Events in the international community

G8 Labour and Employment Ministers Conference

Montreal, Canada, 25-27 April 2002

ILO discussion paper

Learning and training for productivity and decent work:
Challenges for skills development in the 21st Century

Discussion paper by Juan Somavia,
Director-General of the
International Labour Organization

"A critical challenge that faces human society at the start of the twenty-first century is to attain full employment and sustained economic growth in the global economy and social inclusivity. The ILO's framework of decent work addresses both the quality and quantity of employment and provides a basis for new education and training policies and strategies. Human resources development, education and training contribute significantly to promoting the interests of individuals, enterprises, economy and society." (Conclusions concerning human resources training and development, International Labour Conference 2000, para. 1)

Introduction

G8 Labour and Employment Ministers are leaders in their own countries and on the global stage in the search for continuous improvement in the way society organizes for investment in skills development. This paper discusses the key challenges Ministers face in giving momentum to public and private decisions both at the national and international levels which will determine whether systems for learning and training keep pace with, and if possible anticipate, the demand for skills in a globalizing world. It opens by summarizing the scale of the global challenges before attempting to relate this to developments in a variety of countries, including G8 members, and draw out common themes. The paper concludes by highlighting a number of issues for discussion aimed at identifying priorities for action.

The world community has set itself the ambitious target to halve by 2015 the number of people living in extreme poverty, defined as $1 a day or less. The central challenge is to provide decent work for people everywhere in conditions of equity, security, and human dignity. Employment is fundamental to this challenge and yet the present reality glaringly reveals that being at work alone is not enough to provide satisfactory employment. There were 160 million unemployed people at the outset of this decade. This is indeed a loss of human potential. But most of the 1.2 billion people currently living in extreme poverty are supported by 530 million family members who do have work. They are the working poor who are engaged in low-productivity, low-paying work that is inadequate to raise themselves and their families out of poverty. An additional almost 300 million people in the world do not have enough work: they are underemployed, and would work more if they had the opportunity. Taken together, a third of the world's labour force of 3 billion people cannot obtain the material rewards from work which they need and to which they aspire. These facts, combined with the expectation that in the next ten years there will be an additional 500 million more people in the world's labour force create a daunting challenge for employment creation and development. In facing up to this challenge, learning, training and skills development play a crucial role. Knowledge and skills are the engine of economic growth and social development.

Human resources development, education and training contribute significantly to promoting the interests of individuals, enterprises, economy and society. By helping individuals become employable and informed citizens, human resources development and training stimulate economic development, full employment and social inclusion. They also help individuals to gain access to decent work and good jobs, and escape poverty and marginalization. Education and skills formation contributes to less unemployment and to greater equity in employment. The economy and society at large, like individuals and enterprises, benefit from human resources development and training. The economy becomes more productive, innovative and competitive through the existence of more skilled human potential. Human resources development and training also underpin the fundamental values of society - equity, justice, gender equality, non-discrimination, social responsibility, and participation. In order to be effective, education and training must form a integral part of a comprehensive set of economic, labour market, community development and other policies for employment and growth. (Conclusions concerning human resources training and development, International Labour Conference 2000, para. 1.)

I. Increasing opportunities of learning for work

Several mutually reinforcing forces associated with globalization augur an economy where the production of goods and services relies increasingly on human knowledge and skills. The shift to a knowledge economy means an ever-increasing demand for a well-educated, skilled and adaptable workforce. It is only by ensuring all individuals opportunities for education and training that they can be ensured access to decent jobs and incomes. Countries' economic and social policies must therefore be underpinned by increased educational and learning opportunities for all citizens. However, both developed and developing countries have had a mixed record of responding to the challenges ahead.

Literacy and quality basic education cannot be leapfrogged. In many industrialized countries, many adults, and a significant minority of graduates from compulsory schooling, lack the literacy skills needed for effective learning and for participation in the knowledge economy. Many in the current workforce are denied opportunities for learning, training and retraining that would help them adapt to new skills demands. In developing countries, the situation is much more serious. Basic literacy, an essential requirement for employability and access to decent work in today's world, eludes as many as 40 per cent of adults in sub-Saharan Africa and almost half the adult population in Southern Asia. Indeed, the absolute number of illiterates increased in the 1990s. Women are nearly always worse affected than men. Advanced countries invest at least 20 times more per student in education and training than the least developed countries. However, basic and secondary education enrolment is rising worldwide and the education endowment of new labour force entrants will rise substantially. None the less some 113 million children are excluded from primary education and therefore opportunities for further learning for work.

Worldwide, education and training systems face formidable challenges to meet the needs for a well-educated, trained and productive workforce. Even in a "tiger" economy like the Republic of Korea, the training system has been criticized as being out of tune with society 's needs. Not infrequently, vocational education and training is marginalized as it is considered a second rate choice for a future career. With few links between schools/institutions and industry, learning content is often divorced from industry needs. The quality of output from learning institutions is seldom subject to quality control. Perhaps most importantly, the state, industry and individuals often under-invest in knowledge and skills for employment.

Many countries, both developed and developing, have consequently embarked upon a range of education and training policy and system reforms to address the challenges of promoting employability, productivity and social inclusion. Many of these reforms have a solid base in social dialogue. They endeavour to increase learning opportunities and improve the relevance, effectiveness and equity outcomes of education and training. They also aim at increasing investment in training by all parties concerned, in particular the private sector and individuals themselves. These reforms target the systems of general education, vocational education and initial training, and further education and training, and lifelong learning. Countries are endeavouring to establish policies that lay a solid foundation for employability, e.g. by instilling "core skills" (e.g. the capacity to learn to learn, ability to identify, analyse and solve problems and work in a team, initiative, communication skills, etc.). These core skills are prerequisites for acquiring advanced skills and for making use of new technologies. Box 1 below highlights some elements and inherent difficulties of training system reform in a few countries.

While new technology is developing rapidly in many sectors, and ICT technologies in particular are moving ahead at an incredible pace, it is understandable that education and training systems are struggling to keep up. Furthermore, the increasing knowledge content of many jobs, particularly in ICT-related fields puts additional pressures on the supply of skilled workers. Education and training institutions face enormous challenges in attempting to keep their programmes up to date and adapt curricula and courses accordingly. The picture is also very confusing for students who may embark on their studies without a clear view of what the sector in which they hope to work will look like in the future. In this context, it is clear that a range of other strategies have to be developed to assist workers to keep their knowledge and skills up-to-date and, in particular, new strategies have to be developed for learning in the workplace.

Workplace learning is expanding rapidly in enterprises and organizations, boosted by online learning opportunities made accessible to employees. Many of the core skills that are increasingly demanded in today's flatter organizational structures are better learned at work, often informally, than in formal education and training settings. The rise of workplace learning challenges some entrenched practices in traditional training systems. Several countries have recognized the implications for trainers and curricula. The challenge is to emulate workplace learning and training practices on a wider scale in the economy, and to engage all employees - not just workers at the top of enterprise hierarchies - in workplace learning on a continuous, lifelong learning basis.

At present, however, extensive workplace learning is primarily taking place in progressive companies in the developed world. While larger companies often provide considerable training for their workers, a particular problem faced by many small and medium-sized firms, is their limited capacity to engage in the kind of training that may be needed to address their skills shortages. Due to their limited resources and capacity, SMEs are usually unable to develop any training initiatives of their own. For smaller companies, the cost of carrying a less-than-fully productive employee for six months or a year is often too great a burden on their limited resources and they tend to use other approaches to secure the skills they require. They often resort to hiring workers away from other companies in related fields, which creates the situation of companies trying to outbid one another for an existing limited pool of skilled workers instead of joining in cooperative efforts to enlarge the overall number of skilled workers.

II. Investment in learning and training

What policies and measures can be developed, by governments and the social partners, to encourage enterprises and individuals to invest more in knowledge and skills in order to improve productivity and competitiveness and facilitate employability through lifelong learning?

There is tripartite international consensus about guaranteeing universal access of all to, and increasing and optimizing overall investment in, basic education, initial training and lifelong learning. However, structural adjustment programmes, restrictive fiscal policies, low wages, debt repayment obligations, decline of development assistance flows, competitive price pressures on enterprises and lack of resources of large sections of the population in a number of cases induce governments, enterprises and individuals to under-invest in education and training. Often, training done by enterprises benefits primarily those workers who already are relatively highly skilled. All countries need to promote a culture of investing, on an all-inclusive and continuous basis, in individual and collective skills for enhanced productivity and employability in a rapidly changing environment ( Conclusions, para. 10).

Both developed and developing countries have deployed various mechanisms to encourage enterprises and individuals to invest in their human resources, with varying success (tax exemption and rebates, grants, levies, training awards, student loans, training vouchers, etc). Many African and also some Asian countries have introduced training funds which often raise the bulk of their resources from levies on enterprises. While most levy-grant systems were introduced to increase workforce learning, as their primary objective, only on rare occasions have they been successful in doing so. They often build up a cash surplus, owing to bureaucracy and complicated application procedures, and few companies seek grants for training. The experience in many African countries (The Gambia, Mauritania, Togo and Zimbabwe) underscore the risk that training levy proceeds may be not always be utilized for the original purpose - they are often reallocated by financially strapped Ministries of Finance. Singapore's Skills Development Fund (SDF) on the other hand has been highly successful in raising training investments by enterprises, particularly for low-skilled workers. The Fund collects a levy and provides employers with grants for approved training programmes. The levy has frequently been adjusted as international economic conditions have changed, a practice which has been the key to its success.

Social dialogue and bipartite and tripartite collective agreements have also been used in some countries to include the social partners in influencing policy and investments in learning and training over and above any obligatory statutory contributions. Cooperation, dialogue and consultation between the social partners, and local and regional institutions and organizations to link training investment with other development strategies and enabling inputs, can also be instrumental in managing change on a local or area basis. Collective agreements on training have been most extensive in countries that have a strong tradition of social dialogue. In other countries social dialogue and partnerships in training are often limited by the capacity and resources of the actors.
Individuals are increasingly being encouraged to invest in their own learning and self-improvement. The Netherlands, Sweden and the United Kingdom are experimenting with instruments (e.g. "individual learning accounts") to encourage personal savings which can finance, or co-finance in partnership with employers or the state, individuals' learning during their working career and so help them stay economically productive. The pilot programme in the United Kingdom proved to be popular among learners, but there were also problems of poor quality and ineffective targeting of some learning programmes, and accusations of misuse, even fraud, among some training providers.

III. Removing barriers to skills development

A number of cultural and institutional barriers, if not sheer discrimination, deny many people access to learning and training for work. With little education and few skills these people are likely to find themselves excluded from the labour market and socially marginalized. Disadvantaged groups are also denied opportunities that are central to participation in the social, political and cultural life of society, as a result of their limited access to education, skills training, health care and employment. Their exclusion incurs high cost for social security systems and society in general. In many developing countries, particularly those that have had little or no economic growth, the bulk of the rapidly expanding labour force are trapped in low productivity, insecure and poorly paid work in the informal economy.

Governments must assume the greatest responsibility for ensuring access to training of groups in society who are exposed to social exclusion or discrimination. Governments must also share responsibility in order that individuals' access is not denied on financial grounds (The Conclusions, para. 11).

Many developed and developing country governments are promulgating laws and implementing policies and programmes that promote access of these disadvantaged groups to education, training and skills development. Particularly targeted are women and persons with special needs, including rural workers; people with disabilities; older workers; the long-term unemployed, including low-skilled workers; young people; migrant workers; and workers laid off as a result of economic reform programmes, or industrial and enterprise restructuring.

Quality training programmes for disadvantaged groups, including the poor, can significantly improve their skill levels and employability. This is particularly true of training that is geared to market opportunities and provided as part of integrated and targeted measures to promote labour market inclusion of such groups, rather than as a stand-alone programme. Job-search training, vocational guidance and counselling, and remedial basic education, combined with training in specific skills have been particularly effective in improving prospects of finding a job. Among the vast array of programmes in the developing world that target young people, the Chile Joven programme has been particularly successful. Designed to facilitate labour market entry of young people in Chile at a time when many of their traditional employment opportunities were diminishing, the programme provided employer-based, short-duration basic skills training for disadvantaged and unemployed youth. The training was closely tailored to meet local labour market needs. Evaluations suggest that participants had better jobs and higher earnings after their training than non-participants. The PLANFOR programme in Brazil, which promoted disadvantaged women in a large nation-wide training initiative, was successful in raising women's personal skills, self-esteem and perceptions of improved opportunities for self-employment. However, training had less impact on their integration into the labour market.

Reforms of mainstream training systems that endeavour to improve their relevance, flexibility and accessibility of the mainstream training system should benefit members of disadvantaged population groups and reduce the need for special measures. These groups, however, are often overlooked when major reforms to training systems take place. The introduction of competency-based training, and the recognition of knowledge and skills acquired through practical experience, is likely to improve the employability and access to further training of people, including disadvantaged groups, who learned informally through practical work.

IV. Promoting workers' mobility and recognizing prior learning

The mobility of skilled workers across enterprises, sectors, regions and even countries assist them advance their career, enhance their incomes and make labour markets and the economy operate more efficiently. Policies to promote workers mobility are essentially two pronged. The first comprises education and training system reforms that emphasize the development of portable skills, including core work skills, in basic education, initial training and through lifelong learning. These portable skills can be used in wide variety of enterprises and work situations. The second comprises policies to develop national qualifications frameworks for the assessment, recognition and certification of skills.

The development of a national qualifications framework and recognition of prior learning is in the interest of enterprises and workers as it facilitates lifelong learning, helps enterprises and employment agencies match skill demand with supply, and guides individuals in their choice of training and career. The framework should include a credible, fair and transparent system of assessment of skills learned and competencies gained, irrespective of how and where they have been learned, e.g. through formal and non-formal education and training, work experience and on-the-job learning. Ideally, every person should have the opportunity to have his or her experiences and skills gained through work, through everyday activities, or through formal and non-formal training assessed, recognized and certified. In most countries, giving informal learning greater visibility has proven to be difficult for various reasons. In some countries the concept has not been widely recognized, while in others practical implementation has been slow.

France was one of the first countries to entitle by law people to have their skills and experience assessed. The system comprises some 700 organizations and institutions, accredited as centres de bilan, which compete with each other for bilans de compétences (skill assessments) numbering about 125,000 annually. The bilans tend, however, to cover only formal elements of skills and often give only general recommendations for further learning and training. Using competency-based assessment techniques, countries like Australia, the United Kingdom and New Zealand have also established systems of "formally" recognizing these informal skills irrespective of where and how they were acquired. The recognition systems form part of their national qualifications frameworks.

In developing countries, in particular, skills development combined with recognition of skills of workers in the informal economy can greatly improve their access to decent jobs and contribute to improving their living conditions. While many informal economy workers have useful and productive skills, at present there are few opportunities for them to have their skills recognized. Skills recognition not only allows them to participate in further training opportunities, it also improves the individual's self-esteem and personal dignity. The required administrative machinery, however, tends to be complex, the technical capacity is often lacking and the costs involved are often prohibitive. A few developing countries, e.g. Bahrain, Egypt and South Africa, have nevertheless started a process of instituting mechanisms for assessing informal skills. To support country efforts in this area, the ILO is establishing a database on best practices in developing a national qualifications framework, conducting a general study on the comparability of different national qualifications frameworks and undertaking research into the recognition of prior learning.

V. Labour market and training information

In order to design relevant training programmes, training institutions need information on employers' and the economy's skill demand and needs. Many countries used to engage in manpower forecasting exercises, trying to identify future demand for skills in the economy. The results, however, proved to be a poor guide to decision-making on training. Nowadays, countries are instead engaging in efforts to make their training system more flexible, able to adjust quickly their course offerings as the demand and needs for training services change. One way to do this is to promote collaborative links and partnerships with employers. Many countries are also investing in strengthening their systems of labour market information so that they can provide reliable and up-to-date information about skill demand and supply, and guide decision-making and investments in learning and training. In practice, however, the linkages between the collection of this data, and its use in the design and development of effective and relevant training programmes, remains, at best, rather weak.

Attempts have been made to renew or adapt labour market information systems in many countries in order to satisfy the pressing need for such information. Altogether 22 World Bank projects that assisted technical and vocational training systems in various countries in sub-Saharan Africa during the 1990s included a component to develop LMISs, or observatoires as they are called in French-speaking Africa. The results have been mostly disappointing. In Madagascar, linkages with employers - the users of training information - did not materialize. In Togo, the information system was delayed because of coordination and institutional difficulties. In Côte d'Ivoire problems included weak top management and attrition of qualified staff. Generally speaking, the necessary networking with other institutions and for information was often lacking, and the capacity to generate high quality research was often insufficient. Qualified staff were often attracted by other job opportunities. Only Mauritius has established a well functioning LMIS that produces timely information on trainee placements, assessments of training quality and emerging skill needs.

Points for discussion and key policy challenges

• Investment in education and training. There is a critical need for a greater overall investment in education and training, particularly in developing countries, for all people (including women and groups with special needs, such as people with disabilities). Education and training investments should be closely linked to economic and employment growth strategies and programmes. Responsibility should be shared between the government (primary responsibility), enterprises, the social partners, and the individual. Ministers may wish to discuss, based on their own experience, what mechanisms are proving most successful in mobilizing resources for investment in education and training and preventing damaging cyclical fluctations in such investment flows.
  
  
• Basic education, literacy and core skills. Literacy and basic education cannot be leapfrogged. Urgent reforms are needed to improve basic education and the literacy of people in the poorest countries. The development of "core work skills" (such as communication, problem solving, etc.) is an important part of the reform to prepare individuals for the knowledge and skills-based society. Ministers may wish to review efforts to integrate education and training with employment and labour market policies that ensure the successful transition of young people into the world of work.
  
  
• Reforming vocational education and training systems. To make lifelong learning for all a reality, countries will need to make major reforms of their vocational and education and training systems. School-to-work schemes for young people should integrate education with workplace learning. Training systems need to become more flexible and responsive to rapidly changing skill requirements, and higher quality labour market information will be needed to assist in identifying the skills required. Reforms should also focus on how learning can be facilitated, not just on training for specific occupational categories. Ministers may wish to reflect on whether the concept of lifelong learning is being translated into a culture and supportive institutional framework that encourages individuals to view education and training as a normal and continuous part of their life.
  
  
• Recognizing an individual's skills. Many people have acquired skills from a wide range of non-traditional sources, but these go largely unrecognized. It is critical that people should be able to have their skills recognized as part of a national qualifications framework, irrespective of where the skills were obtained. Recognizing an individuals skills is an important component of overcoming the barriers to further skills development. Ministers may wish to exchange their experiences with techniques for broadening skill recognition systems to include capabilities acquired by informal learning.
  
  
• Social dialogue on training. There is an urgent need to involve the social partners more closely in discussions on training policy and skills development, if the desired reforms and increased investment are to become a reality. It is clear that governments can no longer be the sole voices on education and training. The more successful training systems are underpinned by a strong social dialogue process. Ministers may wish to discuss how social dialogue can assist in strengthening the education and training "constituency" and thus the degree of priority accorded by society at large, i.e., public and private decision makers, to the demands of the knowledge economy.

5 April 2002