By Catherine Ramos | Wednesday, 25 November 2015
This article was originally published on Asia Pathways, the blog of the Asian Development Bank Institute.
Education and skills are important policy levers for sustainable socioeconomic growth. With the right economic fundamentals, a highly educated population with the appropriate skills is a powerful tool for economies to move from the low-income to the middle-income status, or for those already in the middle-income category to avoid the middle-income trap and move to the high-income category. Skills shortages are a pressing issue as they limit the growth of output in the short term and limit the possibility for diversification and innovation in the long term. At the individual level, under-education or a lack of skills can undermine wages and career prospects. Mismatch—an undersupply of skills in some areas but an oversupply in others—signals a lack of efficient use of resources and also affects the employment opportunities of graduates in oversupplied areas.
Making skills work
While much progress has been made in the last decades, many countries in Asia are still struggling to respond to the need for the skills required for competitiveness, productivity, and jobs. Countries such as the Philippines, Malaysia, Indonesia, Thailand, and Viet Nam have crafted policies to address the skills issues, but are still found wanting mainly due to implementation issues, and perhaps still being in the midst of implementing the major policies. The identified major sources of the skills issues are driven by factors that include:
- capacity constraints in both human capacity (not enough numbers of highly qualified teachers or trainers) and physical capacity (lack of infrastructure, outdated curricula, pedagogy, and training materials);
- weak coordination in the system to link skills supply and demand, or limited involvement of employers and social partners in the provision of relevant training; and
- a lack of reliable and readily accessible labor market information.
Making skills work for the economy requires cooperation and support from various stakeholders, such as employers, schools, universities, students, and parents. As the World Bank’s Vietnam Development Report argues, “Firms and universities need to build close partnerships. Parents need to become more involved in their children’s schooling. Students need to expose themselves to the world of work even prior to their graduation. In rural areas, all parties need to ensure that children from disadvantaged backgrounds have the opportunity to meet their full potential. The role of government is to facilitate this change in behavior by helping to ensure a better information flow between all the actors, to address capacity constraints including financing capacity, and to set the right incentives by freeing up universities to partner more effectively with businesses” (World Bank 2013: 9).
What are good jobs?
The concerns and efforts related to skills and employability all over the world only show how important it is to be prepared for jobs and how jobs are important to development. In fact, research shows that income from work is the greatest contributor to poverty reduction (World Bank 2012, 2014). Increasing income from work is what matters in escaping poverty (World Bank 2012), as there are still many workers, especially in developing countries, who are considered working poor. The World Economic Forum Global Agenda Council on Employment confirms, “job creation is key to tackling high and increasingly persistent unemployment in many countries. However, promoting jobs without paying due attention to their quality and to the skills required may only buy time and ultimately prolong the crisis” (World Economic Forum 2014: 5). Good jobs, through sufficient earnings and other benefits, affect who we are, our well-being, expansion of our choices, social identity, networks, and sense of fairness; and through these outcomes, jobs become conduits for higher income and economy-wide productivity, and enhanced social cohesion (World Bank 2012, 2014).
The World Development Report 2013: Jobs (World Bank 2012) has indicated that good jobs for development are not the same everywhere, as they depend on the level of economic development of the country. As such, for agrarian economies, such as Thailand and Viet Nam, good jobs mean more productive small-holder farming and urban jobs that are connected to global markets. For urbanizing economies (e.g., Indonesia, Malaysia, and the Philippines), good jobs mean jobs that provide opportunities for women, jobs that move the country to the export ladder, jobs that do not lead to excessive congestion, and jobs that integrate rural migrants. For countries with high youth unemployment (e.g., Tunisia), good jobs mean jobs that are not allocated on the basis of connections or special privileges. For countries that are formalizing (e.g., Malaysia and Viet Nam), good jobs mean jobs with affordable social benefits, and jobs that do not create gaps in social protection coverage. For aging economies (e.g., Indonesia, Thailand, and Viet Nam), good jobs mean jobs that keep the skilled active for longer and jobs that reduce the cost of services to the elderly.
Other context for skills strategy and good jobs creation
In addition to the economy, other socioeconomic details need to be considered. For example, as the path to prosperity in agrarian economies comes through higher productivity of small-holder farming (via access to important production resources), access to non-farm opportunities, and migration of family members, the skills strategy for those living in rural areas needs to include, in addition to farming-related skills, skills improvement in entrepreneurship and personal development for non-farm employment and for better emigration prospects. Another context to consider is the source of job creation. For example, surveys show that small and medium-sized enterprises account for most employment creation in East Asia and the Pacific (Packard and Nguyen 2014). However, the lack of strong growth and further employment prospects is an issue and it is worth researching on how education, skills, and economic strategies would be able to support small and medium-sized enterprises in sustaining their contribution to the economy and in creating good jobs.
Catherine Ramos is Research Manager at the HEAD Foundation. Her research area focuses on skills and employability.
Packard, T. G., and T. V. Nguyen. 2014. East Asia Pacific At Work: Employment, Enterprise, and Well-being. Washington, DC: World Bank.
World Bank. 2012. World Development Report 2013: Jobs. Washington, DC: World Bank.
World Bank. 2013. Skilling up Vietnam: Preparing the Workforce for a Modern Market Economy. Vietnam Development Report 2014. Washington, DC: World Bank.
World Economic Forum. 2014. Matching Skills and Labour Market Needs: Building Social Partnerships for Better Skills and Better Jobs. Davos-Klosters, Switzerland: World Economic Forum.
Photo: By Evan Blaser (24) [CC BY 2.0], via Wikimedia Commons