Bridging the Skill Gaps: Role of Education and On-the- Job Training

Photo credit: NSDC

Are “greater investment in education and training a prerequisite for employability, or can skills be built through jobs?” This question has become quite pertinent in the context of the job market where available skills are not fitting in well with the demands of the economy. The possible approaches to tackle this challenge are explored in the World Development Report, 2013. 
                                                                              

Skill mismatches are arguably growing rather than shrinking. Today, more than one-tenth of 15 to 24 year olds worldwide are functionally illiterate. Without numeracy and literacy skills, the prospects of improving employment opportunities and earnings, whether in agriculture or in urban settings, are thin.

Employment opportunities are seen to increase the demand for education, which systems then have to meet. Often privilege in access to jobs distorts the signals. It hurts and discourages, rather than encourages, the building of skills. Thus policy interventions should focus on ensuring that signals are adequately transmitted and incentives are provided to continue skill accumulation by the young and those of working age alike. In India, informing rural women about job opportunities led to increased schooling for girls and delayed marriage and childbearing for women. 

The report points out that though the straightforward response to skill mismatches would be for private firms or individuals to upgrade skills through further education or training—but several factors act as constraints like the market constraints. For example, lack of information about employment opportunities, transportation costs, or housing market failures may be the real reasons why workers do not take available jobs. Small firms and farms seldom have the necessary funds for training and education.

Institutional failures often end up replacing market failures. But many countries are trying to create oversight entities, to separate quality control and management of providers from financing. In India, the National Skills Development Strategy is based on the principle that the institutions in charge of training, certification, and accreditation should be strictly separated. On the negative side, scattered responsibilities across many Central Ministries, distance from the private sector and slow response to rapidly changing skill needs are some of the problems which continue to plague such systems.

The report emphasises that just as skills are important for jobs, the reverse is true as well. Many technical and social skills can be built through experience in the workplace. Apprenticeship programs, fostering the integration of education and learning through jobs, exist in various shapes around the world. The report suggests that informal apprenticeship can be strengthened through its gradual integration into national training systems. In France, Germany, and the Netherlands has a dual system credited with fast and structured employment integration. “But the dual system requires more than the right economic incentives—it is based on a social contract between employers, trade unions, and government.” Private sector commitment, including financing of training and continuation even in times of economic downturns, is fundamental. 

On-the-job training is consistently found to go hand-in-hand with higher labour earnings and productivity increases, even more so in developing than in industrial countries. But only a fraction of workers have access to it; those with less education and those working in smaller and informal enterprises seldom have the opportunity to benefit from training. Inequitable access and poor quality are key constraints in many countries and the reach of Technical and vocational education in rural areas is often very limited. 

In countries like Korea, industrial projections of manpower supply have taken a backseat to the country’s new initiatives emphasizing quality and relevance of education and skills development. The Korea University of Technology and Education (KUT) established the Bridge Model, a three-way partnership involving a single major enterprise and clusters of small and medium enterprises (SMEs) that serve as its main subcontractors. The major enterprise contributes technical knowledge, the SMEs bring in the employees to be trained, and the University supplies the teaching facilities and content.

Today the focus is gradually shifting from merely ensuring an adequate supply of skills to delivering demand-responsive, quality- skills development programs.