The need for quality employment in the developing world underlies the success of nearly all other development initiatives. Job creation has become one of the most pressing issues on the road towards fueling the economic engine and impacting complex and intertwined poverty issues, such as education, nutrition, healthcare and housing. Without the ability to have a stable, reliable income, there is little hope for the poor to engage in sustained solutions that will improve their circumstances.
A Million per Month
Job creation, however, is only one side of the equation. A report released last month by the World Bank (WB), entitled “More and Better Jobs in South Asia,” says that a comprehensive and multi-sectoral policy framework will need to be implemented in order to meet the “demographic dividend” opportunity. This “dividend” is the return on a swelling youth population and an opening labor market for women—South Asia has the second lowest female participation rate in the world—that will continue to enter the workforce until 2040. The challenge will be to engage these new employees at “rising levels of productivity.” “An estimated 1-1.2 million new workers will join the labor market in South Asia every month over the next few decades—an increase of 25-50% over the historical average.” This means that one-million new jobs need to be added each month in order to “sustain economic growth and reduce poverty in South Asia,” says an article in The Hindu. Introducing quality jobs and having an equally qualified workforce will involve reforming the education system and developing a large-scale skills training initiative, similar to what has been launched in India under the National Skills Development Corporation initiative (see “Skills Training for India’s Youth” in the May 2011 issue of Searchlight South Asia).
A Multi-Layered Policy Framework Needed
While the private sector will play an important role in expanding job opportunities, the governments of South Asian countries have the task of creating an environment where the labor force can be expanded, upgraded and “modernized” at the same time new employment opportunities are developed. In order for this to happen, the framework will need to address infrastructure deficits, nutrition shortfalls and education gaps. “In the absence of such a framework, productivity will be growing slowly or remain stagnant and the dividend will go uncashed,” says the WB report.
Nutrition, for example, was a focal point in the WB study as a major obstacle to a healthy and productive labor force. Investment in nutrition programs, especially for woman and children, will boost school attendance and performance. The malnutrition rate in South Asia is even higher than in sub-Saharan Africa, which translates to some of the highest levels of malnutrition and anemia in the world. Pakistan, for example, has relatively lower percentages of stunting, underweight and wasting rates than India and Bangladesh, though the numbers are still higher than in sub-Saharan Africa: in Pakistan, 31% of children under five are underweight; in Bangladesh, the number jumps to 40%; and in India, it is 44%.
Until recently, Pakistan has made little investment in nutrition programs as compared to its neighbors. However, five years ago in 2006, a plan was launched to reduce malnutrition in women and children that also called upon the private sector to partner in the initiative. Still, more needs to be done at a faster and more comprehensive pace, since malnutrition at a young age impacts the person for life, both physically and cognitively. In a case study published earlier this year that analyzed urban malnutrition in Bahawalpur, Pakistan, the authors found that the “slums need targeted policy for children welfare regarding their nutrition in the form of provision of public utilities and income support.” Pakistan’s case is unique in the region since it has long been seen as self-sufficient in growing diverse agricultural produce and refined foods. Reasons cited for the lack of impact include lack of a clear and focused strategy, as well as lack of political commitment, in addition to minimal investment in nutrition interventions.
A comprehensive nutrition program often goes hand-in-hand with an increase in school attendance and performance. The education system will also need to step up to prepare students from a young age to think critically, analytically and creatively to fill spots in an upgraded job market. South Asian school systems are overburdened and underperforming: absenteeism, rote learning, under-qualified teachers and resource scarcity play into the critical need for immediate reform. In an interview with The Hindu upon release of the WB study, Kalpana Kochhar, Chief Economist for the Bank’s South Asia Region, said that given the average number of years of education of people between the ages 15-34 is only 7.1 years, “There is a stark contrast between increasing demand for higher levels of education and the educational attainment of the work force.”
Skilling in Bangladesh and Pakistan
The cross-sectoral framework and policy that is needed to meet this enormous jobs challenge ahead in South Asia will require an additional layer of training beyond foundational education. Skills training programs that provide tailored, specified classes to enhance the qualifications and preparedness of the workforce, particularly for the informal sector, women and poor youth, are in great demand. In a recent talk in Mumbai, Dilip Chenoy, CEO of the National Skills Development Corporation (NSDC), highlighted recruitment and retention as major obstacles to the success of India’s program. In response, the program will be launching a communications initiative to raise awareness and increase enrollment in addition to a national fellowship program for qualified youth in poor areas. Accelerated timeframes for completing the training have also been taken into account to improve retention rates. Chenoy also highlighted the lucrative potential for partnering to fill the skills development gap: he says that it is a business opportunity worth US$120bn.
India’s NSDC provides a viable model for Pakistan and Bangladesh, where the skills training deficit is equally large but where programs are piecemeal and lack a strategic and coordinated effort that would make the necessary impact. Seventy-three percent of Pakistan’s labor force is part of the informal economy. Skills in this sector are often passed on through generations in an apprentice system called Ustaad-Shagird. According to the government’s policy document “Skilling Pakistan: A Vision for the National Skills Strategy 2008-2012,” “Skills thus gained are no doubt practically sound, but they are usually outdated, static, job-specific, non-portable, lacking in theoretical understanding, and uncertified.”
In 2009, Pakistan’s skills development program was officially approved and launched, focusing on “innovative approaches” that incorporate economic opportunity assessment, social mobilization as well as training and post-training support for the informal sector. The program also seeks to address the need for women’s participation in the workforce, which is low at 28.82%, as cited in the strategy document. While the government has included skills training in a number of different policy initiatives recently—casting vocational skilling as a political priority—there is a “very large gap between the government’s aspirations and the current realities,” says a UNESCO report on boosting enrollment in technical and vocational training (TVET) in Pakistan. “The TVET sector across Pakistan faces many challenges, spanning issues to do with the quality, quantity and relevance of TVET.”
In one initiative, the Medium-Term Development Framework (MTDF) 2005-2010, the Government of Pakistan set an annual training target of 0.95 million appropriately skilled workers, of which 0.70 million are expected to be trained in public-sector training institutes and 250,000 by private-sector training providers. However, there are presently only 315,000 enrolled students in 1,647 TVETs. “It is quite evident therefore, that the present, supply-driven, skills development system in Pakistan would struggle to achieve this quantitative target,” says the UNESCO report.
In Bangladesh, skilling initiatives are even less coordinated and lack a comprehensive national policy. An article earlier this month in the Daily Star, entitled “Bangladesh Must Speed up Productivity to Cut Poverty,” said that the working-age population makes up 62% of the population and that the informal labor force accounts for 88% of the workforce. While there is potential for “huge dividends” with this demographic, the trend shows that “productivity of both public and private sectors has not yet surpassed the 2001 level.”
While the need is imminent for a national initiative to meet the massive demand for training the poor to move them into the formal labor market, there is a need for an alternative platform for bringing together the public and private sectors, as well as NGOs, working on training initiatives. Major donor institutions such as the ADB, WB and European Union have entered the skills training arena in Bangladesh, states a major report called “Context Analysis/Stock Taking on Skills Development in Bangladesh,” which was prepared for the Swiss Agency for Development and Coordination (SDC). “However, lack of adequate human resources, coupled with fragmented institutional structure, is a major hindrance in articulating consistent and cohesive policies in the domain of skills development. As a consequence, the NGOs and private sector initiatives have also become disjointed and dispersed, and lacks synergies of impact.”
Initiatives such as that launched by another Swiss-based organization, Swisscontact, which aims to contribute to poverty alleviation by promoting economic and social development, have been working on research and testing an enabling environment that would bring greater scale potential to the sector. One of the organization’s projects, SkillMark, focuses on developing and strengthening the market for skills development for unemployed or underemployed poor youth by piloting different business models that demonstrate market-based skills training solutions. The project was launched in January 2009 and will run through December 2013. Swisscontact says that despite a youth population (age 18-35) of 49.5 million, only 3% of the entire population in Bangladesh is enrolled in vocational training.
Meeting the Challenge
The challenge over the next few decades for nearly all South Asian countries is vast and complex. However, population demographics are working in favor of a successful outcome if a coordinated, sustainable and, most importantly, cross-sectoral approach is hastily implemented. In addition to human capacity building, the other side of the job creation equation requires the necessary infrastructure to support this growth. Lack of reliable electricity supply—particularly in Bangladesh, where nearly 80% of the population is without reliable power—is a formidable hindrance to developing and expanding business. “The lost output is, according to some estimates, as high as one percent of the GDP. This is critical because the foregone economic growth could have taken Bangladesh beyond the threshold of 6-7% of GDP growth rate that many policymakers think could make a significant and sustained dent on poverty.” In order to generate capacity over time, as well as expand the grid and distribution networks, nearly US$5-6bn will need to be invested in the sector over the next five years, according to conservative estimates.
The WB’s report says that, “The policy reforms required to boost job quality are desirable irrespective of the demographic transition. But the window of demographic opportunity lends urgency to the agenda, especially given that policies take time to bear fruit.” Creating one-million quality jobs per month will be a feat in itself for South Asia, but as millions of youth enter the workforce, they will need to be physically strong, mentally agile and technically sound to be productive assets in this new labor market. The poor, in particular, require specific attention that will provide them with the support necessary to transform their situations in this environment. The skilling model put forth by India’s NSDC offers a solution that could be adopted by Bangladesh and Pakistan for one dimension of the equation. Yet even India will need to rethink its approach and ensure that seemingly disconnected measures, such as boosting nutritional levels or making sure the lights stay on consistently, are all an integral part of a policy and movement that will truly reap rewards if consistent steps are taken in the region in the coming decades.