opportunities. Policymakers must therefore pursue a dual strategy, strengthening labour standards in tourism while accelerating growth in high-potential sectors. This integrated approach can transform vulnerability into resilient, job-rich economic diversification. 

Harnessing underutilised labour: policies for youth, informal and migrant workers

The Caribbean is now confronting a shrinking labour supply driven by slowing population growth, low participation, youth unemployment and the emigration of skilled workers. Annual population growth has fallen from 0.61 per cent in 2000 to 0.37 per cent in 2023 [3]. If current trends persist, twenty-one Caribbean countries and territories will join the global cohort of 81 countries with declining populations by 2050. 

Yet the Caribbean has barely tapped its own labour force potential. Labour force participation languishes at just 64.1 per cent, while unemployment stands at 11.5 per cent [4]. Nearly one-third of 15 to 24 years cohort are neither in education, employment, nor training [5] (NEET). Additionally, all CARICOM member states are net-outward migrating countries, depleting skilled pools and widening skill mismatches, and informality exceeds 50 per cent region-wide. Together, this data reveals a substantial, untapped reservoir of labour to be mobilised.  

Consequently, the urgent priority is to adopt a policy package aiming to increase labour force participation, particularly among youth, women, and rural workers through measures such as flexible work arrangements, subsidised childcare, skills development, and rural outreach programmes. Equally important are initiatives to activate disengaged youth and to manage labour migration effectively. 

One NEP, One Forest, Many Trees

To tackle both the tourism trap and untapped labour, a unified policy framework is required. The pressing question remains: what policy options should constituents pursue to address these challenges? In my view, Caribbean policymakers must operate at two levels simultaneously. Regionally, they should develop collective frameworks and common policy positions to address cross-boundary challenges, such as labour migration, climate-labour market nexus and harmonised macroeconomic governance for job creation. 

At the national level, comprehensive National Employment Policies (NEPs) can play a central role in reducing over-reliance on tourism by integrating sector-specific priorities (e.g. renewable energy, green and digital sectors) into a unified, cross-sectoral framework. Furthermore, NEPs are uniquely positioned to ease labour supply constraints by promoting activation programmes that target youth, women, older persons, and rural workers, such as employment services and reskilling and upskilling programmes.

Just as a forest shelters diverse trees, a comprehensive NEP serves as an umbrella that coordinates different employment interventions. The Caribbean constituents can leverage this single-canopy NEP to accelerate sectoral diversification, expand formal employment, and increase labour force participation. 

*  The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of ILO.

Abdelmalik Muhummed is the Employment and Labour Market Specialist at the ILO Decent Work Team and Office for the Caribbean. He previously served as the ILO’s Labour Economist in Uganda and as Economic Development Technical Adviser in ILO Somalia. His career also includes managerial and advisory roles on labour and economic development in Qatar and Kenya. Abdelmalik holds an MSc in Applied Labour Economics for Development from the University of Turin, Italy. His main research focuses on economic transformation, employment policies, and the informal economy.