Cultivating a Highly Skilled Workforce Through Higher Education
Employers across the region—from Indonesia to Thailand to Mongolia—are pointing out that those graduating from institutions of higher learning lack the skills needed to succeed in today’s market These include communications, critical and creative thinking skills, teamwork abilities, command of foreign languages, and ICT skills.
These skills are needed more than ever to improve productivity and competitiveness, especially in the manufacturing sector, which is lagging in several countries, and to respond to the needs of the growing service sector Higher education has a critical function in supplying employees who have higher–level academic and technical skills, as well behavioral ones. Its inability to supply graduates with these skills may, therefore, have dramatic consequences on economic growth.
The country case studies, under development, are taking a closer look at how skills match up to labor market needs and how to make higher education more responsive to these needs. Policy reviews are complementing these studies to focus on critical policies for skills.
Indonesia Skill Report (Added July 21)
In Indonesia, the past two decades have been a time of great progress but also massive transformations and abrupt setbacks. In this context, this report reviews the main characteristics of - and trends in - demand for skills in Indonesia, seeking to document the existence of a possible skills mismatch between employer demands and available supply and the contribution of the education and training sector to this mismatch, to finally aim at proposing measures to improve its responsiveness to what the labor market and the economy need. In today’s job market in Indonesia, there appears to be a premium on theoretical and practical knowledge of the job. While skills do not appear to be yet among the most important constraints for the economy, the situation is different for larger more export-oriented manufacturing firms, and subjective assessments of difficulties of matching needs with available skills provide evidence that skills are becoming an issue overall in Indonesia. The widest gaps across professional profiles are for English and computer skills followed by thinking and behavioral skills. Theoretical and practical knowledge of the job are also considered to be weak. There are important gaps in creativity, computing and some technical skills for young workers. English remains the largest gap. Five general skill related priorities can be highlighted for Indonesia. First of all, the country needs to improve skill measurement to get a fuller understanding of skill needs and gaps. Second, it is urgent for Indonesia to address the still unsatisfactory quality and relevance of its formal education, including higher education. Third, the country needs to set-up multiple pathways for skill development. Fourth, the country needs to develop an integrated approach to tackle skill development for youth. Fifth, Indonesia should also tackle labor market constraints which affect the skill matching process.
Philippines Skill Report (Added July 21)
This report investigates trends in skills demand and supply over the past two decades for insights into ways to build (and use) the critical skills needed to sustain competitiveness of the Philippines economy. Demand for skills is growing driven by the service sector. Beyond responding to the needs of the demand, adequate skills are central for improving the long-term innovation potential and competitiveness of the Philippines economy. There is a strong need for critical skills with focus on: a combination of job specific and generic skills, higher level skills applicable to the service sector, skills supporting a more competitive manufacturing sector. Unfortunately, many of these skills are under-provided: the economy is facing emerging skill gaps. Causes for emerging skill gaps are multiple, including reasons related to overall skill supply (quantity-quality) and labor market. Quality and relevance of education and training is the most preeminent constraint across the board, much more than overall quantity constraints. Weaknesses in skills include gaps in critical generic skills and, to a lesser extent, gaps in some job-specific/technical skills. Some of the skill gaps also have particularly strong implications for longer-term competitiveness and innovation. General policy recommendations include: more international benchmarking of institutions and students; strengthening generic, or life, skills in the curricula of all education and training levels; better articulation of the different pillars of the skill supply system; more flexibility in curriculum and academic decisions; support for closer linkages between post-secondary and tertiary education and industries; and improved quantity and quality of the information on the labor market.
Mongolia Policy Note Abstract (Added July 21)
The rapid growth of Mongolia’s higher education system has been fueled by the increased demand for higher skills in the labor market, leading to rising education premia. However, the increased supply of tertiary education graduates has failed to improve Mongolia’s international competitiveness. As a result of rapid expansion, an inequitable financing mechanism, and insufficient quality assurance, Mongolia’s tertiary education suffers from low external efficiency, inequitable access, and poor quality. Enhancing the quality of tertiary education along each of these dimensions will be essential to improving Mongolia’s international competitiveness over the medium term. To do so requires making strategic choices, improving governance, and increasing investments in the system. This policy note offers a set of recommendations in order to help Mongolia’s tertiary system to: (i) improve its coherence, governance, and responsiveness to the changing demands of the market economy; (ii) improve its efficiency and resource utilization; and (iii) improve the quality of its curricula, teaching, and learning.
Higher Education and Skills for the Labor Market in Cambodia
Although Cambodia’s higher education system has grown rapidly over the past five years, the emphasis has been weighted toward expanding the system vs. improving it—in terms of teaching quality, research capacity, and labor market responsiveness. As a result quality is at stake and skill gaps are emerging. Diversification remains paramount, say the study’s authors, in a country where the economy is concentrated on just a few industries and where almost 50% of tertiary students are enrolled in business-related courses. It is also critical to ensure that higher education provides workers with the right set of analytical and decision-making skills. Other recommendations in the report include the development of a more comprehensive labor market information system to ensure, in part, that the skills gap begins to narrow.
Higher Education Institutions in Thailand and Malaysia – Can They Deliver?
Despite a long history of higher education reforms, scarcity of skilled, competent employees continues to be one of the biggest policy concerns in Thailand and Malaysia. While enrollments are increasing, higher education institutions in both countries have to face the “market test” by improving the quality and relevance of their students. This comparative study of the higher education systems of Thailand and Malaysia explores the main higher education related skills gaps and mismatches. Several findings of interest have emerged:
- Demand for skilled workers continues to be strong in Thailand and Malaysia, and the growing number of university graduates in both countries does not appear to satisfy this demand.
- “Educated” workers do not appear to be the most skilled. Technical skills and experience are turning out to be far more important in hiring decisions than educational achievement. In this regard, Thai universities are especially weak.
- This lack of skilled employees is costly to firms; many of them see this scarcity as a serious bottleneck in expanding their capacity.
- Employees feel misplaced and underqualified; in addition, many feel they lack the necessary skills to adapt to a changing labor market, and do not know where to turn for help. Hiring managers are also wary of skills mismatches. They think employees lack the skills needed for success, especially language skills, innovative thinking, technical and information technology skills.
- Industry/firm linkages are very weak. Firms do not perceive universities as a major source of know-how, innovation, training, or even employees. The paper also suggests policy options on how higher education systems in both countries can better respond to labor market needs.
- Full Report (PDF)
Vietnam - Higher Education and Skills for Growth
This paper explores the demand for and supply of higher education in Vietnam, by looking at trends and drivers of the demand for skills in the country and at the main constraints and challenges that the higher education systems faces in addressing this demand. The paper finds that the demand for skills has been increasing significantly in Vietnam, owing to a combination of inter-industry employment changes, capital accumulation and some evidence consistent with skill-biased technical change. Low R&D capacity, increasing evidence of skill bottlenecks and the still inequitable distribution of higher education opportunities, combined with broad institutional and financing constraints, suggest that the higher education system does not yet have the tools it needs to adapt to the growing and changing needs of an increasingly dynamic economy. To develop a first-class high-performing higher education system, Vietnam may consider pursuing a three-stage reform agenda to: Strengthen its framework for a competitive higher education system, help universities improve the relevance of decision making for emerging social and economic needs, and invest more in building a first-class higher education system.
Labor Market Outcomes of Higher Education in East Asia
Current diagnostics on higher education and skills in East Asia show that higher education systems are not keeping up with the changing demands for skills, which contributes to the widening skill gaps among graduates and their lack of success in the job market. This paper focuses on the successes and failures in the job market of graduates, examining employment/unemployment/rates of return and job/industry profile, overall and across population groups. In addition, the study explores how the benefits of additional education vary by socioeconomic status. The paper uses data from various household and labor market surveys from individual countries in the region. The main findings of the paper highlight the diversity in labor market outcomes across the East Asia region. The lowest unemployment rates for university graduates are found in Vietnam, Cambodia and Thailand and the highest in the Philippines and Indonesia. Overall, youth unemployment rates exceeded those in the adult population, especially in Indonesia. A significant proportion of graduates in Vietnam, Thailand and Mongolia are employed in the Professional and Management occupations, whereas a significant proportion of graduates in Indonesia, Cambodia and to a certain extent in the Philippines, are employed in clerical occupations. Workers with post-graduate qualifications are more concentrated in high paying occupations. Finally, the assumption that graduates with higher socioeconomic background derive greater benefits in the job market generally holds true, with the exception of Vietnam. Clear evidence is found that the marginal “return” on schooling increases by both family income and the father’s education. In other words, individuals from less privileged backgrounds benefit much less from more education.
East Asian Private Higher Education: Reality and Policy
Private higher education accounts for 38.6 percent of higher education enrollment in East Asia. This is more than twice the raw enrollment in any other region, except for Latin America, and it continues to grow. This growth is a combination of private initiative and favorable public policy. Moreso than in other regions, the bulk of private higher education is “demand-absorbing”: It emerges to absorb the rising demand for higher education because the demand exceeds the supply, and public supply cannot keep pace. Private higher education institutions, both nonprofit and for-profit, are crucial to access but can present problems of quality and transparency. At the same time, the most reputable of these institutions are productively tied to the labor market, show capacity for improvement and enhance diversification, choice and competition in higher education. They can also offer models for the public sector in market-oriented fields of study, entrepreneurial management, and efficiency. The extent and shape of government regulation is not easy to ascertain regionally. Often quite permissive policy has led to “delayed regulation”, which has led to low quality. Here, caution is required because over-regulation can crimp innovation, competition, choice, and diversification. Too often, regulatory provisions (and accreditation) mirror those for the public sector or are even more demanding.
Governance of Higher Education in East Asia
This paper offers an overview of trends in higher education governance in the East Asia, with a special focus on autonomy and accountability, and provides some policy recommendations based on international experience. Governments in the region have prioritized institutional reform in higher education so that they can build a more flexible and responsive system. Although significant inroads have been made in the past decade, reform still has a long way to go. Reform has been much more effective in high-income countries in the region, in particular, Japan and Singapore. Middle-income countries, including Indonesia, Thailand and Malaysia, began reform early but have been slow to push through reform. By contrast, low-income countries, particularly Vietnam, Lao PDR and Cambodia, are at an early stage of reform and are only now considering options on how to decentralize the governance of their higher education systems. Evidence on outcomes remains rather weak and this is clearly the next priority area for research.