Technical and vocational training key to improving employment rates around the world

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 schemes and multinational efforts.

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. Developing countries, however, will continue to see unemployment rise. Job creation is acknowledged as a global need by international bodies like UNESCO, which estimates that at least 475m new jobs need to be created over the next decade to absorb the 73m currently unemployed young people, as well as the 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. 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 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 can provide a solution to this mismatch. To this end, TVET provision is increasingly focused on apprentice-style training to prepare students for the work they will eventually do.

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. This is intended to raise local employment, but these policies can result in high costs for 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 setting 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 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. 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, though 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.

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 have invested public funds in skills development as a growth strategy. 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. Therefore, technical training and vocational schools are at the centre of our policy to develop our people’s capabilities. The ministry runs nine vocational schools, nine polytechnics and a community college.”

Rosan Roeslani, chairman of the Indonesian Chamber of Industry and Commerce, has also observed this push. “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 key to improving workforce skills and competitiveness.”

Public-Private Partnerships

Successful vocational training programmes, such as those in Germany and Austria, show that economies have the most to gain when government strategies directly align with the private sector. This model of cooperation is becoming the global norm. “Both public and private institutions must collaborate. The private sector should be responsible for telling the state what work skills they require,” 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.