For small island nations across the Eastern Caribbean, tourism is far more than a seasonal attraction—it is the backbone of the regional economy. On average, the sector accounts for 39 percent of gross domestic product and supports more than 11 percent of all jobs across the five nations studied. Yet this outsized economic contribution is undermined by longstanding structural challenges: widespread informal employment and a persistent deficit of decent work opportunities that hold back inclusive, long-term growth.
A new report from the International Labour Organization (ILO) argues that addressing these gaps requires a coordinated, holistic approach that ties improvements in productivity, working conditions and formalization together, unlocking the tourism sector’s full potential to drive sustainable, broadly shared development across the region.
Titled *Informality in the tourism sector in the Eastern Caribbean*, the study analyzes labor and economic conditions across five key Eastern Caribbean economies: Antigua and Barbuda, Barbados, Dominica, Grenada, and St Lucia. Researchers found that informality in the region’s tourism sector persists due to a web of interconnected, mutually reinforcing barriers. Many micro, small and medium-sized enterprises (MSMEs)—which make up a large share of the tourism industry—struggle with low productivity, limited access to capital, fragmented regulatory frameworks, and ongoing skills mismatches that leave businesses unable to compete or expand into formal operations. Gaps in social protection coverage and limited government capacity to enforce existing labor regulations further entrench informal practices. On top of these structural challenges, extreme seasonality in tourism demand and growing vulnerability to climate-related shocks leave enterprises with little capital to invest in expansion, formalization, or long-term growth.
“The challenge is not simply to reduce informality, but to transform tourism into a genuine platform for decent work, productive development and social inclusion,” explained Ana Virginia Moreira Gomes, ILO Regional Director for Latin America and the Caribbean.
Instead of framing formalization as an isolated, standalone policy goal, the ILO study proposes an integrated, multi-pronged approach rooted in the ILO’s global normative framework, aligned with the *Strategy for the Promotion of Formalisation in Latin America and the Caribbean (FORLAC 2.0)*, and guided by the ILO’s own global guidelines for decent work and socially responsible tourism. The strategy outlines nine core action pathways that combine targeted interventions: boosting productive development and support for MSMEs, upgrading workforce skills to expand quality employment opportunities, extending social protection coverage to all tourism workers, and strengthening enforcement of labor rights and regulatory compliance. These measures are complemented by additional actions to reinforce social dialogue between governments, employers and worker groups, advance gender-responsive policy that addresses unique barriers faced by women in tourism, improve national data collection on informal work, and deepen cross-regional collaboration to share solutions and best practices.
The ILO emphasizes that any successful strategy must account for the diverse realities across the tourism sector and across the five countries studied. Small subsistence-level tourism operators face vastly different barriers to formalization than growth-oriented businesses, and regulatory, economic and social conditions vary considerably between the five island nations. For this reason, the report calls for gradual, differentiated approaches that make formalization a viable outcome for both workers and enterprises, rather than a one-size-fits-all mandate, while still prioritizing gains in productivity and improvements to working conditions.
“Advancing formalisation in Caribbean tourism is not only a labour market priority; it is a development imperative,” noted Joni Musabayana, Director of the ILO Decent Work Team and Office for the Caribbean. “By turning evidence into action and strengthening tripartite cooperation, we can build a tourism sector that delivers decent work, greater resilience and sustainable development.”
Moving forward, the ILO will continue partnering with national governments, employers’ associations, and workers’ organizations to turn these policy recommendations into concrete, on-the-ground action. The end goal is to build more sustainable tourism enterprises, better protect workers from exploitation and income instability, create more resilient local communities, and ensure that long-term growth in the tourism sector translates to expanded opportunity and dignity for all workers across the region.
The study was developed under the umbrella of the FORLAC 2.0 initiative, with financial support provided by the European Union and the Spanish Agency for International Development Cooperation (AECID). It forms a core part of the ILO’s broader 2024–2030 regional strategy to deliver an integrated, coordinated response supporting the transition to formal employment across Latin America and the Caribbean. The strategy centers on context-specific, innovative policy solutions tailored to each nation’s unique economic and social landscape, with core objectives including boosting productivity, supporting sustainable enterprise growth, expanding formalization and decent work, and fostering cross-sector and cross-regional partnerships to advance integrated formalization policies across the region.









