ILC88 - Report V: Training for employment

88th Session, 30 May - 15 June 2000

Report V

Training for employment:
Social inclusion, productivity
and youth employment

Human resources training and development: Vocational
guidance and vocational training

Fifth item on the agenda

International Labour Office Geneva

ISBN 92-2-111513-5
ISSN 0074-6681

Human resources development (HRD) and training play a major, if not decisive, role in promoting economic growth with equity; they benefit individuals, enterprises, and the economy and society at large; and they can make labour markets function better.

Human resources development and training are understood in this report to be activities of education, initial training, continuous training, and lifelong learning that develop and maintain individuals' employability and productivity over a lifetime.

Human resources development and training benefit individual men and women by developing and maintaining their employability and adaptability in labour markets that change continuously under the influence of globalization, technological change and new ways of organizing work. While education and initial training provide the foundation of individuals' employability, continuous training and lifelong learning give them the means to maintain it over their working lives. Human resources development and training improves their prospects of finding and retaining a job; improves their productivity at work, their income-earning capacity and their living standards; and widens their career choices and opportunities. By developing workers' capabilities to pursue collective and individual interests, education and training foster an environment that is conducive to economic and political democracy. They are also tools for developing the new social skills, competencies and attitudes, and tolerance and solidarity that are needed for economic, social and political participation in an increasingly integrated and mobile world. These skills include foreign language skills and the ability to understand and communicate with people of different cultures and creeds. Finally, education and training are indispensable for individuals to live in a knowledge, communications and technological society.

Enterprises also reap benefits from education and training as they improve workers' productivity and company profits. It is by deploying well-educated and trained workers that enterprises can improve the quality of their products and services and gain a competitive edge in global markets.

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 better use of human potential. Training can help remove skill mismatches by sector, region and occupation. In the industrial and rapidly industrializing countries, major investment in education and training has generated significant productivity gains, rapid economic growth and social progress.

Promoting social justice and equality of treatment in employment is another major objective of human resources development and training. Education and training have an important role to play in promoting labour market integration and the social inclusion of population groups that face discrimination – for example, women, young people, older workers and disadvantaged groups such as people with disabilities, ethnic minorities and migrants.

Human resources development and training can thus contribute significantly to promoting the interests of individuals, enterprises, and economy and society. However, education and training cannot by themselves solve the problems of unemployment and underemployment, and poverty and social exclusion. In order to be effective, they must constitute an integral element of economic and social policies, including macroeconomic policies, that promote employment-intensive and equitable economic growth and social progress.

While these objectives of human resources development and training have not changed significantly over the years (although the vocabulary used is somewhat different, viz. the concept of employability), the context – the shift to liberal, market-based economies, the upward skill bias of technological change, new ways of organizing work, and the growing incidence of unemployment, poverty and social exclusion – has recently changed fundamentally.

The major ILO instruments in the area of human resources development and training are the Human Resources Development Convention (No. 142) and Recommendation (No. 150) of 1975. They tend to cover all the aspects of vocational training and guidance at various levels and have replaced the Vocational Training Recommendation, 1962 (No. 117), which itself replaced a series of specific standards developed since 1939, particularly the Vocational Training Recommendation, 1939 (No. 57), the Apprenticeship Recommendation, 1939 (No. 60), and the Vocational Training (Adults) Recommendation , 1950 (No. 88).

Many other instruments recognize the contribution of training and guidance to the pursuit of employment, working conditions and equitable treatment and some are closely related, including: the Paid Educational Leave Convention, 1974 (No. 140), and Recommendation (No. 148); the Vocational Rehabilitation (Disabled) Recommendation, 1955 (No. 99), and the Vocational Rehabilitation and Employment (Disabled Persons) Convention, 1983 (No. 159), and Recommendation (No. 168); the Minimum Age Convention, 1973 (No. 138); the Discrimination (Employment and Occupation) Convention, 1958 (No. 111) and Recommendation (No. 111); the Employment Policy Convention, 1964 (No. 122); and the Equal Remuneration Convention, 1951 (No. 100), and Recommendation (No. 90).

Adopted in 1975, Convention No. 142 and Recommendation No. 150 mirror the prevailing economic and social conditions of that period. Then, most countries pursued planned economic, social and industrialization policies, information technology was still in its infancy, work organization in enterprises was largely based on Taylorist principles, and the labour force was employed in secure wage jobs. While Convention No. 142, which is rather general, can still be regarded as valid, Recommendation No. 150 is clearly outdated.

Recommendation No. 150 reflects the planning paradigm of that period, while giving little room for demand and labour market considerations; it provides little or no guidance on many issues that nowadays are central to training policy and system reforms being undertaken by member States. These issues comprise the policy, governance and regulatory framework of training; the role of stakeholders other than the State (e.g. the private sector, the social partners and civil society) in policy formulation and training provision; the scope and mechanisms for diversifying and tapping alternative sources of financing training; devising appropriate mechanisms and methods to target training programmes at particular groups; the shift away from training for "qualifications" towards the development and recognition of "competencies" that comprise a wide range of work-related knowledge, technical and behavioural skills, and attitudes; and the increasing need to focus skill development activities on preparing workers for self-employment and the informal sector.

For these reasons, the ILO Governing Body decided at its March 1998 session that human resources development and training should be the subject of a general discussion at the International Labour Conference in 2000. The present report is therefore intended to stimulate a discussion on:

At the end of the report a set of points for discussion are suggested. Ultimately, the Conference Committee on the subject will be expected to advise the Office on whether a new Human Resources Development Recommendation should be submitted for adoption at a subsequent session of the Conference.

Globalization, technological change and new organization:
The development of new skills and competencies

This chapter examines the gradual shift in the world towards knowledge- and skills-based economies and societies. The basic tenet of the report is that workers' knowledge and skills, and education and training, today take centre stage in countries' efforts to meet the twin challenge of globalization with a human face: to improve their capacity to compete in the world markets for goods and services, and to promote the access of all citizens to decent employment and economic and social life. The implications of these trends for different countries, sectors and people vary. Countries that have long invested in education and skills development have so far been able to adapt and reap the benefits of the changing global order. Others, particularly in the developing world where access to, and the level of, education and training are inadequate, have serious difficulties participating in the opening up of the world economy and enjoying the full benefit of their efforts to rehabilitate their economies. The report takes the view that education and training, provided they are supported by a favourable national and international economic environment, can help countries, enterprises and individuals benefit from globalization and overcome its constraints, create more and better jobs, and improve incomes and living conditions.

Major forces driving changes in the world of work include globalization, rapid advances in information and communications technology, changes in financial markets, new business strategies, new management practices and new forms of work organization. These interrelated and mutually reinforcing forces augur an economy and society where the production of goods and services relies increasingly on human knowledge and skills.

The world's economies have grown increasingly interdependent in recent decades, but this process of globalization is not evenly spread over the various economic activities and sectors. The industrial and tradable goods sector and the services sector are particularly exposed to international market forces.⁽¹⁾ The pressure of competition in the services sector is accentuated by the advent of new information and communications technologies and the process of liberalization.⁽²⁾ The rapid rise of Internet-based shopping (e-commerce) and other services available on the World Wide Web reinforces this trend. Growing international competition from lower-cost, more effective competitors is forcing domestic firms to adopt more efficient technologies and modes of production. Foreign competitors are increasingly producing goods and operating services directly in the countries in which they are investing.

This global exposure brings with it an opportunity to learn from competitors and to improve the organization of work, provided that the workforce is adequately educated and trained. Successful practices that have been developed in one economy spread to others, not only within multinational companies but also from company to company. A growing number of firms use outsourcing and information technologies to increase the ability of their supply-chain enterprises to bolster their own competitiveness, so as to meet new expectations in terms of productivity quality, flexibility and just-in-time delivery on a global scale.

Informal sector enterprises and entrepreneurs may also require new skills as they become exposed to competition. By improving productivity and product quality, mutually supportive links can be established between informal sector activities and the modern sector.

The implications of this global competition, and of the new technologies and organization of work that it calls into play in terms of the functioning of labour markets and the demand for skills and competencies, is discussed below.

The rate of technological advance has accelerated at an unprecedented pace in recent decades, as has the process by which technology is transferred from firm to firm and across sectors and economies. Many of the advances that have had a major impact on labour markets and work have been in the fields of computerization, information technology, telecommunications and space research (global positioning technology, meteorology, energy, biotechnology, etc.).

By setting new quality criteria for products and services, globalization largely imposes the use of technology. In turn, the impact of technological change on the demand for skills (and hence on employment) depends on whether it is accompanied by corresponding changes in work organization or the adoption of new business practices. Thus it can be said that the productive potential of technology is determined as much by the availability and quality of training, as by the skills it imparts, as skill requirements are determined by the use of technology. Accordingly, the development of skills through training should be the strategic response to technological change, globalization and other forces affecting labour markets.

Analysts have stressed the upward skill bias of the new generation of technology, especially information and communications technologies and certain manufacturing processes, and its likely effect on productivity and on the demand for workers with higher-level skills and broader workplace competencies, who can command higher wages.

The introduction of new technologies has reduced the demand for unskilled labour and raised the value of advanced skills and competencies in the industrialized economies. In the services sector technological change has created new categories of high-skilled occupations in health care, information processing, and finance and business services; in the goods-producing sector too, the emphasis is now less on physical strength and adherence to routine and more on workers' behaviour, flexibility and initiative. This has opened up new opportunities for those in a position to seize them.

In a few developed countries and in most developing countries low-skilled occupations in sales and services have grown, reflecting a shift in economic activity towards services. In the developed countries the more technology-intensive service sectors (finance, insurance, real estate, business services, and to some extent transport, storage and communications) have generated a significant share of all new jobs over the last 15 years. Elsewhere, the jobs created in the services sector have been mostly labour-intensive, low-skilled, low-wage and non-standard. Among the low-skilled workforce, full-time jobs have been lost and non-standard work has grown, both for men and women, the latter having gained in terms of part-time work. Because of the increasingly skill-intensive nature of the formal sector, the informal sector has absorbed the bulk of the expansion of low-skilled service occupations in developing countries.

Manufacturing employment, which has seen its share of total employment fall, has become increasingly high-skilled in developed countries; in the OECD countries, for example, skilled manufacturing employment remained more or less constant from 1974 to 1994, while employment in unskilled manufacturing declined by 20 per cent. High-skilled manufacturing employment has grown sharply in the fast-growing East and South-East Asian economies, but somewhat more slowly in some Latin American and South Asian countries. These significantly higher levels of skilled employment in the manufacturing sector are attributable largely to the increasing intensity of capital formation in office and computer technologies and the need for blue-collar workers in that sector to be more educated; the substitution of machines for unskilled production workers; and the redefinition of much production work with the introduction of new technology and new forms of work organization that require more skill and knowledge. Countries are investing increasingly in human capital: in Germany, for example, the ratio between human capital and physical capital is estimated to have increased from 1:5 to 1:2.2 between the 1920s and 1989.

New systems of enterprise organization such as total quality management (TQM) may lead to reductions in employment at the management level, as they shift responsibility for quality assurance from managers to lower-level employees. Devolution of decision-making and the substitution of incentives and corporate culture for administrative controls also tend to squeeze managers out of the system. Hierarchies become flatter, and spans of control broader. Corporate operations become less divided along functional lines and more organized around broad product lines and markets, in order for the enterprise to be more flexible and more responsive to customer demands. Organizations tend to evolve along horizontal rather than vertical lines.

Work practices associated with increased employee involvement – such as the introduction of high-performance work organization involving devolved decision-making, and reliance on team-based systems – are perhaps the most important of the management practices affecting skill requirements. Self-managed teams in particular transfer management skills to front-line workers as they are exposed to the tasks other team members are performing.

Industrial restructuring, technological and workplace change, and enterprises' quest for quality have profound implications for labour markets worldwide. However, their effect on employment differs markedly between developed and developing economies. In the former, there has been a decline in permanent employment, rising job instability and insecurity, and rapid growth of various non-standard forms of work, including part-time and temporary employment. In the developing countries the dominant effect is on the nature of the informal sector and its growth.

The pressure to sell off unrelated operations and to buy new ones as strategies change, to reduce costs, especially fixed costs, to shorten production runs and to make production more flexible all have a pervasive effect on employment, of which downsizing – permanent job reductions driven mostly by corporate restructuring – has received most attention. It is a process that differs significantly from the layoffs of earlier periods that were caused by recessions and were largely temporary. The job insecurity that has followed has often affected people in the traditionally most stable jobs in the "primary" sectors of the labour market, i.e. those offering stable, high-paying jobs with access to employee benefits and career advancement opportunities.

Continuing efforts to reshape the boundaries of firms through mergers, acquisitions and outsourcing have contributed further to job insecurity. If jobs are outsourced, it is possible that they might be as stable as those in the original companies, but in companies that are bought and sold restructuring takes place over an extended period and the employees face considerable disruption of their careers.

Although, overall, jobs would seem to have been as stable in the 1990s as in the 1980s, nevertheless there is widespread perception that employment is becoming less secure.⁽³⁾ (Job instability differs from job insecurity in that it can result both from dismissals or layoff, which create insecurity, and from voluntary terminations, which do not.) People's sense of insecurity has much to do with how they assess the worth of their skills and competencies in relation to rapidly changing labour market needs, their access to training opportunities and their ability to upgrade them and have them recognized. Improvements in these areas are likely to reduce individuals' perception of insecurity.

Employee turnover is an important measure of the extent to which employment relationships have changed. Research in the United States suggests that job tenure overall has been quite stable over time but has declined modestly in the past ten years. Changes in job tenure may be more dramatic for particular groups, especially those that have not systematically upgraded their skills and general employability. During the 1980s, at least, turnover in the United States appears to have been increasingly attributable to dismissals, particularly of managers. In other countries, the topic is also gaining relevance as restructuring gathers pace.

There is some evidence that occupational attachment is increasing even as tenure with a given employer may be declining, and this raises the whole issue of investment in continuous training. Whereas employees may have greater interest in developing their occupational skills because they will be using them longer, employers may be less inclined to provide those skills or to finance their acquisition because the movement of employees from one firm to another implies that they are less likely to capture the return from their investments.

Another important labour market consequence of restructuring is the growth of non-standard forms of work, defined as part-time employment, temporary or contingent work, and self-employed individuals working as independent contractors. Enterprises face two basic pressures to expand non-standard work. The first is the pressure to shift labour from a fixed to a variable cost, particularly in countries where collective agreements increase the fixed costs of employment ⁽⁴⁾ or when the labour legislation does not cover non-standard forms of work. The second is to shift work away from high-cost internal labour markets to more competitive, lower-cost external labour markets. Such pressures make it all the more necessary to ensure that workers engaged in non-standard work (most of whom are women) have access to continuous training.

A third possible pressure favouring the adoption of non-standard work may be the introduction of a system of high-performance work organization, with its emphasis on flexibility, responsiveness and just-in-time production. One study in the United States in the mid-1990s suggested that reliance on temporary or contingent workers – comprising as much as half the production workforce of many of the enterprises interviewed – was the less attractive side of high-performance work organization.⁽⁵⁾ Companies indicated that relying on such workers gave them the requisite flexibility for responding quickly and effectively to changing market conditions. This could reduce workers' access to continuous training unless emphasis is also placed on product and service quality in the competition for a share of the market.

Non-standard work has grown in many developed countries recently. In the United States it now accounts for roughly 30 per cent of employment. Temporary workers have nearly tripled since the early 1980s; although they make up only 2 to 4 per cent of total employment (depending on the definition), they may account for as much as 10 per cent of job growth in the 1990s. In Europe, too, part-time work has grown rapidly, especially in countries where it is one of the few ways for employers to avoid the high fixed cost of regular employment. In Japan, for similar reasons, part-time work now accounts for 25 per cent of all jobs. In developing countries, which have long relied on non-standard, informal sector work, the increase in non-standard work in the formal sector has been much less marked.

Workers engaged in temporary contract work – interspersed with periods of unemployment – are likely to see their skills and competencies deteriorate more rapidly than permanent employees, as they often have less access to in-service and continuous training. This affects women in particular, who are liable to become less employable over time and risk social exclusion. Maintaining and renewing the skills of these workers is an important issue to be addressed. Some countries, particularly in the European Union, have integrated basic social rights, including the right to training, into labour codes that extend to workers on temporary contracts.

Restructuring and the availability of qualified workers seeking better-paid jobs have also encouraged enterprises to recruit on the external labour market in order to procure new skills rapidly and meet increased competition. If the skills and competencies required are new to the enterprise, it may be difficult, costly or time-consuming to develop them internally and enterprises may prefer to look to subcontractors, joint ventures or outside hiring. Moreover, the cost of carrying employees with obsolete skills often encourages employers to sever the employment relationship altogether. This tends to favour younger workers, as they are more likely to be familiar with new technologies and to have the appropriate skills and competencies.

There are signs, in some sectors and companies and in tight labour markets, that the traditional relationship between employers and workers is weakening. On the one hand, many employers nowadays feel less responsible for their employees' job and income security and career planning. At the same time, employees who are highly employable often see their interests and goals as linked to a series of employers rather than to a single company.

A study of successful electronics firms in southern England, for example, found that they tended to manage their engineers more like short-term than long-term assets, hiring and laying off to rearrange their pool of competencies so as to keep them up to date. One of the main reasons for this pattern was that companies were frequently restructuring and developing new products and were using the labour market as a source of new skills and competencies.⁽⁶⁾

Some employers take a more strategic approach to their human resources management and training and promote the internal mobility of their most valuable workers through training. Enterprises that assume the social responsibility of investing in the general skills and employability training of workers, even though they may have to release them later in order to remain flexible and competitive, clearly reduce the risk of social conflict by facilitating their reintegration into the labour market.

The introduction of production teams of first-line workers sharply reduces the need for supervisors and managers, removing several rungs from the promotion ladder and limiting the opportunities on the internal labour market. In some sectors, such as the high technology industries of California's Silicon Valley, vertical integration has largely given way to networks of companies whose managerial and professional employees advance by moving across, rather than within, the organization. Although it is difficult to measure the extent to which outside hiring has increased around the world, it is revealing that the volume of business undertaken by international corporate recruiting companies tripled during the mid-1990s.⁽⁷⁾

The implications of this are considerable, as new career paths have to be devised and supported through continuous training and each individual needs to be committed to the development of his or her career and competency. Labour market and training information and guidance therefore assume renewed importance in this respect.

Non-standard work has increased in many developing countries as informal sector employment has grown. While the labour force in these countries has grown fast, little of that growth has been in the formal sector. The reasons are many and include faltering economic and productivity growth and an unstable political and macroeconomic environment that is not conducive to investment. In Africa structural adjustment programmes have exacerbated the loss of formal sector jobs. Because the labour market is unable to absorb all the laid-off workers and new jobseekers, the informal sector has become the predominant source of employment. Formal sector wage employment accounted for only 9.1 per cent of the active labour force in the United Republic of Tanzania in 1995, 16.9 per cent in Kenya in 1994 and 25.3 per cent in Zimbabwe in 1995.⁽⁸⁾ All over Africa (with the exception of Mauritius) and in many developing countries in other regions, the pattern is similar.

Unable to find work in the formal sector and equipped with skills and work attitudes that are ill adapted to informal sector work, school-leavers, graduates and laid-off workers often find themselves unemployed or seriously underemployed. Those who engage in informal sector work often find that the business, entrepreneurial and technical skills they require are different from those needed in wage jobs. This is one side of the skills mismatch that puts a break on job creation, productivity and income growth in the informal sector.

Formal and informal education and training can greatly enhance incomes and living conditions in the informal sector, when linked to other measures to improve productivity, safety, working conditions and product quality. How national education and training policies' programmes can effectively reach informal sector entrepreneurs and workers and encourage them to make the necessary investment in terms of time, effort and resources is one of the issues that needs to be discussed.

In open competitive economies, wages and earnings are increasingly determined by productivity and by the capacity to produce high-quality products and services. The increasing diffusion of new technology and work practices has created a demand for workers who possess higher skills and broader workplace competencies than before. In many OECD countries the wage differential between skilled and unskilled labour has increased since 1980; in some cases there has been a decline in the real earnings of the less skilled. For example, more than two-thirds of the increase in the United States labour force since 1994 has consisted of unskilled female household heads who have been drawn into the market by a combination of factors, including economic expansion, more attractive income tax provisions and subsidized child and medical care, as well as national and state reforms that have made reliance on welfare less attractive as an alternative to work.⁽⁹⁾ This dramatic increase in the supply of low-skilled workers is putting downward pressure on their real earnings, even as policy-makers and the general public are expecting more from them in terms of self-reliance.

A few studies suggest that wage differentials between skilled and unskilled workers in the developing and transition countries have also widened. The World Employment Report 1998-99 noted that high-tech investments by firms in China, Colombia, Mexico, and Taiwan, China, have also significantly increased the wage premium for skilled workers.

According to this report, "a combination of an increasing premium on education and an increasing premium on experience suggests that the employment situation of those with low educational qualifications or no experience in the labour market has worsened the most." ⁽¹⁰⁾ However, experience in Germany, where low-paid workers have improved their position and where the wages of the highest paid have not risen relative to other workers, suggests that wage behaviour is not simply a question of labour supply and demand. Institutions also matter, especially in wage bargaining. Because it is based on social partnerships, the German training system has been able to adapt to new technologies and work practices without new incentives being needed to bring about major changes in labour quality and supply.

Studies in the United States show that computer use raises wages and, implicitly, skill requirements. Elsewhere, wages (and, by implication, skill requirements) are found to rise with the use of other office equipment too. However, it would appear from those findings that it is not the equipment-specific skills that are driving these higher wages but that the employees concerned have some higher, unmeasured skills. Another explanation might be that workplaces where employees use such equipment are different in fundamental ways: for example, they may be based on decentralized work systems that require more from the employee, especially more autonomy. Other studies conclude that it is the more productive employees who are selected to use new technology; these workers acquire more skills as a result and are then also paid more.

Broader demand-side economic policies therefore have an important role to play. Programmes that raise workers' education, skill and competency are by themselves insufficient to redress rising wage inequality unless labour demand is maintained at sufficiently high levels over extended periods.

From the discussion in this chapter, a dual function for education and training emerges: a proactive, or developmental, function; and a "mitigating", or remedial, function.

The proactive function of education and training is to develop and harness the knowledge and abilities of individuals and enterprises – and the capacity of entire economies – so as to seize the opportunities that globalization and more open markets potentially offer. Human resources and skills are becoming the key competitive instrument in international markets for goods and services. Human resources training must therefore focus on developing those multiple skills and competencies that will help countries, enterprises and individual men and women seize the new opportunities. Workers will need new, higher technical skills and competencies in order to be able to exploit the productive potential of advanced technologies, particularly information and communications. They will also need new behavioural, teamwork and social skills to help them adjust and retool rapidly; as markets, technology, work organization and opportunities change, knowledge and skills quickly become obsolete and have to be renewed on a continuous basis. A major challenge is therefore to expand opportunities of – and the necessary financing for – lifelong learning, so that they are accessible to all workers.

The poorer developing countries face the formidable task of overcoming the handicaps that have so far prevented them from seizing the new opportunities. Their first priority is to raise the basic education and skills levels of their populations. It is by drawing on those skills and competencies that they can exploit their respective comparative advantages and benefit from the opening up of world markets.

The mitigating, or remedial, function of education and training is to address the recent labour market trends outlined in this chapter. Many of these trends have been the unwelcome effect of globalization and related developments in many countries. Education and training are a major instrument, if not the instrument, for enhancing the employability, productivity and income-earning capacity of many disadvantaged people in the labour market, and so for promoting equity in employment outcomes. Human resources development and training can help to correct skills and knowledge mismatches of large segments of the labour force following major economic restructuring, particularly in the transition economies but also in many developing economies. In developing countries with a rapidly growing informal sector, education and training are indispensable for improving productivity and living conditions among the large sections of the population who earn a living there.

Many unemployed workers need new skills and competencies that enhance their chances of re-entering stable employment. Young people need broad, general, employable skills combined with training in specific skills and exposure to the world of work that will ease the transition from school to work. Women and other victims of discrimination need education and training to give them access to more and better jobs in the labour market and to overcome the syndromes of poverty and social exclusion. Workers in precarious and insecure jobs, and often intermittently unemployed, need to renew their rapidly deteriorating skills in order to improve their prospects of finding more stable jobs that also offer them a career.

Although addressing widely different needs, the proactive and social functions of education nevertheless have a point of convergence. They both point towards the emergence of knowledge- and skills-based societies, where education, skills and competencies largely determine the employment and career outcomes of individuals and their integration into social life, the competitiveness of enterprises, and ultimately the growth and well-being of nations. To enable everybody to participate fully in such societies, rethinking human resources development and training is critical.

1 Robert Reich: The work of nations: Preparing ourselves for 21st century capitalism (New York, Alfred A. Knopf, 1992).

2 Ray Marshall and Marc Tucker: Thinking for a living: Work skills and the future of the American economy (New York, Basic Books, 1992).

4 Richard B. Freeman (ed.): Working under different rules (New York, Russell Sage Foundation, 1994).

5 Christopher T. King et al.: Engaging employers in school-to-work (Austin, Center for the Study of Human Resources, University of Texas, 1996).

6 G. Causer and C. Jones. "Responding to ‘skill shortages': Recruitment and retention in a high technology labour market," in Human Resource Management Journal, Vol. 3, No. 3, 1993, pp. 202-221.

7 Peter Cappelli, The New Deal at work (New York, Oxford University Press, 1999).

8 R. van der Hoeven and W. van der Geest: Adjustment, employment and missing institutions in Africa: The experience in eastern and southern Africa (Geneva, ILO, 1999).

9 John Bishop: Is welfare reform succeeding?, Working Paper No. 98-15 (Ithaca, Cornell University Center for Advanced Human Resources Studies, Aug. 1998).

10 International Labour Office: World Employment Report 1998-99 (Geneva, 1998), p. 50.

The present chapter examines the underlying principles of human resources development for improved competitiveness and employability, and for more equitably shared prosperity. It examines the paradigm shift toward training that is responsive to economic demands and the social needs of individuals. And it raises the fundamental question of how social responsibility for training and human resources development should be shared between the State, enterprises and individuals.

The trends identified in Chapter I present formidable challenges for national and local governments, enterprises, education and training authorities, institutions and individuals, to which training policies and systems should adjust. Education and training systems in developed countries tend to be fragmented and inflexible because they have generally been built up over many decades. In developing countries technical education and training were traditionally regarded as inferior options for economic and social advancement compared with academic education. The systems that were established inherited much of the inertia characteristic of the systems in the developed countries, which made them unresponsive to the pervasive changes occurring in the economy.

While the forces of globalization and economic restructuring create a greater need to invest in workers' training, these same forces have led policy-makers and enterprises actually to reduce investment in HRD and training, in the belief that the taxes and social spending needed to finance these investments would threaten their country's competitive advantage and deter inward investments. There has been little international policy coordination to solve the problem.

The skills gap – the difference between the demand for skills and competencies and those available in the workforce – has been widening recently. The content, quality and coverage of education and training in many parts of the world are insufficient to help workers adapt to the changing world of work so as to maintain employability throughout their working lives. Workers often lack the literacy skills necessary to learn professional skills. In many developing countries widespread child labour prevents adequate schooling, and young people who drop out of school are ill-prepared for the labour market. With few exceptions, enterprise training generally excludes unskilled and semi-skilled workers, groups with special needs and workers with disabilities; and it is often limited to particular production processes and workplaces, reducing the portability of skills in the labour market. In addition, skills and competencies gained through non-formal training and workplace experience are seldom recognized. Most labour market training is centred on younger members of the labour force; lifelong learning is still more a slogan than a reality. And labour market information and guidance and information about training opportunities are not widely available, particularly in developing countries.

Training systems historically have been largely public, and mostly prepared individuals for work in stable jobs in the wage-earning formal sectors. In developing countries they catered mainly to public sector demand. In developed countries training policies traditionally were second-chance programmes that placed participants mainly in poorly compensated jobs. Most of the training provided tended to be supply-driven initial training given to new labour market entrants. Often neglected were the growing need and demand for retraining and adjustment of skills and competencies of the existing workforce as technological and workplace changes took effect. In addition, training efforts were underfunded, poorly coordinated, and too focused on rigidly defined target populations, while less attention was given to the needs of people on the fringes of or outside formal labour markets, who constitute up to 80 per cent of the labour force in some countries.

Governments typically retain primary or sole responsibility for organizing, financing and providing education and training, particularly in developing countries and transition economies. However, governments tend to be poorly informed about the training needs of enterprises and workers; and they are ill-equipped to adjust training programmes and policies without input from the private sector. On the other hand, complete privatization of training has sometimes led to limited coverage and content of training, and poor portability of skills. Enterprises, particularly small and micro-enterprises, have limited capacity and are less willing to train and manage their human resources as they have short-term planning horizons and little knowledge about their skills requirements. In addition, they seldom provide generic skills training for fear of poaching by competitors, unless there are adequate cost-sharing arrangements. And firms generally provide no training at all for the growing numbers of casual and temporary employees. Hence, a new approach to skills development is beginning to emerge.

Many countries have been attempting recently to reform their education and training systems to meet the new demand for skills and competencies. Policies are now being introduced to reform education and initial training programmes and to establish systems of continuous training and lifelong learning. In many cases governments are given a facilitating rather than a directive role, and individuals are expected to shoulder a greater share of the responsibility for planning and financing education and training throughout the course of their working lives. Incentives are given to enterprises as well to induce them to invest more in training and retraining of staff. Training markets are being opened to competition. And active labour market policies and social programmes, including large-scale training components, are being targeted at disadvantaged groups. These changes reflect movement towards a new training paradigm.

In this new paradigm, training objectives are multifaceted and composite. Education and training are the main instruments available to prepare individuals for a rapidly changing, increasingly demanding world of work, and to improve their employability. An individual's employability includes the ability to secure and retain employment and improve his or her productivity and income-earning prospects, compete effectively in the labour market and be occupationally mobile, "learning-to-learn" for new labour market and job opportunities, integrate fully into economic and social life, and generally work and live well in an advanced knowledge, communications and technological society. Individuals' employability assets comprise their knowledge, skills and attitudes on at least three levels:

The complementarity of education and training can be illustrated as an employability pyramid, with a foundation of individuals' baseline assets and a peak consisting of high-level assets. For the purpose of the general discussion by the Conference, a useful definition of employability is the following: an individual is employable when he or she is able to (i) secure a job; (ii) retain employment, progress at work and cope with change; (iii) secure another job if he or she wishes to change jobs or has been laid off; and (iv) move flexibly in and out of the labour force at different periods of the life cycle (for women this is particularly important because of the need to take time off for childbearing and rearing).

The sum of an individual's knowledge, skills and attitudes is his or her competence. Competence is much more than the linear, sequential acquisition of a narrow set of job-related skills and the ability to carry out specific tasks in a single workplace. Today's world of work calls for individuals who are able to apply their knowledge in different contexts and under varying technological conditions, and to respond independently and creatively. Competence is a building block of knowledge, skills and attitudes that individuals acquire, starting as young children enrolled in basic education, moving on to initial training and work experience to prepare them for entry into the labour market as teenagers or young adults, and continuing to learn and train throughout their adult working lives. This is a markedly different course of events from that envisaged only a few decades ago, and applies to almost all workers, in developed and developing countries alike.⁽²⁾Fostering individuals' employability through competency-building has important policy implications at the level of general or basic education, initial training, and lifelong learning. These are discussed in turn below. (The special issues and problems facing youth and employment and training responses to them are discussed at length in Chapter III.)

An individual's ability to find and retain a job has much to do with basic education; the less education individuals have, the more likely they are to be unemployed. General education should provide individuals with the minimum requirements (such as literacy and numeracy) to function productively in the workplace. It should also focus on basic skills, including the ability to identify, analyse and solve problems, the capacity to learn new skills in order to adapt to new work tasks, the ability to communicate with others and use information independently, planning skills, computer literacy and a grasp of simple scientific knowledge and technology.⁽³⁾ Basic education should moreover convey to children at an early age social skills and an understanding of citizenship and the culture of work, as these skills help to understand both social rights and claims and social obligations and responsibilities. Many education systems have neglected this task.

Education should prepare young people for non-linear career paths and the likelihood of several career changes during their working lives. It should convey a positive image of enterprise and entrepreneurship, break down gender stereotypes and promote gender sensibility. And it should develop their capacity to improvise and be creative and, in general, equip them to deal with the complexities of a rapidly changing world.⁽⁴⁾ Instilling these skills for the promotion of each individual's employability is, more than ever, a major task of basic education.

Basic education is largely universal in industrialized countries, although the quality is not always uniform even within a country. Many developing countries, however, face challenges in providing all school-age children with the core skills identified in the national curriculum; many girls and children in rural areas in particular are unable to attend school, while others drop out of school before mastering the essential basic skills. In 1997 the enrolment rate in primary education was 56 per cent in sub-Saharan Africa and South Asia, 65 per cent in Latin America and the Caribbean, and 71 per cent in East Asia, compared with 96 per cent and higher in the industrialized countries. The funding impact of structural adjustment programmes in many African countries has further negatively affected educational enrolment and quality.⁽⁵⁾

There is a broad consensus that the strengthening of general education, in particular at the primary and secondary levels, should be a priority in public policies to improve the productivity and flexibility of the workforce. Lack of basic education lies at the root of labour market segmentation, child labour and the vicious circle of social exclusion. World Bank research has shown that in some countries workers who have completed secondary school have a 50 per cent greater chance of receiving on-the-job training than those with a primary education alone.⁽⁶⁾ The World Bank also suggests that training in specific skills is more effective when trainees are already literate and numerate and have problem-solving skills that they can build upon.

Primary and secondary education systems should support the development of a flexible workforce, adopting a more active "learning-to-learn" approach, and working in teams. A greater effort should be made to expose students to the world of work, as is the case in Australia, Germany, the United Kingdom and the United States. Higher general education must become more flexible, responsive and timely as labour markets change, providing open-entry/open-exit courses, certificates and diplomas and distance-learning possibilities and working directly with employers and industry associations in customized training programmes.

National and international public investment should ensure a minimum level of quality and universal access to basic education, particularly in rural areas and for women and other disadvantaged groups. In 1990 the Jomtien Conference in Thailand developed a plan to increase learning and educational quality in schools and to attain universal primary education before the year 2000. In 1995 the Social Summit of Copenhagen pushed the date back to 2015 but affirmed that this global objective should be financed on a sustained and predictable basis. Primary responsibility for investment in basic education will remain with the public sector in the future, but local communities should be involved so as to ensure that it is supported by them, that it meets local needs and that it is accessible to all.

New channels for providing basic education may include programmes sponsored by the private sector and non-governmental organizations (NGOs), some of which could take advantage of distance-learning and Internet-based mechanisms which hold out considerable promise for populations that are most in need. Moreover, by supporting agriculture as a productive enterprise, education can encourage people to remain in rural areas and help them to earn adequate incomes.

Vocational education and training (VET) is at the centre of ongoing reforms in many countries. A consensus is crystallizing regarding its new rationale and aims, although the means of attaining them vary considerably among countries.

The primary purpose of VET is to instil knowledge of science and technology within a broad occupational area and to develop the requisite technical and professional competencies and specific occupational skills. VET policies, programmes and administrative structures vary widely in countries at different stages of economic development. A critical issue for VET is the emphasis placed upon general academic education and the development of portable skills on the one hand, and on occupationally-oriented training on the other, in order to facilitate the smooth transition from school to work and enhance people's basic employability.

At some intermediate age between 11 and 15, students tend to be channelled into one of two or three distinct streams that emphasize academic, vocational and general skills. The academic stream usually prepares for tertiary education and entry to university and has relatively little job-related content, given the pressure to meet the competitive entry requirements of higher education. The vocational stream includes a wide range of programmes with various levels of work-based content. At one extreme is school-based learning, which includes work familiarization and practical exercises designed primarily to prepare students for work or for post-secondary vocational training. At the other end of the spectrum are rigorously organized and accredited alternating periods of learning at school and in an enterprise, aimed at producing skilled workers who can gain access to jobs smoothly. The general stream lies somewhere between the two, leading to unskilled employment and possibly some post-secondary VET, but only limited opportunities for higher education. These streaming decisions, which generally involve some form of individual assessment, have traditionally been immutable, but they are becoming increasingly permeable.⁽⁷⁾

Vocational training programmes outside the formal education system, run by independent bodies and financed by governments or by a levy on the payroll of employers, are also common. Entry requirements and the duration of training vary considerably, as they target school leavers, unemployed youth and employed workers who need to upgrade and adapt their skills. Vocational training courses of short duration are more work-oriented and flexible.

Proprietary training, provided by private training firms and institutions, has traditionally been a large supplier of skills in the industrialized world, and has recently grown rapidly in many developing countries. Growth in proprietary training has mostly been in the area of non-industrial skills such as service occupations, computing and information technology, management, and accounting; it has largely avoided training for technical and industrial occupations, which tends to require more costly investments. Such training has grown in response to employer and individual demand for increased opportunities for upgrading and continuous training. Private training institutions finance their operations primarily by charging fees, sometimes complemented by government subsidies; a large share of the tuition and other fees charged by these institutions may also be underwritten in the form of state grants and low-cost individual student loans.⁽⁸⁾ Informal apprenticeship is a form of proprietary training common in countries that have a large informal sector, both rural and urban. Informal apprenticeship often absorbs a relatively large number of young people, and is now also being examined for wider use in other countries as a means of augmenting the supply of skilled trainees for informal sector employment.

VET has many benefits, but also some shortcomings.⁽⁹⁾ Faced with rising unemployment among new labour force entrants who primarily have a broad academic background but few workplace skills, many countries have turned to vocational education and training as a means of solving the problem. The results have not always been satisfactory, and the hope that equipping school leavers with practical skills would ease their transition into employment and alleviate youth unemployment has been only partially realized.⁽¹⁰⁾

At the secondary level, vocational education costs 1.2 to 7.2 times that of academic secondary education. In some countries participating in secondary vocational education may leave options for further study open. In others it may shut students out of university education because entrance is based on performance in the general or academic secondary school curriculum or because admission and enrolment have a clear male bias or are based on attainments in general education, which discriminate against young women and groups with a poor educational background.

Vocational education often has not been effective in instilling employable skills because of poor links to industry and delays in adapting programmes to changing enterprise needs. Vocational training programmes provided outside the formal education system have suffered the same fate, with generally only a modest impact on employment and earnings. These outcomes are not surprising given the relatively low level of investment, particularly in developing countries where structural adjustment has cut VET budgets significantly.

The quality of output of proprietary training institutions is also often poor, as the enrolment in these institutions, rather than their rate of placement or retention in productive employment of graduates, largely determines the level of public funding. Given the inadequate attention to outcomes, training quality suffers. Furthermore, poor population groups may not gain access to programmes for lack of resources. Informal apprenticeship is more widely accessible in developing countries, but it has little theoretical content and uses rudimentary methods and materials. Apprentices are often exploited as cheap labour, and apprenticeships may deteriorate into child labour. In addition, quality control, recognition and certification of skills and competencies remain a problem.

VET should be an extension of the general education system, providing both basic skills and the specific skills demanded by the labour market. And these skills should be portable, so that the workers can be versatile and adaptable.

In a knowledge and information society, lifelong learning in the form of continuous education and training (CET) is the guiding principle for policy strategies that promote a nation's economic well-being and competitiveness, but also its social cohesion and the individual's personal fulfilment. In developing countries, lifelong learning often assumes a particularly important social role as there is a large backlog in educating and training the labour force. Lifelong learning has an important equity element because it offers young people the prospect of gaining access to advanced training irrespective of their initial education and training. The need for lifelong learning applies not only to formal sector workers in developing countries, but also to small and micro-enterprises and rural and urban informal sector workers that urgently need to improve their skills, products, services and working conditions.

Many international organizations are promoting the adoption of lifelong learning strategies in their member States. For example, in June 1999 the group of eight leading industrialized nations (the G8) adopted an "employability charter", the Cologne Charter, with the subtitle "Aims and ambitions for lifelong learning." The Charter states that education should promote the spirit of enterprise and be accessible to everyone. It urges governments to make the investments necessary to modernize education and training at all levels, the private sector to invest in training their present and future employees, and individuals to take charge of their own personal development and career advancement. The Charter stresses the complementary role of the private and public sectors in financing lifelong learning, highlights the importance of new information technologies, and calls for greater international recognition of the skills and competencies gained through continuous education and training.

Some countries have enacted constitutional guarantees of the right to CET, and many have enacted laws to promote and develop CET actively. These laws define its objectives, scope and limits, institutional and organizational structure, basic financing arrangements and the accessibility conditions for such education and training. Some countries (e.g. most European Union (EU) countries) are attempting to harmonize different CET programmes and practices that have mushroomed in the past and to consolidate them under a single legal framework so as to make them both more effective and more equitable.

Several factors account for the growing demand for CET. Enterprises seek CET to enhance their competitiveness. Large numbers of displaced and vulnerable workers need CET because their skills are specific to a single employer or sector, putting them at higher risk of unemployment if they lose their jobs. The long-term unemployed whose skills have deteriorated and whose confidence has ebbed need CET to boost their chances of getting a job. "Second-chance" workers who dropped out of general education and/or training at an early stage need CET to make up for lost opportunities, and many people simply wish to continue learning as technology and the world of work continue to change. The educational attainment of young and adult workforce members, and the quality of their initial training before they enter the labour market, largely determine the scope and nature of CET.⁽¹¹⁾

Training and learning have often taken place in the workplace, depending on the size and type of the enterprise and the type of work organization and management culture. Job enrichment initiatives in the 1960s were perhaps the starting point for introducing continuous education on a more systematic basis, particularly in large enterprises. By the 1970s workers' training and upgrading had become promotional elements of sales contracts for new equipment and technology transfer to developing countries. Multinational and large enterprises tend to approach CET in a systematic manner and to make in-service training investment an integral part of their human resource and total quality management policies and practices. A few have even started to integrate human resource investment into their accounting systems, just as they would any other investment in physical capital.

Enterprise size is often an important factor in the provision of CET. Statistics for both the EU and the United States indicate that large enterprises are often the most active CET providers. These large enterprises increasingly introduce successful human resource management practices and new forms of work organization that help them become high-performance organizations, based on the use of continuous individual and collective learning. Professional, employer and industry associations also provide for, and assist in, financing in-service CET, particularly catering to the needs of small and medium-sized enterprises. In the informal sector in developing countries entrepreneurial associations play a key role.

Initial training by enterprises plays an important part in assisting young people to adapt to particular jobs and subsequently develop their portable professional competencies, especially when there has been little, or too general, initial institution-based training. Japan, for example, has emphasized the value of training in the workplace over that provided in training institutions; and it has stressed both technical and employment relations training, including "soft" skills.⁽¹²⁾ In many countries continuous in-service training has expanded to compensate for initial training and basic education programmes that are, or are perceived to be, inadequate responses to changes in the labour market. To some extent, this reflects the United States experience in recent years, with the expansion of customized training that is financed through a variety of training funds (e.g. the Employment and Training Panel in California, the Smart Jobs Fund in Texas) and responds very directly to needs articulated by employers and employer associations.

The expansion of initial training to "alternating" training, which combines institutional and workplace training, and apprenticeship has reduced the differences between initial and in-service training. When enterprises play a major role in initial training, particularly through structured apprenticeships, alternating training or a dual system such as Germany's, or when they maintain close linkages with training institutions, CET has followed naturally and reached all or many employees as an instrument to promote the enterprise's competitiveness and human resource management. Norway has expanded its use of apprenticeship training after many years emphasizing a school-based system, as have certain subsectors in many countries, e.g. banking, insurance, water, electricity and public services.

Despite the increased enterprise demand for CET, overall firm investment in training has been insufficient, except perhaps in countries with a tradition of on-the-job training (e.g. Denmark, Germany, Japan and Switzerland). If employee turnover is high, firms may be reluctant to train workers. Firms that risk having their staff "poached" tend to limit investment to non-portable firm-specific training; and smaller firms generally provide limited training as they often face higher training costs per employee. According to a recent study, one in five workers in the Netherlands reported that they were not receiving the training they needed, one in four in the United States reported they were under-trained, and almost 30 per cent of workers in Switzerland and a third of Canadian workers responded that they were not obtaining sufficient workforce development training. In addition, many studies show that CET is directed at younger workers up to 35 years of age and at workers who are better educated, have developed learning skills and possess the right portable, general skills; workers typically less likely to receive employer-sponsored training include women, minorities and those employed in the informal sector.

The growth of unemployment in the late 1970s and early 1980s was initially met by passive income-support measures. But these soon gave way to active programmes designed to help in particular the young and long-term unemployed, laid-off workers and women returning to the labour market to obtain work, inter alia, by providing substantial education and training. Employment and training funds have been established in both developed and developing countries to provide training and retraining of unemployed and other adults. These funds are financed by the State or through partially diverted unemployment insurance taxes paid by employers and workers.⁽¹³⁾ Regional and subregional economic organizations such as the EU and MERCOSUR increasingly contribute. And enterprises may be required to pay into a CET fund, particularly in industries with frequent lay-offs. The amount of resources allocated to CET for the unemployed tends to follow the economic cycle, rising when unemployment increases and decreasing when it falls.

Today, local and regional contracts for training are more open to competition and are increasingly contracted out to private training providers on a competitive basis as reforms have been introduced that open up the market for training the unemployed, which traditionally was the domain of public sector training institutions and centres. At the same time, public institutions are afforded the opportunity to compete with other training providers for a share of the growing private-sector CET market for adult education and training. Stagnant or declining regular employment, particularly in developing countries, has recently led to the promotion of self-employment and entrepreneurship as well, both of which call for managerial and business training. But entrepreneurial training measures have not always been as successful as expected, as economic conditions continue to be unfavourable, especially in some developing countries.

Recent international conferences and meetings, such as the 1996 Social Summit, have pointed to the growing incidence of poverty, inequality, economic vulnerability and social exclusion in the world. The population groups most affected include women, the unemployed, minority groups, persons with disabilities, indigenous populations, and workers in small enterprises and rural and urban informal sectors. Because many of the poor have had limited access to basic education and training, they remain trapped in low-productivity, low-wage work, often outside the formal sector.

Women make up over two-thirds of those living in poverty worldwide. They are heavily concentrated in the most marginal survival enterprises (often working at home) and in wage employment in secondary labour markets that are characterized by low skills and high turnover. In sub-Saharan Africa they also undertake most of the agricultural production. The problem of training is therefore overwhelmingly linked to the economic and social vulnerability of women, and particularly the multiple barriers and constraints that prevent them from taking advantage of training opportunities.

Older women workers who are illiterate or poorly educated lack the basic skills required to benefit from training if it were to be provided. In addition, in part because they enter and re-enter the labour market with such inadequate skills, they are constrained to the lower reaches of the formal sector in developing countries or to low-paid and increasingly contingent or part-time work in the developed countries.

Eliminating employment practices that discriminate against women, reducing the opportunity costs of training for women and improving their access to CET are likely to improve greatly their chances of securing better jobs and earning higher incomes. Policies to support lifelong learning and new pathways to skill development for workers in non-standard forms of work and those in occupations with low training opportunities can greatly improve women's access to better jobs and higher income earnings. In some developed countries, private sector enterprises have pioneered CET as part of their policies to promote equity in employment between men and women. For example, at the Electricity Supply Board in Ireland, technical and top-level jobs that hitherto were dominated by men have been opened up to women after they have undergone the requisite CET programmes.

Persons with disabilities comprise on average about 10 per cent of the total population. Traditionally they were excluded from regular schools and training programmes in most countries and placed instead in special centres with very limited training, often disconnected from the real demands of the labour market. This inequality of opportunities in education and training has contributed to the low level of economic integration and the marginalization of disabled persons.

Inspired mainly by United Nations, ILO and UNESCO policies and guidelines, an increasing number of countries are developing strategies, legislation and incentives to guarantee people with disabilities equal access and opportunities in education and training. The concept of "reasonable accommodation" to disabled persons' needs, reflected in the national legislation of the United States and the United Kingdom, for instance, applies also to schools and training centres. A methodology has been developed in Bolivia, Brazil, the Caribbean, Colombia, Mexico and Uruguay to integrate disabled persons in mainstream VET institutions. Some EU countries have established measures to encourage training for disabled workers through collective bargaining and agreements between the social partners. However, the problem of adequate education and training remains unsolved for the vast majority of persons with disabilities.

Many countries, particularly those in Africa, have a large informal sector where traditional apprenticeship is strong. Continuous training targeted at craftsmen can be used there to improve the quality of such apprenticeship. Assistance programmes have often endeavoured to establish multi-purpose resource centres that provide technical assistance and services and facilitate technology transfer to informal sector and micro-enterprise entrepreneurs and artisans. In some countries entrepreneur associations have taken over these resource centres and used them for continuous training and upgrading of their members. The centres have also contributed to raising the quality of informal apprenticeship. Particularly developed in West Africa, they are emulated in other parts of the region.

Public sector training has traditionally favoured groups other than those most in need. This is especially true in developing countries, although some, most notably Colombia, have changed their training priorities and resource commitments significantly in favour of the poor. In Africa most governments simply do not have the resources to fund major training programmes for the poor adequately and the small number of public institutions there mostly prepare school leavers for skilled occupations in the formal sector. Little is known about access of the poor to private training. However, NGOs have filled the large gap to some extent by integrating literacy and other training into their ongoing assistance programmes.

CET directly linked to the development needs of clearly identified groups among the poor is an important element of an effective anti-poverty strategy. CET, provided formally or informally, emphasizes functional literacy, basic business skills, skills to improve safety at work, and the development of technical skills to raise productivity in small urban and rural enterprises. Training in multiple skills is also given in support of efforts to diversify the participants' income-earning base.

Countries have tried a variety of different strategies to stimulate private investment in skills training that also targets disadvantaged and vulnerable workers. Since many of these workers are employed in micro-, small or medium-sized establishments, some of these training incentives have also been aimed at them. Training levies are potentially useful in that they can set a level playing field in terms of the investment that employers make in their employees. In some countries efforts have been made to redistribute the money collected through these levies so as to finance the training of members of vulnerable groups, even when these do not contribute financially. But employers have sometimes questioned this practice, arguing that they do not reap direct benefits from the provision of such training.

CET also plays an increasingly important role in collective bargaining. Some trade unions have established training funds through the collective bargaining process at the national level in Europe (for example in Denmark and the Netherlands) and at the sectoral level (in the United States in the telecommuni-cations and automobile industries). These funds are typically financed jointly by employers and workers, with contributions specified in the collective bargaining agreement. This has had a positive impact on the training of workers, especially those covered by collective bargaining agreements. But in countries with a substantial informal sector or low union coverage, such a strategy is likely to have a very limited impact.

The United States and the United Kingdom have recently focused on promoting a training market to meet the needs of disadvantaged groups by establishing individual training accounts (ITAs). In order to be effective these training accounts must be accompanied by adequate and targeted labour market information and guidance services.⁽¹⁴⁾

CET efforts have evolved from mainly ad hoc, private initiatives in the 1970s to become a strategic and integral element of economic and social policies in many countries in the 1990s. Many governments have endeavoured to establish a framework of incentives for, and commitments by, enterprises and individuals to engage in, sustain, develop and finance CET activities that both meet the short-term training and skills development needs of enterprises and promote the long-term career success of employees and increasingly diversified career paths.

A first challenge must be to review and strengthen the base on which CET is built – basic education and initial training. A substantial improvement in basic education and skills will create a better foundation for developing a CET system that will assist individuals to adapt to continuously changing demands in the labour market. Some countries have progressed more than others in ensuring everybody's access to opportunities to develop general, portable and employable skills. In countries that have progressed less in this area CET must, as a priority, continue to compensate for the deficiencies in basic education and initial training and impart the necessary employable skills. But CET must also endeavour to respond to the rapidly changing demand for specific skills in the labour market. The State must continue to assume a major role in providing CET as a means of equipping the labour force with the requisite general employability. In contrast, countries that have been able to raise the basic skills of their population have been able to devolve much of the responsibility for CET and its financing to the enterprise sector and the private training market.

The second challenge is to engage all the partners involved – the State, enterprises and individuals being the major ones – in a collective effort to sustain the emerging culture of CET. The State should assume a major role in developing the base for CET, enterprises and the private training market in providing and financing CET, and the individual in sustaining the demand for CET and contributing to its financing. The major equity challenge is to mobilize particular groups, provide the necessary information and guidance to them, and improve their capacity to organize themselves and make effective use of CET opportunities. This includes seizing the vast learning opportunities provided through the Internet, today accessible to an increasingly significant portion of the population, as an indispensable tool and vital medium of CET.

To sum up, in most countries, training policies and institutions have often responded poorly to the pervasive changes occurring in the economy and society. The growing need for education and initial training to provide the basis for employability and trainability throughout working life is still unmet for large sections of the population, particularly in developing countries. Economic and social demand for the retraining and adjustment of skills and competencies of the existing workforce has often been neglected, particularly at the fringes of formal labour markets. This omission has made it difficult for all countries to benefit from globalization and new technologies and to improve productivity and competitiveness. The incidence of poverty, inequality, economic vulnerability and social exclusion is growing worldwide. The groups most affected include women, the unemployed, minority groups and indigenous populations, often working in small enterprises and in the rural and urban informal sectors. More and continuous investment in skills acquisition and training could go a long way towards reversing this trend and should therefore constitute an integral element of comprehensive economic, employment and social policies and programmes.

For this, two major challenges must be addressed. Firstly, countries need to continue reviewing and strengthening basic education and initial training, and to pursue policies that reflect the progress they have made so far. Secondly, countries need to commit and engage all the partners concerned – the State, enterprises and individuals – in a collective effort to invest in more and better training and to sustain the emerging culture of continuous education and training. This effort must be supported by more resources, targeted guidance and improved information about successful experiences, nationally and internationally.

1 J. Hillage and E. Pollard: "Employability: Developing a framework for policy analysis", in Labour Market Trends (London) Feb. 1999.

3 These have been labelled "SCANS skills" in the United States, from a set of workplace skills and competencies identified in the early 1990s by the Secretary Commission on Achieving Necessary Skills of the Secretary of Labor.

5 R. van der Hoeven: Into the 21st century: Assessing social and political concerns, Paper prepared for the UNU Conference: On the threshold: The United Nations and Global Governance in the New Millennium, Tokyo, 19-21 Jan. 1999.

6 World Bank: Vocational and technical education and training, World Bank Policy Paper (Washington, DC, 1991).

7 For example, an increasing number of German apprentices now obtain a university entry certificate (Abitur). See David Soskice: "Reconciling markets and institutions: The German apprenticeship system", in Lisa M. Lynch (ed.): Training and the private sector: International comparisons (Chicago, University of Chicago Press, 1994).

8 The United States has an extensive system of student grants and loans that can be used for attending many proprietary schools, community and technical colleges and universities. In 1996-97, US$28.5 billion was expended on student (and family) grants and loans at all levels.

9 See Christopher T. King et al., op. cit.; and W. Norton Grubb: Learning to work: The case for reintegrating job training and education (New York, Russell Sage Foundation, 1996), Chapter 7.

10 The latest round of National Assessment of Vocational Education, which will report to Congress in 2002, is especially concerned about the poor rates of return to secondary vocational education in the United States. One of the main quality improvement strategies at the secondary level has been strengthening the connection between vocational and mainstream academic education objectives.

11 For a comprehensive review of employer training and its effects, see John Bishop: The incidence of and pay off to employer training: A review of the literature with recommendations for policy, Working Paper No. 94 (Ithaca, Cornell University, 1994).

12 Masanori Hashimoto: "Employment-based training in Japanese firms in Japan and in the United States: Experiences of automobile manufacturers", in Lynch (ed.), op. cit.

13 In the United States these state-based funds now often rival in size the federal training allocations under its 1998 Workforce Investment Act; for example, the three training funds in Texas, the second largest state, totalled more than US$60 million in 1998.

14 The ITAs that are being created in the United States under the Workforce Investment Act are not vouchers in the true sense, in that they come with many controls and restrictions and are accompanied by an elaborate training provider certification process and substantial information on labour market opportunities, demand occupations, wages, etc. For a thoughtful critique of training vouchers, see John Trutko and Burt S. Barnow: The evidence on vouchers (1999).

Impediments to employment of youth (aged 15-24 years) have substantially increased in recent years. A disproportionately large number of young people are exposed to long-term unemployment or are limited to precarious or short-term work, or poor-quality low-income jobs. Consequently, large numbers of young people drop out of the workforce, or fail to enter it successfully in the first place and become inactive. Socially disadvantaged youth are particularly affected, perpetuating a vicious circle of poverty and social exclusion. Problems of youth employment pervade both developed and developing countries, although in developing countries, where few people can afford to be unemployed, the employment problem is more an issue of underemployment and low pay in the formal sector and low-quality jobs in the typically large informal sector.

Youth employment has become a priority of employers' and workers' organizations throughout the world. The International Organisation of Employers (IOE) presented its action programme on youth employment at the First 1998 Session of the General Council of the IOE. The International Confederation of Free Trade Unions also has an action plan on youth employment. Many youth organizations are involved in youth employment promotion and projects. The Young Americans Business Trust (YABT) of the Organization of American States is a multinational project that promotes micro-enterprise development, business skills training and support services for young people throughout the Caribbean and the Americas. The European Commission's 2000 Employment Guidelines urge member States to ensure that every unemployed young person is offered a new start before reaching six months of unemployment, by means of training, retraining, work practice, a job or other employability measure with a view to effective integration into the labour market.

The ILO has long been active in raising awareness of youth employment issues. In 1970 it adopted the Special Youth Schemes Recommendation (No. 136), which provides guidelines regarding youth employment and training schemes for development purposes and specifies the conditions under which they should operate. In 1986 and 1996 youth employment was on the agenda of the International Labour Conference, and in 1996 the Conference adopted conclusions for the promotion of full employment which called on countries to design and implement special measures to enhance the employability of groups with special needs, including young workers.

The ILO also implemented an Action Programme on Youth Employment that highlighted the importance of improving general economic conditions and strengthening tripartite involvement; and it stressed the need for adequate labour market information, carefully targeted measures, and monitoring and evaluation. The ILO has established a database entitled Key Indicators of the Labour Market (KILM) that includes youth unemployment, disaggregated by sex, as one of the indicators. The ILO now has a youth employment web page⁽¹⁾ that provides information on publications, indicators and best practices of youth employment, and is in the process of preparing manuals on youth employment for use by employers' and workers' organizations. And the ILO has undertaken country-level activities to promote youth employment in Brazil and Fiji.

The ILO has also made a serious commitment to the elimination of child labour, which is at the root of poor working conditions for youth. The International Programme on the Elimination of Child Labour (IPEC) is now active in 90 countries in Asia, Africa, Latin America and Europe. In June 1999 the International Labour Conference adopted a new Convention on the worst forms of child labour. The elimination of child labour should remove a major obstacle to school attendance and improve conditions of traditional apprenticeship.

Other international ventures have also been launched recently, including the World Youth Forum of the United Nations System and the First World Conference of Ministers Responsible for Youth. In the light of the growing consensus on the special need to help youth obtain adequate work, the ILO Governing Body decided that special emphasis should be placed on youth during the general discussion on human resources development and training at the 2000 session of the International Labour Conference.

A large proportion of young workers are unemployed throughout the world. In countries as diverse as Colombia, Egypt, Italy and Jamaica, more than one in three young workers are classed as unemployed – declaring themselves to be without work, to be searching for work and to be available for work (table 1). The most seriously affected regions are southern Europe (notably Greece, Italy and Spain), Eastern Europe (particularly Bulgaria, Latvia, Macedonia and Poland) and the Caribbean (especially Jamaica and Trinidad and Tobago). However, youth unemployment is not high in all countries. In Austria, Japan, the Republic of Korea, Mexico, Singapore and the United Republic of Tanzania, fewer than one in 12 young workers are unemployed, and the difference between youth and adult rates is relatively low. In Germany, although unemployment among youth has risen, it remains not much different from that of adults.

Table 1. Open unemployment rates, young workers, selected countries, ca. 1997

(Ranked by difference between youth and adult rates)


	Youth unemployment	Difference between	Year
	rate	Youth and adult rates	(if not 1997)
	(%)	(% points)

Zimbabwe	44.3	33.7	1994
Egypt	34.4	30.0	1995
Colombia	35.1	29.3
Namibia	56.7	28.5
Jamaica	35.2	26.6	1995
Italy	33.6	24.5
Spain	37.1	19.9
Sri Lanka	24.7	18.7	1995
France	28.1	17.2
Poland	24.6	15.2
India	16.1	12.6	1993
Russian Federation	16.6	09.7	1995
Hungary	15.9	08.5
Chile	13.0	08.9
Brazil	12.6	08.0
Indonesia	08.7	07.7	1992
United Kingdom	13.5	07.6
United States	11.3	07.5
Korea, Republic of	07.7	05.8
Tanzania, United Republic of	07.2	05.1	1990
Mexico	06.6	04.2
Japan	06.6	03.7
Singapore	05.1	03.0
Austria	06.5	02.3
Germany	10.0	00.3
Note: Youth is typically defined as ages 15-24 inclusive, adults as ages 25 plus. Unemployment is defined as the combination of being without work, available for work and actively seeking work during the reference period; differences in the implementation of the definition and in sources of data nevertheless limit the comparability of unemployment rates across countries.
Sources: ILO: World Employment Report 1998-99 (Geneva, 1998), table 9; P. Visaria: Unemployment among youth in India: Level, nature and policy implications, Employment and Training Paper No. 36 (Geneva, ILO, 1998), tables 2.3 and 2.8; ILO: Key Indicators of the Labour Market 1999 (Geneva, ILO, 1999), table 2.

A disproportionately large number of youth in many countries are underemployed, working fewer hours than they would like. Young people may be able to obtain only part-time work, as is often the case in France (particularly among young women) and Indonesia for example, or seasonal work, as happens frequently in the agriculturally based economies of South Asia and sub-Saharan Africa. Underemployment is also high among many young people who work in the household production unit in the rural and urban informal sectors.⁽²⁾

In most countries teenagers show higher unemployment rates than do people in their early twenties (table 2). However, the difference is small in Indonesia and India, and only moderate in most developed economies. In France and Germany, where it is actually negative, mass labour market programmes and apprenticeships that target teenagers have temporarily reduced their rate of unemployment.

Table 2. Disadvantage and youth unemployment, by schooling, race, gender, age

(Percentage point differences between unemployment rates of the two sub-groups of young workers)


	(1)	(2)	(3)	(4)
	Schooling:	Ethnicity:	Gender:	Age:
	early leavers	minority minus	Female minus	15/16-19 age group
	minus all leavers¹	majority²	male	minus 20-24 age group
Developed economies
France	–10	10	07	–6
Germany	–06	10	–1	–3
Japan	–00³	06	00	04
Sweden	–10	10	–1	07
United Kingdom	–15	26	–6	04
United States	0–9	20⁴	–1	08
Other economies
Brazil			06
Hungary			–2	15
India			00	03
Indonesia	–20⁵		01	01