Skill based education versus productivity improvement

Educational qualifications do not always accurately describe the qualification-holder’s level of skills

For decades, the primary argument in justifying education has been based on its direct economic effects. Yet education also provides productivity growth at industry level and economic resilient for individuals and society at large, including a better way of taking care of ourselves, and consequently creating a better society to live in.

Equipping the workforce with the skills required for the jobs of today and those of tomorrow is a strategic concern in the national growth and development outlooks of all the countries of the world. Each country’s ultimate prosperity depends on how many of its people are in skilled to work and how productive they are, which in turn rests on the skills they have and how effectively those skills are used. Skill based education and trainings, in this regard can be a foundation of decent work and better productivity in Bangladeshi industry.
The interaction between educational qualifications and skills in determining higher wages and labour market arrangements are still heavily based on educational qualifications. But educational qualifications do not always accurately describe the qualification-holder’s level of skills. Better-skilled individuals with a mid-level qualification earn more than low-skilled tertiary graduates. At the same time, tertiary educated workers with low skills still get a higher wage than mid-skilled workers with lower qualifications.
As much as 96 percent of the labor force has less than secondary education, and two-thirds has less than primary education. According to the World Bank (2013a), just a third of the primary graduates acquire the numeracy and literacy skills they are expected to master by the time they graduate. Moreover, only 0.17 percent of the labor force has professional degrees such as engineering and medicine. A World Bank survey of 1000 garment firms in 2011 found that skills were the major disadvantage if firms located outside Dhaka. High rejection rates in a 2010 UNIDO survey also point to low average skills of garment workers. In sectors such as ITES, shipbuilding and pharmaceuticals, part of this DTIS, higher skills were in constant demand (World Bank 2012a, 2012b).
Bangladesh’s performance on literacy rates and secondary school enrollment is extremely poor and undermines the development of all sectors. Basic tasks conducted in all sectors, from arment to IT Enabled Services, typically need a labor force that comes out of secondary schools and colleges that can then be trained. In this respect, Bangladesh has one of the poorest records of comparators. In contrast, Sri Lanka has provided a skills environment that allowed garment firms to quickly move up the value chain. Bangladeshi firms’ choice is mostly restricted to primary school graduates and high school dropouts.
According to Global Development Solutions report 2011 the Literacy and Enrollment Rates of comparators country of Bangladesh like Sri Lanka 90% and 91%, China 76% and 93%, Vietnam70% and 93%, India 59% and 62%, Malaysia 70% and 92% respectively whereas Bangladesh merely Secondary School Enrollment at 44% and Adult Literacy 56% . In fact where do we stand in regard to our comparators country? Let us compare the Literacy and Enrollment Rates of industry workforce with that of OECD’s country.
It has now been well established that wage inequality has increased. Increasing social inequality also seems to have an adverse impact on growth. Even if inequality and well-being should be seen as multidimensional, incorporating many more factors than just wages, the income generated from employment lies at the core of social inequality. The latest Education Indicators in Focus, presenting data from the Survey of Adult Skills (a product of the OECD Programme for the International Assessment of Adult Competencies, or PIAAC), presents a snapshot of how different factors, such as gender, age, educational attainment and, especially, skills, affected the distribution of wages in 2012. The snapshot doesn’t provide trend data, but shows where we are now.
As the chart above illustrates, on average across the 24 countries and regions that participated in the survey, the wage differences between various categories are significant. Gender, age and educational attainment all have an impact on wages. Labour markets and wage-setting systems tend to closely reflect educational qualifications, often through institutional frameworks. Wages also reward professional experience and seniority of older workers. And the gender bias in wages partly echoes different labour market participation patterns between males and females.
But the most interesting finding of the chart is the very significant impact that skills have on earnings within each category of the gender, age and education variables. Skills differentiate wages to an almost similar degree within both sexes. With age we see a different pattern: as people grow older, their wages depend more and more on their skills level. But the wage differentiation only happens at the top of the skills distribution: higher skilled older workers earn higher wages than younger colleagues, while lower skilled workers don’t see their wages increase with age.
The example of Vietnam shows that accelerated, export-oriented development is possible, even in the context of the current global environment. Vietnam moved from being one of the poorest countries in the world to a lower middle income one in the space of 25 years, with FDI and trade playing a dominant role in the economy: exports and imports each form 90 percent of GDP, and, with 88 million people compared to Bangladesh’s 164 million, it exports four times as much as Bangladesh today.
To conclude, what should be the strategy to ensure better productivity in industry to make resilient a countries’ economic growth? Of course, Government must vows to skill based education and training. Otherwise, simply narrowing the gaps in school-enrollment rates and total years of schooling is not enough. Govern­ment must also ensure the quality of her education systems – a key challenge for the coming decades. Furthermore, adequate education at the secondary and tertiary levels, including skill based education and training will equipped workforce to meet the job market’s changing demands. Together, Government and private organiza­tions simultaneously have to pledge to support skill based education and training strategies to meet the challenges of fostering higher economic growth through sustainable and balanced produc­tivity improvement in the country. 

The writers are all assistant deputy secretaries of Bangladesh Knitwear and manufacturers and exports association (BKMEA). Email: [email protected]

Skill based education versus productivity improvement

Educational qualifications do not always accurately describe the qualification-holders level of skills

For decades, the primary argument in justifying education has been based on its direct economic effects. Yet education also provides productivity growth at industry level and economic resilient for individuals and society at large, including a better way of taking care of ourselves, and consequently creating a better society to live in. Equipping the workforce with the skills required for the jobs of today and those of tomorrow is a strategic concern in the national growth and development outlooks of all the countries of the world. Each countrys ultimate prosperity depends on how many of its people are in skilled to work and how productive they are, which in turn rests on the skills they have and how effectively those skills are used. Skill based education and trainings, in this regard can be a foundation of decent work and better productivity in Bangladeshi industry. The interaction between educational qualifications and skills in determining higher wages and labour market arrangements are still heavily based on educational qualifications. But educational qualifications do not always accurately describe the qualification-holders level of skills. Better-skilled individuals with a mid-level qualification earn more than low-skilled tertiary graduates. At the same time, tertiary educated workers with low skills still get a higher wage than mid-skilled workers with lower qualifications. As much as 96 percent of the labor force has less than secondary education, and two-thirds has less than primary education. According to the World Bank (2013a), just a third of the primary graduates acquire the numeracy and literacy skills they are expected to master by the time they graduate. Moreover, only 0.17 percent of the labor force has professional degrees such as engineering and medicine. A World Bank survey of 1000 garment firms in 2011 found that skills were the major disadvantage if firms located outside Dhaka. High rejection rates in a 2010 UNIDO survey also point to low average skills of garment workers. In sectors such as ITES, shipbuilding and pharmaceuticals, part of this DTIS, higher skills were in constant demand (World Bank 2012a, 2012b). Bangladeshs performance on literacy rates and secondary school enrollment is extremely poor and undermines the development of all sectors. Basic tasks conducted in all sectors, from arment to IT Enabled Services, typically need a labor force that comes out of secondary schools and colleges that can then be trained. In this respect, Bangladesh has one of the poorest records of comparators. In contrast, Sri Lanka has provided a skills environment that allowed garment firms to quickly move up the value chain. Bangladeshi firms choice is mostly restricted to primary school graduates and high school dropouts. According to Global Development Solutions report 2011 the Literacy and Enrollment Rates of comparators country of Bangladesh like Sri Lanka 90% and 91%, China 76% and 93%, Vietnam70% and 93%, India 59% and 62%, Malaysia 70% and 92% respectively whereas Bangladesh merely Secondary School Enrollment at 44% and Adult Literacy 56% . In fact where do we stand in regard to our comparators country? Let us compare the Literacy and Enrollment Rates of industry workforce with that of OECDs country. It has now been well established that wage inequality has increased. Increasing social inequality also seems to have an adverse impact on growth. Even if inequality and well-being should be seen as multidimensional, incorporating many more factors than just wages, the income generated from employment lies at the core of social inequality. The latest Education Indicators in Focus, presenting data from the Survey of Adult Skills (a product of the OECD Programme for the International Assessment of Adult Competencies, or PIAAC), presents a snapshot of how different factors, such as gender, age, educational attainment and, especially, skills, affected the distribution of wages in 2012. The snapshot doesnt provide trend data, but shows where we are now. As the chart above illustrates, on average across the 24 countries and regions that participated in the survey, the wage differences between various categories are significant. Gender, age and educational attainment all have an impact on wages. Labour markets and wage-setting systems tend to closely reflect educational qualifications, often through institutional frameworks. Wages also reward professional experience and seniority of older workers. And the gender bias in wages partly echoes different labour market participation patterns between males and females. But the most interesting finding of the chart is the very significant impact that skills have on earnings within each category of the gender, age and education variables. Skills differentiate wages to an almost similar degree within both sexes. With age we see a different pattern: as people grow older, their wages depend more and more on their skills level. But the wage differentiation only happens at the top of the skills distribution: higher skilled older workers earn higher wages than younger colleagues, while lower skilled workers dont see their wages increase with age. The example of Vietnam shows that accelerated, export-oriented development is possible, even in the context of the current global environment. Vietnam moved from being one of the poorest countries in the world to a lower middle income one in the space of 25 years, with FDI and trade playing a dominant role in the economy: exports and imports each form 90 percent of GDP, and, with 88 million people compared to Bangladeshs 164 million, it exports four times as much as Bangladesh today. To conclude, what should be the strategy to ensure better productivity in industry to make resilient a countries economic growth? Of course, Government must vows to skill based education and training. Otherwise, simply narrowing the gaps in school-enrollment rates and total years of schooling is not enough. Government must also ensure the quality of her education systems a key challenge for the coming decades. Furthermore, adequate education at the secondary and tertiary levels, including skill based education and training will equipped workforce to meet the job markets changing demands. Together, Government and private organizations simultaneously have to pledge to support skill based education and training strategies to meet the challenges of fostering higher economic growth through sustainable and balanced productivity improvement in the country. The writers are all assistant deputy secretaries of Bangladesh Knitwear and manufacturers and exportsassociation (BKMEA). Email: [email protected]