Caribbean Tourism Powers Local Economies, but Workers Need More Than Visitor Growth

“Advancing formalization in Caribbean tourism is not only a labour market priority; it is a development imperative,” said Joni Musabayana, Director of the ILO Decent Work Team and Office for the Caribbean.

Tourism contributes an average of 39 per cent of GDP and more than 11 per cent of total employment in the Eastern Caribbean, giving the people serving visitors a central role in the region's economy. That economic importance exists alongside persistent informal employment and shortcomings in working conditions, leaving a gap between what tourism generates and the security it provides. A new International Labour Organization (ILO) study examines how stronger businesses, better jobs and greater access to the formal economy can help close that gap.

What keeps tourism businesses and workers in informality

The study, Informality in the tourism sector in the Eastern Caribbean, covers Antigua and Barbuda, Barbados, Dominica, Grenada and Saint Lucia, identifying several connected pressures that keep informality in place. Many micro, small and medium-sized enterprises struggle with low productivity and limited access to finance, making it harder to invest in their operations. Fragmented regulations, mismatches between available skills and employers' needs, gaps in social protection, and limited capacity to enforce labour rules add to the difficulties facing businesses and workers.

Seasonal demand and exposure to climate shocks create further uncertainty for enterprises trying to grow and maintain formal operations, particularly when their resources are already stretched. The findings point to a problem that reaches beyond business registration, because enterprises need the capacity to operate productively and workers need access to rights and protection. Ana Virginia Moreira Gomes, ILO Regional Director for Latin America and the Caribbean, said the challenge is to make tourism a source of decent work, productive development and social inclusion.

Making better jobs and stronger businesses part of the same effort

The study proposes nine pathways that connect support for productive development and smaller businesses with improvements in skills, employment opportunities, social protection, labour rights and compliance. Social dialogue, policies that respond to gender differences, better data collection and regional collaboration form part of the proposed response. The approach draws on the ILO's labour standards framework, its guidelines on decent work and socially responsible tourism, and FORLAC 2.0, the regional strategy for promoting formalization in Latin America and the Caribbean.

A small operator earning enough to meet basic needs faces different barriers from an enterprise preparing to expand, making a single approach unlikely to work across the sector. Conditions differ among the five countries covered by the research, requiring gradual measures shaped around national circumstances and the needs of workers and businesses. The study places productivity and working conditions at the centre of this process, so that entering and remaining in the formal economy becomes a viable step supported by practical improvements.

Turning the findings into lasting opportunities

"Advancing formalization in Caribbean tourism is not only a labour market priority; it is a development imperative," said Joni Musabayana, Director of the ILO Decent Work Team and Office for the Caribbean. He called for evidence to inform action and for stronger cooperation among governments, employers and workers to build a sector that delivers decent work, resilience and sustainable development. The ILO will continue working with these groups to turn the study's priorities into practical measures for sustainable enterprises, better-protected workers and stronger communities.

Developed under FORLAC 2.0 with financial support from the European Union and the Spanish Agency for International Development Cooperation (AECID), the study forms part of the ILO's 2024–2030 regional strategy to support the transition to the formal economy. That work centres on coordinated policies, innovative solutions adapted to national contexts and partnerships that connect productivity with sustainable enterprises and decent work. For tourism-dependent communities, the proposed changes concern how reliably the sector can provide livelihoods, protect people at work and create opportunities that last.