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Addressing the demand for skilled workers in Asia

Asia is facing a human-capital challenge. Over the last three decades, significant gains in workforce size and quality helped Asia to become a hub of global supply chains – and so to sustain rapid progress to advanced-economy income levels and living standards. But with workers increasingly unable to meet labour market demands, development could be derailed

Asia has plenty of educated young workers. But, at a time of industrial upgrading and technological sophistication, the knowledge and skills gained in school are often insufficient. As a result, youth unemployment, underemployment and job dissatisfaction are rising.

Throughout Asia, a significant share of workers feel they are over- or under-educated for their jobs, while employers often lament a lack of qualified graduates. A Manpower Group survey shows that 48% of employers had difficulty filling vacancies in Asia in 2015, compared to 28% in 2006. Meanwhile, university graduates, including 45% in South Korea, are struggling to find jobs.

Some weaknesses in policies and systems designed to boost skills development are endemic. Among the most damaging is the inability of many countries to impart the right skills through pre-employment and on-the-job training.

 Across Asia, a lack of involvement by private companies – that is, potential employers – further undermines the ability of technical and vocational education and training (TVET) systems to respond adequately to changes in the labour market, thereby reducing graduate employability. In Bangladesh, Indonesia and Sri Lanka, less than one-quarter of companies conduct formal in-house training. A dearth of well-qualified teachers and ineffective governance exacerbates the situation.

Governments across Asia must devise ways to help workers acquire the skills they need to boost economic growth and productivity – the key to better jobs and higher wages. Governments must make skills acquisition a central feature of national development policies. At a time of rapid change, education and skills training should be co-ordinated with, say, trade and industrial policies.

Moreover, general education and TVET systems need to be restructured. In many Asian countries, formal education is often overly academic or simply low-quality, undermining not only graduates’ employability, but also their capacity to reap the benefits of further TVET. To be effective, secondary and tertiary schools must produce graduates with both soft skills, such as communication and teamwork, and relevant technical skills. Here, stronger partnerships between educators and employers to develop curriculum standards, create internship opportunities and provide financing would be help significantly.

As governments improve their capacity for supervision, co-ordination and regulation of the TVET system, actual skills training should be shifted to the private sector, thereby transforming the current supply-driven system to one that responds effectively to changing market demand.

Governments should encourage public-private partnerships focused on, for example, identifying the labour market’s unmet needs, setting TVET policy priorities, developing curricula and national standards, training TVET teachers, and enacting cost-sharing mechanisms. Governments must also ensure better access to TVET systems for disadvantaged groups.

Given that the challenge of upgrading educational and skills-training systems is shared across Asia, national governments should not be working in isolation. More knowledge-sharing, especially with regard to curriculum development and teacher training, as well as expert and student exchanges and improved technology-sharing, would strengthen everyone’s efforts considerably.

Moreover, promoting greater student/worker mobility and improving labour-market flexibility, both within countries and across the region, would help to improve the allocation of skilled workers.

In the coming decades, Asia will continue to contribute a large number of workers to the global labour market. How well equipped these workers are to meet ever-evolving market needs will be a key factor influencing not only Asia’s trajectory, but also that of the entire global economy.