Most important research results
The following section summarizes key findings of our research and identifies which research interests we were able to cover, and which ones not, or not sufficiently. We begin by providing an overview of our key insights with respect to our three guiding hypotheses concerning the skills level of programmes, and strategies to link education, training, and industrial development.
A Review of our Hypotheses
Hypothesis 1: VSD initiatives that focus on higher skill levels are more likely to contribute to inclusive industrial growth and transformation. We found that VSD initiatives focused on higher skill levels are crucial for fostering industrial growth, particularly in areas experiencing acute skills shortages. VSD initiatives at higher skill levels are also perceived as not only beneficial but sometimes pivotal in equipping the workforce for technological advancements and organizational shifts. Companies express an appreciation for employees with formal training, attributing to their greater adaptability to these changes, however many don’t have the capacity or motivation given their specific context to recruit or train accordingly. In terms of inclusivity, the contribution is nuanced. A focus on higher skill levels can lead to additional disparity, with benefits accruing more to those already possessing higher skills or having access to advanced training opportunities. Yet addressing skills shortages can also remove obstacles to company growth overall, which might benefit workers positioned lower in the skills ladder too.
Hypothesis 2: VSD initiatives that aim at helping companies to access low-qualified labour are less likely to contribute to inclusive industrial growth and transformation. Overall, the evidence suggests that employers place limited emphasis on formal qualifications for lower-skilled positions, prioritizing practical abilities instead. Furthermore, these skills are often highly specific to the job at hand, leading companies to prefer conducting their own training. Consequently, initiatives appear to offer minimal contributions to transformation, growth, or inclusivity.
Hypothesis 3: VSD initiatives in countries with a clear strategy and the respective capacity to link education and training to industrial development are more likely to contribute to inclusive industrial growth and transformation. There were indications from the interviews that VSD initiatives in countries with clear strategies linking education and training to industrial development are more likely to contribute effectively to industrial growth and transformation. However, we were not able to test and explore this further, for instance by comparing countries or industries with and without such strategies and linkages. Overall, we can make little contribution here, for a variety of factors, including the complexity of the topic, the inability of interviewees to talk about the linkages, or because these topics were not given sufficient space in interviews.
Reflecting on the findings in terms of understanding Skills Formation
Understanding the quality and extent of transformation across its different interlinked dimensions – changes in products and services of the company, in technology, in work organization – is a challenge in itself, let alone to then extend this understanding to the interrelations with skills development. The same applies to inclusivity, which is a multifaceted concept, relating to various outcomes for as diverse groups as women, low-income households, and historically disadvantaged groups. We were, however, able to reach certain conclusions through our analysis.
1. We found that workplace transformation in low- and middle-income countries is mostly externally initiated – including through changing demand and buyer requests; new technology; the need to replace broken machines; and government incentives and interventions. For most companies, industrial transformation has resulted in the need for new and more skills. Skills development is, at least in principle, perceived as crucial by companies to enable workers to deal with the technological and organizational change. Formal training is seen as providing foundational knowledge and technical skills which can prepare individuals for emerging technologies and new practices. However, its rigid structure prevents swift adaptation to industrial changes, and many programmes are seen as misaligned with industry needs in the first place. Perhaps for these reasons, we found that despite the positive statements made about the value of TVET, uptake is low in many contexts, especially at the lower end of the skills spectrum. Non-formal training, with its increased flexibility and adaptability, can in principle address specific, immediate industry needs, offering a more tailored approach to skill acquisition and upskilling. Beyond ubiquitous induction training across the six countries and the various industries observed, non-formal training is also regularly used for upskilling, sometimes by clients or machine suppliers themselves.
2. In our study, we conceptualized the relationship between vocational skills development and growth as being primarily mediated through company transformation itself. Consequently, the observations mentioned above are relevant here as well. However, there is also a direct connection between skills formation and growth, particularly in the short to medium term, as companies deal with their current skills shortages. Many companies in Cambodia, Laos, South Africa, and Vietnam have indicated such skills shortages, at least for part of the roles. Skills shortages were mentioned less often in Bangladesh and Ethiopia.
3. In terms of inclusivity, our analysis of company training uptake shows a distinct hierarchy: more training is requested upon recruitment for higher-skilled positions while more training opportunities are offered to individuals in these positions. Notably, while access to training may be equitable, women remain underrepresented in these roles, particularly in technician positions. Our research indicates that wages have increased across all occupational levels, demonstrating absolute inclusive growth in all countries and all but one sector. Relative inclusive growth – as measured as above-average growth for low occupational levels – is also observable in specific areas. However, discerning the direct impact of training on inclusivity was very challenging.
4. Finally, the findings show that much employment is offered on lower occupation levels, with thinning employment opportunities as one moves up the occupational ladder. Conversely, skills shortages are primarily reported for those higher segments of the ladder.
Together, our findings suggest a limited role for formal TVET as mass education solution in low- and middle-income countries. Formal training is too rigid in its structure, which prevents swift adaptation to industrial changes, and many programmes are seen as misaligned with industry needs. Non-formal training, with its increased flexibility and adaptability, is mentioned more often in terms of its ability to address specific, immediate industry needs, offering a more tailored approach to skill acquisition and upskilling. Notwithstanding these challenges, we found that the three training types (formal, non-formal, and informal) appear to complement each other rather than act as substitutes. By linking program features with company perceptions of the programs, we found that programmes with certificates issued by providers rather than government (where such a distinction can be made) received on average better ratings from companies, as did programmes with funding sourced from entities other than the government. We also found that a high proportion of teachers/lecturers with industrial backgrounds as opposed to purely formal qualifications, and programmes offering additional services such as coaching and placement were often associated with positive ratings. Interestingly, programmes run by profit, private but non-profit, and public institutions received almost identical ratings in terms of their contribution to skills needs.
To understand why so many VSD programmes do not adequately respond to demand we returned to our question about the factors that influence skills formation in these countries and found that formal provision systems and national policies do not appear to be developing in response to the needs of industry. There appears to be a lack of strategic integration among the training methods reflecting that on a system level, skill development is not approached and conceptualized in a strategic manner, leading to a disjointed learning process. This is particularly evident in the regulatory frameworks related to skills development which almost solely focus on formal TVET provision in terms of funding and in the way in which quality assurance mechanisms are implemented. This lack of responsiveness suggests that the regulatory factors may be a central hindrance to allowing skills formation to evolve in response to the demand for skills in a country which are determined by workplace transformation, the regulatory framework related to industry as well as the labour market more broadly, as well as wider socio-economic factors and global economic trends.
Results that are particularly useful for up-take to shape policy and/or practice
Many of the research results are relevant to share policy and practice.
• Formal pre-employment VSD programmes are of particular relevance for companies at the mid-level of the occupational hierarchy, while on-the-job training is considered to be more effective for employees at the lower level. This is even the case for companies that have more intensive skill formation regimes and offer comparatively good prospects to employees at lower occupational levels. This finding is critical as many governments and donors (e.g. SDC), in order to equalise access to formal VSD, often provide support to formal pre-employment training catering to lower occupational levels, a practice that might need critical review.
• Effective VSD delivery, catering to the needs of industries, can also emerge without national-level strategies linking education and training to industrial and economic development. This points to the importance of involving stakeholders at the implementation level in the design of VSD programmes, to ensure they are in line with companies’ skills needs (according to their positions in value and supply chains).
• Furthermore, our results suggest that there is, even within mainly supply-driven TVET systems, room for public policies (e.g. skills development funds such as the one currently being set up in Cambodia) that support the establishment of such VSD programmes.
