Fundamental Lessons For SA from China,India

…concrete steps towards skills development for economic growth

During the past decade, dramatic changes in the world economy were spread headed by the fast changes in technology and the knowledge economy. Positive impacts include the creation of 900 million non-farm jobs in developing countries. At the same time, emerging imbalances are resulting in skill shortages in largest world economies, while other developing countries are facing increasing unemployment rates among the youth. Employers face growing shortages of high-skill workers required to raise productivity and sustain GDP growth

This is according to a report of the BRICS Business Council Skills Development Working Group.

In China for example, the shortage of high-skilled workers could deter high economic growth rates. There is an increasing mismatch between skills that employers demand and those that could be offered by workers.

SA Lessons from China:

China rates just 4% of its workforce as highly qualified. Only 36% of workers have a lower secondary-school qualification. The remaining 60% have little or no skills and regarded as “elementary workers”. These include some 200 million migrants from rural to urban areas. Four out of five German enterprises in China consider the lack of qualified workers the biggest obstacle to growth and competitiveness. However, estimates show that one-third of all secondary vocational education graduates are unable to find appropriate jobs, and about a third of university graduates fail to find work during their first year after graduation.

Key elements of the “Opinion on Further Strengthening Efforts on Highly Skilled Workers Cultivation”, issued by the Government in 2006, include:

Encouraging a broader variety of providers to supply training while also improving curricula and assessment; incentives to employers to hire more highly skilled workers;

Special remuneration schemes targeting higher-skilled workers;

Increased training for migrant workers and for business start- ups;

Increased investment in training centers’ facilities and in the teaching profession.

SA Lessons from India:

In India, employment growth is almost exclusively concentrated in the informal economy, where more than 90% of India’s workers are employed at low levels of productivity and income. Half of the country’s population over the age of 25 has had no education and an additional third have at best primary schooling. Four out of five new entrants to the workforce have never had any opportunity for skills training. While enrolment in technical education institutions has increased (from 2.1 million in 2000 to some 3.8 million in 2005), there is a very high dropout rate in these institutions. There is a huge shortage of teaching faculty in engineering colleges. At the same time, significant skills shortages are reported throughout the formal economy. In the information technology sector alone, the current deficit in engineers is estimated to be around half a million.

In order to address these challenges, India adopted an ambitious National Skills Development Policy in 2009. Its main aim, in the words of the Union Minister for Labour and Employment, is to:

Empower all individuals through improved skills, knowledge and internationally recognized qualifications to give them access to decent employment and to promote inclusive national growth.

Increase vocational training capacity to 15 million students over the 11th Five Year Plan period (2007-12).

Meanwhile, Latin America is the region with the highest talent shortages as reported by industries. Countries in this region on top of the list of skills shortages are Peru (67%), Brazil (63%), Argentina (63%), Panama (58%) and Colombia (57%). In India talent shortages amount to 61%, in China 36% and South Africa 6%. The global average is 35%17.