Technical and vocational training key to improving global employment rates

Although priorities vary when it comes to economic development, the increasing need for skilled labour is both a cause of and a requirement for accelerated growth across markets. This demand for technical specialists is often most concentrated in the sectors that are vital to economic advancement, including infrastructure, oil and gas exploration and extraction, and value-add processes for agricultural commodities. Efforts to expand this expertise locally, rather than relying on international organisations or expatriate leadership, have come to the fore in recent years, both as part of individual country schemes and multinational efforts. As a result, markets around the world are using a range of strategies to overcome common challenges and align legal frameworks, policies, and education and training systems with industry needs.

Skills Mismatch

On average, global unemployment remains an ongoing challenge, particularly in developing economies. According to the “World Employment and Social Outlook: Trends 2018” report by the International Labour Organisation, the number of unemployed people around the world is expected to fall by 400,000 in 2018 to just over 192m, compared to an increase of 2.6m in 2017. The report credits the stabilisation of unemployment to growth in developed markets where numbers will dip to pre-crisis levels. Developing countries, on the other hand, will continue to see unemployment rise. Job creation is acknowledged as a global need by international entities like UNESCO, which estimates that at least 475m new jobs need to be created over the next decade to absorb the 73m currently unemployed youth population, as well as the influx of 40m new entrants to the labour market per year.

It is not the case that high unemployment rates result from a lack of jobs, but rather from the mismatch of market needs and skills that people bring to industries. A 2014 World Bank report on Ghana’s demand and supply of labour, for example, estimated that over 1m jobs could become available in the country’s booming construction sector between 2015 and 2020. However, this demand remains unmatched by the local supply, resulting in a deficit of 60,000-70,000 skilled workers.

Furthermore, required skill sets are constantly shifting as industries change more rapidly. The World Economic Forum reports that the top-10 skills required by companies will change between 2015 and 2020.

Practical Training

Technical and vocational education and training (TVET) programmes provide a solution to this mismatch, assuming they are directly linked to market needs. To this end, TVET provision is increasingly focused on apprentice-style training to prepare students for the work they will eventually do. This has been championed as the way forward by numerous international organisations. As noted in the 2017 Inter-American Development Bank report, “On-the-job training helps develop specific skills that can boost workers’ productivity. Thus, while preparedness is important, the intensity and quality of the training received in the workplace is crucial. This is even more true in a fast-changing world, where updating skills is the key to workers’ relevance and longevity.”

Markets like Nigeria have started working on improving the links between education and employment with the 2015 establishment of Vocational Enterprise Institutions (VEIs) and Innovation Enterprise Institutions (IEIs). These schools – 82 approved VEIs and 154 IEIs as of April 2018, according to the National Board of Technical Education – are directly partnered with businesses to provide tailored technical training.

Regulatory Environments

In addition to training, international knowledge transfer on technical subjects can be highly valuable, but can be made difficult by local content regulations that set quotas for the use of local staff and resources. According to a 2016 paper from the OECD, local content regulations can cause notable losses and inefficiencies. For example, when Ghana discovered offshore oil fields in 2007, there was a definite skill gap in the local market as Ghanaians were newcomers to the highly technical industry, making it difficult to adhere to regulations to locally staff many jobs. In the GCC, nationalisation policies that prioritise the bulk of jobs to citizens as opposed to foreigners have been adopted in Saudi Arabia, the UAE and Oman. This is intended to raise local employment, but these policies can result in high costs for private firms, as local salaries are usually higher than expatriate salaries, and training is often required for specific positions.

Some industry players are optimistic that a thoughtful revision of policies could achieve both objectives of increasing local employment while maintaining global competitiveness. Shahswar Al Balushi, CEO of the Oman Society of Contractors, explained this would involve revising local content policies to more realistic targets. “Obtaining a 30% Omanisation rate in a sector like construction that employs over 750,000 people means we would need to employ 225,000 Omanis in the sector alone, when the entire Omani workforce in the private sector is 230,000,” he told OBG. “The current reality is we stand below 8%, around 55,000, in the sector, so it would make more sense to establish a target of 10%, gradually going up to 15% by 2020.”

International knowledge transfer can also come from local employees who worked overseas and have returned to their home countries. For example, Mirna Arif, regional sales director in Cairo for Baker Hughes, a global oil field services company, explained that with Egypt’s recent oil and gas discoveries, Egyptian engineers who have gained highly technical expertise in the Gulf are returning to Egypt for work. “We have a huge labour pool and now we also have a lot of mid-career hires who bring exposure and experience from abroad to support the Egyptian industry,” she told OBG.

Universities provide another avenue to building globally competitive skill sets. Qatar, for example, relies on international consultants for deep technical expertise in the oil and gas business, according to Mike Bowman, who served as chair of the Petroleum Engineering Programme at Texas A&M University at Qatar from 2015 to 2017. “A next step could be using international campuses as vehicles to create that technical expertise by establishing PhD programmes that will make Qatar less dependent on external players,” he said.

Government-Led Efforts

Another positive trend in recent years has been for governments to incorporate TVET programmes into their national education and economic strategies, though the cross-cutting challenge of streamlining this public involvement remains. When too many departments or ministries become engaged, the OECD states this can “confuse students and employers, involve some duplication of tasks such as curriculum design, and complicate transitions”.

In Ghana, for example, aspects of TVET programming had been overseen by up to 18 different ministries, negatively affecting coordination. However, reporting to local press in August 2017, Ghana’s minister of education announced a plan to align all TVET provision solely under the Ministry of Education. Indeed, around the world there are various success stories with regard to government reforms that can serve as blueprints.

In South Africa the establishment of the Department of Higher Education and Training (DHET) in 2009 was a key step in integrating and consolidating TVET policy, according to the OECD. Rather than dividing responsibilities between the Department of Education and the Department of Labour, the DHET now bears responsibility for an integrated “post-school” system consisting of universities, colleges, the Sector Education and Training Authority, the National Skills Fund, and regulatory bodies that oversee quality.

Increased public investment in TVET programming is also being witnessed. The Asian Development Bank notes that many economically successful countries in Asia, including Singapore and South Korea, have invested public funds in skills development as a growth strategy, and others in the region are following suit. In Indonesia, for example, vocational training is increasingly seen as a way to tackle the skills shortage, particularly in manufacturing. Airlangga Hartarto, the minister of industry, told OBG, “Our main goal is to improve workers’ capabilities by developing technical skills through vocational training. The ministry is pushing for linkages between the needs of industrial development and the availability of education. Therefore, technical training and vocational schools are at the centre of our policy to develop our people’s capabilities, as well as push for new entrepreneurship. The ministry runs nine vocational schools, nine polytechnics and a community college.”

Rosan Roeslani, chairman of the Indonesian Chamber of Industry and Commerce (KADIN), has also observed this push. “The government has made one of its primary targets to boost vocational training education. If you look at the structure of Indonesian labour, out of 122m people, slightly more than 50% have an elementary school education, 21% have completed junior high school and about 19% have senior high school qualifications. Only 10-12% have a university background. Therefore, vocational training is important to improve workforce skills and increase competitiveness.”

Public-Private Partnerships

As highlighted by the World Economic Forum, the World Bank and markets with long-standing successful vocational training programmes, such as Germany and Austria, when government strategies directly align with and support the on-the-job training provided by private companies, economies have the most to gain. This model of cooperation is becoming more articulated around the globe.

“Both public and private institutions must collaborate, as the private sector alone should not be pushing reforms. The private sector should be responsible under the law for telling the government what work skills they require, similar to the annual consultations provided by the Sector Skills Councils in the UK,” Virachai Techavijit, the chairman and founder of the private Regent’s International School in Thailand, told OBG.

Efforts to reduce the supply-demand gap are under way. Governments, in conjunction with private companies, are working to equip graduates with skills to bring to the workplace. Promoting this cooperation and commitment will produce a stronger pool of talent to help economies grow throughout the 21st century.