How can we close the industrial skills gap?

Technical education and vocational training lie at the heart of sustainable development, with direct links to at least four1 of the 17 Sustainable Development Goals (SDGs), and have an indirect impact on other SDGs. The challenges in this regard are daunting. In the Middle East and North Africa, for example, 31 per cent of young adults are unemployed; 30 per cent of them have a university degree. This points to a mismatch between the supply and demand for specific skills rather than a lack of education per se. In South Africa, the unemployment rate among young graduates is rising faster than for the nation as a whole (see figure below).2 

Women in the Middle East and North Africa are three times more likely than men to be unemployed, despite similar rates of educational participation and attainment.3 The International Labour Organization (ILO) calls for mutually reinforcing industrial policy and skills development policies. Taken together with the profound transformations engendered by the Fourth Industrial Revolution and the evolving preferences of the millennial generation, there is a strong case for seeking new approaches to equipping the young workforce for the industries of the future.

Why Public Private Development Partnerships (PPDPs)?

In recent years, foreign direct investment (FDI) has played a more important role than official development assistance (ODA), pointing to an increasing involvement of private business and investment in development partnerships. Accordingly, private public partnership (PPP) models have assumed prominence in vocational training, with an emphasis on financial sustainability. The distinguishing factor for public private development partnerships (PPDPs) is the addition of social inclusion (e.g. of women or indigenous populations) and environmental sustainability (such as proper disposal of toxic waste) as outcomes of interest. For a PPDP to be successful, it has to generate benefits for all parties involved. In the case of PPDPs that promote skills development, the public sector gains through the development of the country’s economy, companies acquire a pool of adequately skilled labour to grow their business, and poverty declines as a result of improved employability and higher earning potential.

A typical PPDP industrial skills development project consists of several steps or work packages, including constructing and equipping training centres, developing curricula and training the trainers, delivering courses and providing different forms of employment support. Each stage benefits from a combination of actors – for example, the private sector ensures that the curricula and technologies are up-to-date and meet local industry standards. Similarly, the development partner ensures social inclusion and global linkages, while the host country identifies target populations and contributes staff time.

Although data is still emerging, a sample of small-scale project outcomes suggest substantial impacts across various indicators. Among this sample of interventions, between 88 per cent and 99 per cent of participants were satisfied with the training, 50 per cent to 95 per cent found jobs after graduating, and between 30 per cent and 70 per cent reported higher earnings than at the time of enrolment. Early indications are therefore in favour of this partnered approach to building industrial skills with the aim of achieving economic and social outcomes. Although PPDP projects are characterized by some ‘typical’ features, each initiative needs to be informed by the specific context, and—given the nature of these partnerships—social indicators are of particular salience. Each country should implement an individualized distinct strategy to address the specific challenges it faces. This, in particular, highlights the local development partner’s role in designing the intervention that best taps into community strengths and regional economic opportunities.

Scaling up the PPDP model

Scaling up PPDPs to accelerate the progress towards achieving the SDGs is fraught with challenges as described above. Instead of designing a project, a distinctive methodology for PPDP initiatives should be developed to help smooth out and further improve the results across different contexts, time scales and industrial sectors. One promising option is the Market Systems Development (MSD) approach, which, as the name suggests, analyses broader market conditions and the underlying systemic constraints to identify the context of beneficiaries. This, in turn, feeds into strategies that modify the incentives and behaviours of actors throughout the market system to strengthen its long-term productiveness, inclusiveness and resilience at scale.4 In addition to an initial analysis, MSD also promotes ongoing experimentation, monitoring and adjustments to account for changes in the market system, as well as the incorporation of new insights as they emerge. Applied to PPDP interventions, any vocational training project should start with an analysis of key market failures to build a more robust basis for the selection of participants, partners and programmes, to reduce start-up costs and maximize the intervention’s change in scale and long-term sustainability.

For example, understanding the specific conditions of South Africa’s education sector and labour market, the Forest Sector Education and Training for Green Employment PPDP project specifically targeted women for enrolment in the industrial skills development initiative. By designing the course’s content and delivery with a focus on women, an enrolment rate of 73 per cent was achieved (compared with a global average of only 2 per cent in similar programmes). The PPDP project of the Zambian Industrial Training Academy (ZAMITA) demonstrated the importance of female role models in increasing gender parity. The project started with a female enrolment rate of less than 1 per cent annually. After conducting awareness campaigns in local schools, social media, various advertisement channels and selected public locations highlighting success stories among the alumnae, the enrolment rate of women rose to 13 per cent in subsequent years.

Conclusion

Unlocking the manufacturing sector’s potential in developing countries hinges on a number of enabling factors, not least on the availability of a workforce with the appropriate skills and education. Yet an increasingly automated workplace calls for a new skill set. Future industrial workers will need to be more creative, flexible and possess technological know-how to thrive in the new reality. This necessitates a complete overhaul of vocational training, not just a simple upgrade of existing skills.

Such an overhaul can only be achieved through integrated industrial and educational policies and investments in technology and skills under a single coordinated strategy. Bringing public, private and development actors together means that the strengths of each stakeholder can be drawn upon to identify needs, determine priorities and leverage funding in support of joint outcomes. Encouraging PPDPs to take an MSD-based approach allows them to tackle the underlying challenges currently limiting industrial growth in many countries, and to help them create a more inclusive and sustainable manufacturing sector.