‘Many countries face significant skills gaps across a range of industries, particularly in technical and specialized fields’ says Boston Consulting Group .
These gaps persist despite distressingly high unemployment rates even in developed economies. Jobs remain unfilled even as potential workers, lacking the skills and training that industries require, sit idle.
Technical and vocational education and training (TVET) has the potential to address both challenges: closing skills gaps and reducing unemployment. However, TVET suffers from the perception that it is inferior to the general academic education (GAE) provided by traditional four-year universities. In most countries, students, parents, and career advisors still hold a strong bias in favor of degrees from traditional universities and see TVET programs as a “second tier” option that is suited for students with lower aspirations or lesser academic abilities.
The result is a negative-feedback loop: TVET schools are perceived as lower quality, which in turn limits investment in them. With insufficient investment, TVET schools increasingly suffer from inferior infrastructure relative to traditional education channels and have less money for teacher training, curriculum upgrades, and the equipment needed for students to learn the required skills. In 2008, Organisation for Economic Co-operation and Development countries spent an average of just 0.2 percent of their gross domestic product on TVET, compared with 4.3 percent of GDP on early-childhood, primary, and secondary education and 1.3 percent of GDP on traditional tertiary education. The investment shortfall leads to declining outcomes among graduates and reinforces perceptions that TVET is a lesser substitute for GAE.
A related issue is that TVET programs often lack regulatory oversight. Many countries either lack accreditation bodies or have multiple agencies that operate independently. The absence of a single national authority with a complete overview of the entire TVET landscape often leads to different, competing, or confusing standards within a single country. Without consistent regulation, TVET providers have wide latitude to craft their own content, which may lead to significant variations in quality. As a result, employers often do not know what TVET programs are teaching and cannot rely on a consistent pipeline of quality graduates. In some cases, employers have had to retrain their new hires in the skills needed for specific jobs.
Countries can reverse the negative-feedback loop by upgrading TVET schools and ensuring the relevance of TVET to employers. Such steps can generate real value for national economies by putting people to work productively. To make this happen, all stakeholders in national education systems—governments, industry players, TVET providers, and students—will need to collaborate and work to adopt best practices.
Four Key Success Factors
The Boston Consulting Group’s in-depth research on education in markets around the world has revealed four factors that are key to the success of TVET systems:
- The presence of a coordinated ecosystem in which all stakeholders, including a central agency with clear oversight of the TVET ecosystem, actively cooperate
- Performance-based government funding and support
- Parity between GAE and TVET and a straightforward means for students to transition between the two tracks
- Sustained, collaborative efforts from industry…
Because education systems are strongly correlated with the level of economic development within a given country, the report plots the countries’ TVET performance against GDP growth over the past six years. (See Exhibit 1.) This broke the universe of 45 countries into three clear bands:
- Mature economies with strong TVET ecosystems
- Fast-growing economies that are developing their TVET ecosystems and stand to benefit from a more stable set of practices
- Developing economies that have the greatest relative potential gains from making improvements to their TVET ecosystems
Many countries have recognized the benefits of improving their TVET ecosystems and have taken active steps in this direction. For instance, Indonesia, which has one of the fastest rates of economic growth worldwide—and appears to have been relatively resilient in the face of the economic crisis—has implemented several measures to standardize its TVET system. The country’s Ministry of Manpower and Transmigration, which establishes the National Competence Standards for Work, collaborates with private-sector players to identify the key skills required of workers and establish industry-specific standards. Indonesia’s National Education Standards Agency coordinates among stakeholders and develops a framework for competence-based certification based on the National Competence Standards for Work. Finally, a national training system encourages training in the workplace and has established regulations for apprenticeships…