52
Connecting skills development to productivity and employment growth in developing and developed countries
9.7 per cent on average and their employment rate increased by 5.7 per cent
(Gallart, 2008).
ɽ
Enable rural migrant workers to secure formal urban employment. This likewise
may require targeted interventions or support. In China, for example, assisting
workers to migrate from low-productivity informal rural work to formal work in
urban areas is one of the strategies for overcoming skills shortages and for reducing
rural poverty (box 2.11). In a separate approach, distance learning programmes, for
example education in English, computer programming, economics and
management, are being extended to rural informal economy workers in the more
poorly served areas (Wu, 2007).
Box 2.11
Training rural workers for formal urban jobs:
The Dew Drop Programme in China
In 2004, the Chinese Government launched the Dew Drop Programme, a combined
anti-poverty and skills training programme that encourages people from poor rural areas
to migrate to urban areas where skill shortages are acute. The stated goal, according to
the State Council Leading Group of Poverty Alleviation and Development, is to provide
free vocational training for 5 million young farmers and 200,000 older persons from poor
rural areas and help them to find jobs in cities during the 11th Five Year Plan (2006–
2010). Comprising skills training, modest subsidies and relocation assistance to urban
areas facing specific skills shortages, the Dew Drop Programme is part of a larger
ambitious government poverty reduction campaign. Government reports suggest that in
2006 the project budget included US$95 million for training, approximately 1.65 million
farmers, an increase of 29 per cent from 2005. Nearly 1.3 million of those trained went
on to find work in urban areas, furthering the programme’s objective to reduce both
urban labour shortages and rural poverty. Recent legislation, in particular the
Employment Protection Law, is intended to integrate the national labour market,
including providing vocational training for both laid-off urban workers and rural migrant
workers. Other efforts target improving working conditions so that jobs in labour-
intensive, export-oriented industries are more attractive to migrant workers. In Guangdon
Province, only 4.8 million out of 7.3 million vacancies were reported filled in 2007.
Source: State Council Leading Group Office of Poverty Alleviation and Development, China,
http://en.cpad.gov.cn.
114. In all these examples, the advantage of anchoring the outreach in national
vocational training institutions lies in the fact that their experience, human resources,
infrastructure and tripartite governance help to align training supply and demand. The
challenge for the training institutions is to adapt training to the needs of people with low
levels of education and scant employment experience. The goal is to equip them with the
skills and competencies needed in the smaller enterprises likely to hire them, while
instilling skills and the ability to learn that will, in turn, help these enterprises to adopt
newer technologies and become competitive in the formal economy.
115. Schemes for the recognition of prior learning (RPL) aim to open formal economy
jobs to those who have not had the advantage of formal vocational training. Prior
learning embraces all skills, no matter where or how they were acquired: at the
workplace, in the community, at home, through informal apprenticeships or “learning by
doing” in the formal or informal economy. Recognition means certification of skills on
the basis of standard qualification criteria. Certification is intended to help employers
more easily recognize the skills and competencies of job applicants and thus make it
easier for workers to compete for jobs in the formal economy.
45
51
Skills for improved productivity, employment growth and development
116. RPL has been particularly prominent in skills development in South Africa. The
country shares the characteristic of many developing countries in that the industrial and
technology-based economy thrives alongside a very large informal economy. A formal
RPL system was instigated by the Government to redress the legacy of apartheid by
recognizing the skills and learning of those who had been denied access to formal
education, training and employment (box 2.12). System reforms elsewhere that
emphasize a qualification-based approach and recognition of acquired vocational skills
are also expected to improve employment opportunities for those in the informal
economy.
Box 2.12
Recognition of prior learning (RPL) in South Africa
The South African Qualifications Authority (SAQA) has developed common
procedures and guidelines for the implementation of RPL within the National
Qualifications Framework. The comprehensive guidelines encompass assessment,
feedback and quality management systems and procedures. Industry “Sector Education
and Training Authorities” (SETAs) develop industry-specific plans (for example in the
tourism, hospitality and sport, health and welfare, construction, insurance, and
engineering sectors) to advise on RPL procedures, set skills verifications procedures
(including, when necessary, through observation rather than examination) and organize
provision of upgrading training. Some of these industries particularly target workers in
the informal economy. For example, RPL is directed towards the construction trades with
a large number of workers in informal work without certification to enable them to access
jobs that require qualifications. The system is expected to continue promoting lifelong
learning as well as job entry into the formal economy.
Source: Blom, 2006; SAQA, 2004; Dyson and Keating, 2005.
117. National qualifications frameworks (NQFs) comprise a comprehensive approach
for testing and certifying competencies and for appraising the effectiveness of different
training providers. Implementation of NQFs is proving to require large commitments –
to develop and, even more, to maintain them (such as keeping assessments abreast of
technologies). Some cautionary notes are emerging from researchers. “One of the newest
innovations, national qualifications frameworks, … is proving difficult to implement for
countries that have limited capacity. More limited competency-based systems appear
effective and more feasible” (Johanson and Adams, 2004, p. 5).
23
118. Small enterprise development (SED) efforts can directly support formalization as
part of strategies to promote productivity and decent work. For example, surveys of large
and small enterprises in Ghana, Kenya and Zimbabwe found a positive impact of all
SED support mechanisms on productivity, including workplace or outside training,
internal R&D, hiring expatriates, access to foreign buyers and suppliers and technology
transfer by means of technical assistance or licensing. Of these measures, employee
training had the greatest impact on productivity. The effects were relatively larger in
small enterprises where skill levels were lower (Biggs et al., 1996).
119. The experience in Ghana (described in box 2.13) and the following examples
highlight the importance of giving more attention to training, for both managers and
workers, in addition to other measures that promote formalization, such as access to
credit and product markets and improving the environment for sustainable enterprise.
23
For information about the challenges of implementing and maintaining such approaches, see the following
ILO working papers: Tuck, 2007; Young, 2005; and Dyson and Keating, 2005.
46
50
Connecting skills development to productivity and employment growth in developing and developed countries
ɽ
In Kenya, the Programme on product improvement and inter-firm linkages
between micro and formal enterprises developed by the Federation of Kenya
Employers helps informal operators to enter into subcontracting arrangements with
large enterprises, including applying the ILO’s Start and Improve Your Business
programme and other tools in the CD package Employers’ organizations and
enterprise development in the informal economy: Moving from informality to
formality (ILO, 2006m).
ɽ
In Peru, the Department of Micro and Small Enterprises of the Ministry of Labour
and Employment Promotion supports PRODAME (Programa de Autoempleo y
Microempresa) in providing free guidance and counselling services to individuals
who wish to create or formalize a small enterprise, and PROMPYME (Centro de
Promoción de la Pequeña y Micro Empresa) in helping small enterprises to raise
their productivity and competitiveness by accessing new markets, including public
procurement, a market available only to formal registered enterprises (ILO, 2005j).
ɽ
In South Africa, the National Productivity Institute provides education and training
to small-business owners to help them improve their productivity by becoming
formal businesses, in particular in learning to follow regulations on production
processes, minimum wages, insurance, labour regulations, etc. (National
Productivity Institute, 2003, cited in ILO, 2005a, p. 109).
Box 2.13
A decentralized pro-poor strategy to upgrade
the informal economy in Ghana
In Ghana, the policy to promote pro-poor growth focuses on upgrading the informal
economy by expanding opportunities for decent work. The work pilot tested in two
districts through partnership between the Ministry for Manpower, Youth and
Employment, the Trade Union Congress of Ghana, the Ghana Employers’ Association
and the ILO under the Ghana Decent Work Pilot Programme established local
institutions for social dialogue, bringing together local government, elected assembly
officials and representatives of small enterprise associations. Statutory subcommittees of
the District Assemblies for Productive and Gainful Employment draw up and implement
local economic development plans that are helping hundreds of small local enterprises to
upgrade their business and expand into the formal economy. The partnership between
the private and the public sector removes constraints on growth through investments in
infrastructure, training and other factors. The small business associations encourage
members to join the national health insurance scheme and pension fund. The
subcommittees have initiated “decent work savings and credit unions” that bolster
economic stability as well as mobilizing capital for investment. Voice, organization and
local social dialogue have led to improvements in governance and conflict resolution and
generated local tax revenue, providing additional fiscal resources for investments in
infrastructure and training that further encourage growth and improved working
conditions. The training manual for small business associations in Ghana was developed
jointly by the Informal Sector Desk of the Trade Union Congress of Ghana, the training
unit of the Ghana Employers’ Association and two national providers of business
services to small and medium enterprises.
Source: www.ilo.org/led, van Empel, 2007.
47
32
Skills for improved productivity, employment growth and development
2.4. Least developed countries
2.4.1. Low productivity and education and persistent working poverty
120. The LDCs comprise some 50 countries in the world (as listed in the annex to this
chapter; for distinctions between “developing” and “least developed”, see footnote 15).
Two-thirds are in sub-Saharan Africa and many others are in Asia. There are also many
least developed small island countries. Recent developments in these countries underline
the fact that low skills, low productivity and working poverty reinforce one another in a
vicious circle.
121. A distinctive characteristic of the poorest countries is a generally low level of
education. As discussed in Chapter 4, only one fifth of boys and girls of secondary-
school age in sub-Saharan Africa actually attend school (UNICEF, 2007). This is exactly
half the average attendance rate worldwide.
122. Data availability is particularly poor for examining the relationships between
productivity, skills and employment. Comparable data to measure changes over the last
decade in all three of these categories is available for only a dozen countries. Across this
small sample, poverty remains high, with 48 per cent of workers on average living on
less than US$1 per day. The literacy rate on average across these dozen countries is
52 per cent of the population over the age of 15. Given that statistics are generally
available for better-off countries, there is reason to assume that the actual situation
across the entire set of LDCs is more sobering still.
123. The good news is that average growth in productivity was high among the
countries in this sample – 31 per cent from 1995 to 2005 – and productivity growth
appears to be correlated with a decreasing share of working poor (figure 2.8). However,
with such a narrow education base, only a small proportion of the potential workforce is
able to take advantage of any opportunities for higher productive work in newer
technologies or service sectors. Poorly educated and without marketable skills, most of
the labour force cannot find decent and productive jobs in the formal economy. In
sub-Saharan Africa 75 per cent of workers earn a living in the informal economy.
Income earned from informal economic activity is too low to lift more than a minority of
them out of poverty.
48
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69
Connecting skills development to productivity and employment growth in developing and developed countries
Figure 2.8. Least developed countries: Changes in productivity and numbers
of working poor (at US$1 per day), selected countries
Burkina Faso
Ethiopia
Madagascar
Malawi
Mozambique
Senegal
United Rep. of Tanzania
Yemen
Mali
Uganda
Zambia
Cambodia
-50
-40
-30
-20
-10
0
10
20
30
40
-10
0
10
20
30
40
50
60
70
80
90
Productivity growth 1995-2005 (% change)
Change in share of working poor
(% change 1995-2005)
Source: ILO, 2007a; ILO, 2007o.
2.4.2. Policy priorities: Improving training quality and availability
124. Education and training systems in LDCs have many weaknesses and are not yet, in
general, assets in terms of achieving development goals. Educational output is often
distorted, favouring academic non-technical qualifications, while vocational, technical
and employability skills training that could open up labour market opportunities is in
short supply. Many young people tend to consider vocational and technical training to be
a second-class choice for a career.
125. LDCs need to confront the following twin challenges in broadening coverage and
improving the quality of skills training so as to improve productivity and promote
income growth:
ɽ
first, to raise the productivity of women and men in the informal economy, where
most young people, women and entrepreneurs work today; and
ɽ
second, to reform education and training systems so that they provide the skills and
competencies that will be needed to boost the growth of decent work in the formal
economy.
126. A recent study by the African Union identified specific areas of skills development
that were considered crucial for economic and social development in Africa
.
. In two
priority areas, agriculture and rural development, and indigenous and cottage industries,
the emphasis is on upgrading traditional and informal skill acquisition systems (African
Union, 2007). The ILO’s 11th African Regional Meeting (Addis Ababa, April 2007)
concluded that African member States should enact strategies that include “…
(re)training opportunities for the working poor, especially young people and women,
with the aim of ensuring that half of Africa’s workforce has obtained new or improved
skills by 2015” (ILO, 2007c).
49
50
Skills for improved productivity, employment growth and development
127. Many governments have recently designed policies that emphasize training for
workers in the informal economy. Policies in Senegal give priority to vocational training
for small producers and the self-employed. In Benin, government technical schools now
provide skills training to informal sector master craftspersons and apprentices. Zambia’s
training policies are largely focused on raising skills for the informal economy. Some
initiatives endeavour to improve the links between formal training institutions and
informal sector workers and entrepreneurs.
128. Many financial and non-financial barriers have to be overcome in order to increase
the access of the poor to training. These barriers include opportunity costs of training
time in terms of livelihood, high entry requirements or high fees for training courses and
social factors that often put pressure on women to enter training that only gives them
access to low-productivity jobs. Women face obstacles in upgrading their work or
receiving training because of the unpaid work they are expected to do within the
household. Unpaid household work may help other household members to participate in
training and higher level paid employment, but leaves women with less time to expand
their business and improve their productivity. Box 2.14 summarizes some general
lessons learned from numerous small-scale projects and larger programmes that have
successfully overcome these barriers.
Box 2.14
Improving the access of the poor to training: Lessons learned
Reduce financial entry barriers: governments should fund specific poverty targeted
interventions for the poor to facilitate access to mainstream (formal) skills training.
Lower the non-financial access barriers to formal courses, and/or provide additional
assistance to the poor to overcome them, for example by addressing their lack of formal
educational background, before they undertake skills training.
Develop skills development strategies for disadvantaged groups: rural groups,
specific categories of women, young women and men, those working in the informal
economy, and men and women with disabilities.
Develop special facilities that respond to difficult personal circumstances (in
terms, for example, timing, location or training methodology).
Avoid training the poor (and especially poor women) in traditional trade areas so
that they are not marginalized further; train them instead for businesses using new
technologies (such as mobile phone repair) and train women in traditionally male
occupations. Long and sustained efforts of advocacy and awareness raising at the
community and institutional level are often required to help build public support for new
economic roles of women.
Support financially informal apprenticeship training (elaborated below).
Source: Palmer, 2007.
129. Illiteracy puts formal training out of reach for many people in the informal
economy, including for apprentices and master craftspersons. The success of combining
literacy training with livelihood training has been demonstrated by many programmes,
such as the Society for the Development of Textile Fibres in Senegal, the Tangail
Infrastructure Development Project in Bangladesh and the Somaliland Education
Initiative for Girls and Young Men (Oxenham, 2002).
130. In the United Republic of Tanzania, the Vocational Education and Training
Authority has designed and tested an integrated training programme comprising literacy,
technical and managerial training, as literacy is an important precondition for effective
skills training. Trainees are linked with credit and business development providers. An
50
56
Connecting skills development to productivity and employment growth in developing and developed countries
evaluation found that the quality of the products and services produced by the trainees
improved and sales and profits increased (Johanson and Adams, 2004).
131. Informal apprenticeships can improve training and productivity outcomes.
Informal apprenticeships are a major supplier of skills and training for work in the
informal economy. However, the quality of training is often low as the theoretical
foundations of a trade are lacking and technology is rudimentary. In many LDCs,
numerous initiatives endeavour to upgrade apprenticeship training in view of its
potential to raise productivity and employability. Some efforts have been piecemeal but
others have taken a comprehensive approach (Nübler, 2008a).
132. In Benin, the Artisans’ Support Office (Bureau d’appui aux artisans) seeks to
complete the training of apprentices by working with various trade associations. The
Bureau links master craftspersons and apprentices who are trade association members to
reputable public or private sector training providers for complementary training. It
finances the programmes and acts as a technical adviser. The trade associations
implement and supervise the training, develop new training modules, participate in
trainee selection, negotiate instructors’ fees, monitor apprentices’ attendance,
co-organize tests at the end of the training and participate in programme evaluation. The
concept of complementary apprentice training was new to the master craftspersons, and
advocacy and information efforts were needed to secure their participation. Other
success factors include investing in upgraded equipment and teacher training (Johanson
and Adams, 2004).
133. Making informal apprenticeships more effective requires an integrated strategy,
comprising the following elements:
ɽ
Improving the image of apprenticeship training by means of general awareness-
raising campaigns about its role and opportunities, including in primary and
secondary schools.
ɽ
Conducting market surveys to determine trades and skills that have market
potential and the complementary support needed.
ɽ
Assisting the poor in financing apprenticeship when households cannot afford
apprenticeship fees and costs of tools and equipment.
ɽ
Improving quality and relevance of skills training, e.g. by complementing training
on the job with theoretical training or by providing master craftspersons in informal
apprenticeships with technical, entrepreneurial and pedagogical skills.
ɽ
Combining skills training with development of literacy and numeracy for
apprentices without sufficient basic education.
ɽ
Upgrading the skills of master craftspersons, as improving their skills will translate
into better or more relevant skills for their apprentices.
ɽ
Developing national schemes for the recognition of skills through the assessment
and certification of skills, whether or not they were acquired in the informal or
formal apprenticeship system.
ɽ
Providing post-training support for graduates through job-matching employment
services or access to microfinance and other support for self-employment.
ɽ
Encouraging young women to enter apprenticeships. If apprenticeships are to
provide equitable and high-quality training for young men and women, efforts are
needed to improve understanding of occupational segregation and find ways in
51
46
Skills for improved productivity, employment growth and development
which apprenticeships can help to overcome barriers to young women entering
non-traditional fields of work.
24
134. Formal public training systems in LDCs face problems of relevance, quality and
equity.
ɽ
Formal TVET systems fail to deliver skills for existing jobs.
ɽ
The quality of training has deteriorated as budget cuts have curtailed investments in
facilities, equipment and staff salaries.
ɽ
Equity in access to education and training is a critical problem in LDCs. Women
and girls are under-represented in vocational education and training, in some
countries making up only a small fraction of enrolments and often ending up in
occupational streams traditionally reserved for women, like hairdressing and
secretarial work.
135. New policies and delivery systems have been introduced by many LDCs to address
these problems, many of which centre on coordination and partnerships with the private
sector. For example, Malawi, United Republic of Tanzania and Zambia have established
national consultative or coordinating bodies (national training authorities) that advocate
partnership as a means of improving efficiency in the use of public money by making
vocational education and training more responsive to the job market. Structuring the
relationship between the training system, employers and trade unions is a major feature
of national training authorities (Johanson and Adams, 2004).
136. Delivery of education and training has been another area of innovation, generally
focused on introducing dual training programmes (combining institution-based education
and training with enterprise-based instruction), competency-based training, expanded
training services and distance teaching. Putting competency-based training into operation
is a complex process, involving the development of job analysis-based standards,
preparation of new modular course materials and design of new assessment methods and
performance tests. It puts pressure on instructors and institution managers to deliver
these skills and raises expectation of employers’ involvement.
137. In recent years, there has been much policy and programme development activity
to encourage enterprises to expand workplace learning, while improving the quality of
training. In a number of French-speaking African countries (for example, Benin, Burkina
Faso, Chad, Côte d’Ivoire, Guinea, Mali, Niger, Senegal and Togo) training funds have
been established. The funds are primarily fed by money collected in enterprises (a
certain percentage of their payroll). The funds finance employee training within or
outside the enterprise and constitute the embryo of these countries’ emerging systems of
lifelong learning. Box 2.15 illustrates the rationale and operations of Senegal’s Fonds de
développement de l’enseignement technique et de la formation professionnelle
(FONDEF).
24
See ILO, 2005e.
52
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Connecting skills development to productivity and employment growth in developing and developed countries
Box 2.15
Senegal: Fonds de développement de l’enseignement
technique et de la formation professionnelle (FONDEF)
FONDEF is an autonomous organization that finances the bulk of continuous
training and lifelong learning in enterprises. FONDEF receives money from the State and
from enterprise contributions (based on a payroll levy). Its aim is to sharpen enterprise
staff skills and create a real market for continuous training. Enterprises pay 25 per cent
of the training costs. FONDEF finances training in all types of economic activity, supports
training plans of public and private sector enterprises and training programmes agreed
upon by sector and branch organizations and groups of enterprises. FONDEF’s
contributions can amount to a maximum of 75 per cent of total training costs. Once a
selection committee (consisting of representatives of FONDEF’s administration and the
social partners) has approved a training plan, the training is contracted to one or more
private or public training providers (at present 130) accredited by FONDEF. In almost
three years (2004–06) FONDEF financed training in 106 enterprises for nearly 7,000
staff. Small and medium-sized enterprises accounted for 52 per cent of the requests for
financing training, while 31 per cent of such requests came from large enterprises. The
banking and financial sector and industry (textiles, food) were among the major
beneficiaries. There were few beneficiaries among very small enterprises.
Source: World Bank, 2007a.
138. Training by itself does not create jobs, nor does it necessarily raise productivity in
the informal economy. These objectives can best be achieved in an economic and labour
market environment that supports the development and use of skills and the
formalization of informal activities. For example, the participants of the 11th African
Regional Meeting agreed that strategies to escape the informal economy trap should
integrate, among other things, “policies for the increased registration of informal
businesses, skills development, improved and safer working conditions, the extension of
social protection coverage and the encouragement of freely chosen associations of
informal economy workers and employers” (ILO, 2007c, p. 9).
53
205
Skills for improved productivity, employment growth and development
54
Annex
Country groups
High-income OECD countries
Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Greece
Iceland
Ireland
Italy
Japan
Korea, Rep. of
Luxembourg
Netherlands
New Zealand
Norway
Portugal
Spain
Sweden
Switzerland
United Kingdom
United States
(24 countries or areas)
Central and Eastern Europe
and the Commonwealth of
Independent States (CIS)
Albania
Armenia
Azerbaijan
Belarus
Bosnia and Herzegovina
Bulgaria
Croatia
Czech Republic
Estonia
Georgia
Hungary
Kazakhstan
Kyrgyzstan
Latvia
Lithuania
The Former Yugoslav
Rep. of Macedonia
Moldova, Rep. of
Montenegro
Poland
Romania
Russian Federation
Serbia
Slovakia
Slovenia
Tajikistan
Turkmenistan
Ukraine
Uzbekistan
(28 countries or areas)
Developing countries
Algeria
Antigua and Barbuda
Argentina
Bahamas
Bahrain
Barbados
Belize
Bolivia
Botswana
Brazil
Brunei Darussalam
Cameroon
Chile
China
Colombia
Congo
Costa Rica
Côte d’Ivoire
Cuba
Cyprus
Dominica
Dominican Republic
Ecuador
Egypt
El Salvador
Fiji
Gabon
Ghana
Grenada
Guatemala
Guyana
Honduras
Hong Kong (China)
India
Indonesia
Iran, Islamic Rep. of
Iraq
Jamaica
Jordan
Kenya
Korea, Dem. Rep of
Kuwait
Lebanon
Libyan Arab Jamahiriya
Malaysia
Marshall Islands
Mauritius
Mexico
Micronesia, Fed. Sts.
Mongolia
Morocco
Namibia
Nauru
Nicaragua
Nigeria
Oman
Pakistan
Palau
Panama
Papua New Guinea
Paraguay
Peru
Philippines
Qatar
Saint Kitts and Nevis
Saint Lucia
Saint Vincent and the
Grenadines
Saudi Arabia
Seychelles
Singapore
South Africa
Sri Lanka
Suriname
Swaziland
Syrian Arab Republic
Thailand
Tonga
Trinidad and Tobago
Tunisia
Turkey
United Arab Emirates
Uruguay
Venezuela, Bolivarian Rep. of
Viet Nam
West Bank and Gaza Strip
Zimbabwe
(89 countries and areas)
Least developed countries
Afghanistan
Angola
Bangladesh
Benin
Bhutan
Burkina Faso
Burundi
Cambodia
Cape Verde
Central African Republic
Chad
Comoros
Congo, Dem. Rep. of the
Djibouti
Equatorial Guinea
Eritrea
Ethiopia
Gambia
Guinea
Guinea-Bissau
Haiti
Kiribati
Lao PDR
Lesotho
Liberia
Madagascar
Malawi
Maldives
Mali
Mauritania
Mozambique
Myanmar
Nepal
Niger
Rwanda
Samoa (Western)
Sao Tomé and Principe
Senegal
Sierra Leone
Solomon Islands
Somalia
Sudan
Tanzania, United Republic of
Timor-Leste
Togo
Tuvalu
Uganda
Vanuatu
Yemen
Zambia
(50 countries and areas)
Source: UNDP, 2006.
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