Beyond Infrastructure: How Labor Assets and Data Integrity Shape FDI in Guatemala & El Salvador
- Whitney Dubinsky
- Oct 15
- 6 min read
At the recent XX Congreso Industrial in Guatemala, government and business leaders gathered to discuss how the region can attract more sustainable, scalable foreign direct investment (FDI). The tone was ambitious, yet grounded. A key takeaway, captured effectively in a República article titled “Certezas y desafíos para atraer IED” (Sept. 30, 2025), was that Guatemala's FDI future depends not only on infrastructure, but also on deeper structural reforms.
Two of the most telling gaps mentioned during the conference were:
Harnessing the demographic and labor strengths of countries like Guatemala and El Salvador, and
Fixing persistent issues in data reliability and statistical transparency that can erode investor confidence.
While roads and ports remain vital, it's these quieter, systemic variables that could make or break the region's investment future. In this post, we dig into both dimensions, what the evidence says, why it matters, and how governments and partners (like ALD Strategic Advisory) can act now.
Labor & Demographic Advantage: A Silent FDI Magnet
Investors, especially in sectors such as light manufacturing, nearshoring, and agribusiness, are increasingly selecting locations based on workforce dynamics, including demographic trends, skill readiness, labor costs, and employability. A country that can reliably deliver a capable, growing labor pool wins a competitive edge beyond bricks and mortar. In Latin America and the Caribbean more broadly, countries with growing working-age populations have seen stronger correlates with FDI inflows (because growth in labor supply suggests potential scaling).
Guatemala has historically benefited from a youth bulge: thousands of young people enter the labor force each year. Each year, approximately 140,000 youth enter Guatemala’s labor market, but the formal sector fails to absorb most of them. The World Bank notes that only 15-20% of Guatemalan youth seeking work are absorbed into the formal sector, while the majority enter informal, low-productivity employment. (World Bank Guatemala Country Overview, 2024). Officially, Guatemala’s unemployment rate stood at 2.2% in 2024, among the lowest in Latin America. However, this metric masks structural fragility: over 80% of the workforce is informally employed, according to the IMF and World Bank. (IMF Guatemala Article IV, 2023). Therefore, the real issue isn't unemployment, it's underemployment and informality. The question is whether Guatemala can scale up formal industry fast enough to absorb its growing, youthful labor force into stable, productive work.
In 2024, El Salvador’s reported unemployment (as a share of the labor force) was relatively low at 2.84 % 2024 although national sources report a higher figure of 4.65 %, reflecting a difference in methodology. Youth unemployment (ages 15–24) is also modest by global standards, at about 6.7 % in 2024. These numbers show promise: a steady, employable labor pool with manageable joblessness. But as in Guatemala, the structural question persists: Can the formal economy scale fast enough to absorb this workforce? El Salvador’s low official unemployment conceals a deeper challenge: large swaths of the population remain in informal, low-productivity roles.
For FDI to thrive, it’s not enough to have workers available; they must be trainable, formalized, and part of an enabling ecosystem that meets investor needs for scale and quality. Investors want assurance that if they commit to factories or operations, the labor supply will scale, with predictable turnover and skill acquisition. Countries with a strong demographic advantage temper wage pressure and support sustainable cost models, and thereby are less likely to exit when the labor base deepens. Guatemala or El Salvador may compete with Mexico, Vietnam, or Southeast Asia, as their differentiator is labor readiness and reliability. But this competitive advantage is fragile. It can erode if demographic momentum wanes, or if skills, mobility, or formalization don’t keep pace.
Data Transparency & Credibility: The Hidden Barrier
No investor wants to bet millions based on shaky data. When labor, regulatory, or institutional information is inconsistent, opaque, or delayed, risk premiums climb fast. Countries lose from the mistrust, even if the fundamentals are solid. Academic and policy literature underscores that transparency, institutional quality, and governance are significant determinants of FDI inflow. For example:
Some of Guatemala’s statistical reporting, especially on employment, informality, and sector breakdowns, lacks consistency or real-time updating, which can undermine external credibility. El Salvador, while making strides in digital systems, still has policy risk perceptions tied to data opacity, particularly around contract enforcement, procurement, public finances, and sector-level statistics. In both countries, critical infrastructure projects or PPP frameworks may be underpinned by non-transparent fiscal projections or murky contingency treatments that are opaque to external observers. Investors often conduct detailed due diligence, and when this reveals contradictory or missing data, their “country discount” grows.
When data is unreliable or inconsistent, investors perceive greater risk—forcing them to demand higher returns or limit their commitments to shorter timeframes. Without precise, trustworthy data, it's challenging to monitor performance, enforce contracts, or resolve disputes. In contrast, countries that prioritize open data and transparent governance build reputational capital and climb in global investment rankings. Those that fall short often pay the price in reduced investor confidence. Moreover, many international investors depend on multilateral guarantees or de-risking tools, which themselves require credible, verifiable data to function.
Strategic Imperatives (and How ALD Helps)
To strengthen labor systems, governments should first conduct a labor-readiness audit to assess the current workforce supply against projected demand in key sectors such as manufacturing, agritech, and logistics. This should be paired with investment in skills-matching platforms that connect vocational training and technical education directly to market needs, reducing friction between training and employment. Equally important is the need to incentivize formalization, bringing informal workers into structured, protected employment to boost reliability, improve measurement, and expand social protections. Governments should also promote mobility and regional labor hubs by aligning industrial parks and special economic zones with transportation corridors to maximize access to job markets.
On the institutional front, countries must build or enhance open data platforms, especially for geospatial, infrastructure, labor, and public-private partnership (PPP) data. Rigorous data validation protocols, including inter-agency coordination, third-party audits, and strong metadata standards, should support these platforms. It’s also critical to adopt international statistical standards and commit to more frequent, agile data updates, ideally on a quarterly or semi-annual basis. To ensure credibility and investor confidence, governments should mandate transparency clauses in public contracts, making key risk-sharing terms accessible. Lastly, there must be active interoperability with donors and partners such as the World Bank and IDB, enabling them to validate and align with national data systems to improve trust and investment outcomes.
At ALD, we specialize in precisely this intersection: strategic advisory, technical due diligence, and bridging public-private gaps. ALD designs and delivers workforce-demand analyses and skills pipeline strategies that align education, training, and employment incentives with investor needs in sectors like manufacturing and renewables. We support governments in crafting formalization incentives, such as payroll subsidies, to expand measurable employment and improve the reliability of labor data. Our team conducts statistical-integrity diagnostics and helps build or refine open-data platforms that meet investor and public transparency standards. We also assist in embedding transparency protocols into PPPs and coach institutions to benchmark their data systems against those of peer investment destinations.
With deep expertise in private-sector engagement and coalition building, ALD helps align investor priorities with public-sector reform. We propose working directly with investor associations, business chambers, and sector consortia to articulate collective demands around data quality. Our team facilitates the development of monitoring and feedback mechanisms that enable firms to flag data inconsistencies and inform government response in real time. In parallel, we support the creation of investor pitch materials that clearly and credibly present national labor and sector data, building trust, improving deal readiness, and reinforcing the country’s reputation as a transparent, investment-ready partner.
Call to Action: From Promise to Payment
Guatemala and El Salvador already have compelling narratives: strategic location, proximity to U.S. markets, and existing infrastructure programs. But their next frontier in competing for capital is less visible and more structural.
To governments: invest now in labor readiness and data credibility. These are not optional “nice-to-haves” but prerequisites for meaningful FDI growth in the coming decade.
To the private sector: engage as partners, not passive recipients. Press for clarity, benchmark data, and demand transparency commitments from public entities.
To donors and partners: prioritize technical support for national data systems and workforce alignment, not just “hard infrastructure” grants.
At ALD, we bring blended expertise — policy-first, data-literate, investment-savvy — to help countries close that last-mile gap. If you’re a ministry, an investment promotion agency, or a consortium of firms looking to anchor capital in Guatemala or El Salvador, let’s talk. We can help you audit gaps, set a roadmap, and deliver tangible improvements that the global investor community notices.
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