ILO/MOLSS International Forum on Chinese High Skilled Workers Innovative skills policy reforms: Sector-based approaches to skills development A SKILLS-AP Discussion Paper by Dr J. Sung and Prof D. Ashton presented by Trevor Riordan Manager, ILO/SKILLS-AP

Introduction and background to the discussion

Introduction Increasing demand globally for higher levels of workforce knowledge and skills, which is driven by many factors:Increasing demand globally for higher levels of workforce knowledge and skills, which is driven by many factors: –Need for countries to improve productivity to compete in the global economy –Move to more higher value-added products with higher knowledge component –Changing patterns of work organization –Increasing skills intensification of economies/ jobs –Need to develop higher skilled workers for particular sectors (China)

Why knowledge and skills are important One example: Contributions of different factors to economic growth Source: OECD

Skill Intensity of the Economy Accelerating in All Sectors Knowledge and Management Occupations as a Share of Total Employment, Canada

HRD and competitiveness

Introduction Many countries are finding it difficult to reform their national skills development system to deal with the challenges of the global economyMany countries are finding it difficult to reform their national skills development system to deal with the challenges of the global economy Different innovations developed relate closely to social, political and historical context in which they were developed:Different innovations developed relate closely to social, political and historical context in which they were developed: –English speaking countries focus on outcomes –French speaking countries focus on process – German speaking countries focus on occupations

Introduction Most international approaches to skills development focus on integrated national skills strategies which develop the skills across the total workforce, rather than segments, such as high-skilled workers. This will be a feature of the presentations of the international resource personsMost international approaches to skills development focus on integrated national skills strategies which develop the skills across the total workforce, rather than segments, such as high-skilled workers. This will be a feature of the presentations of the international resource persons ILO/SKILLS-AP has brought international approaches to skills development from Partner Organizations in Australia, Germany, Republic of Korea and Singapore to this ForumILO/SKILLS-AP has brought international approaches to skills development from Partner Organizations in Australia, Germany, Republic of Korea and Singapore to this Forum This presentation will focus on a new trend in skills development being implemented across many advanced countriesThis presentation will focus on a new trend in skills development being implemented across many advanced countries

Sector-based approaches to skills development

Background Background Many countries exploring new approaches to skillsMany countries exploring new approaches to skills A demand-led approach to training is currently a top priority in skills policies in many countriesA demand-led approach to training is currently a top priority in skills policies in many countries This approach enables the coordinating agency to determine the skill needs within a sector, the kinds and level of training required and how such training should be financed and deliveredThis approach enables the coordinating agency to determine the skill needs within a sector, the kinds and level of training required and how such training should be financed and delivered This paper examines the lessons learnt from countries which have adopted this approach.This paper examines the lessons learnt from countries which have adopted this approach.

What is a sector approach to training? No precise definition nor single model in the six countries which have declared sector approach as a major workforce development structure:No precise definition nor single model in the six countries which have declared sector approach as a major workforce development structure: Australia, Canada, the Netherlands, New Zealand, South Africa and the UK (Singapore now included)Australia, Canada, the Netherlands, New Zealand, South Africa and the UK (Singapore now included) All systems differ in terms of: scope; objectives; funding, working relations with educ/training and qualification authorities; and number of sectorsAll systems differ in terms of: scope; objectives; funding, working relations with educ/training and qualification authorities; and number of sectors But all system have two main common features:But all system have two main common features: –Existence of sector-based coordinating bodies –Involvement of industry/employers in these bodies

Why use sector-based approaches? Governments wanting to focus on the development of particular economic sectors which provide the best prospects for increasing international market share, and developing skills for that sector e.g. Singapore in biomedical scienceGovernments wanting to focus on the development of particular economic sectors which provide the best prospects for increasing international market share, and developing skills for that sector e.g. Singapore in biomedical science Strengthen emerging sectors that have potential for contributing to future economic growthStrengthen emerging sectors that have potential for contributing to future economic growth Linking skills development to the real economic divisions in the countryLinking skills development to the real economic divisions in the country As a mechanism to steer employers towards higher value-added forms of productionsAs a mechanism to steer employers towards higher value-added forms of productions Ensuring more effective training deliveryEnsuring more effective training delivery

Six main features of an effective sector skills approach An effective sector approach: allows employers to have key role in identifying demand for skills and designing the competencies required:allows employers to have key role in identifying demand for skills and designing the competencies required: –In the Netherlands, employers determine skills needs and qualifications through “Knowledge Centres” which ensure consistency between work- and centre-based training –In Singapore, government uses major employers as a model to identify skills needs of specific industries –In Hong Kong SAR employers set up and finance bodies to define and deliver the skills (textile & construction) –In UK, some problems emerged with employers involvement as they were only consulted after skills and qualifications were determined by consultants

Six main features of an effective sector skills approach An effective sector approach: secures the involvement of workerssecures the involvement of workers – assists in transferability of skills across labour market; in the Netherlands, unions are involved in identifying sector skills needs maximizes the use of financial incentivesmaximizes the use of financial incentives –Levy schemes: in South Africa levy used to establish training infrastructure; in Netherlands only small levy (0.5%) used for specific skills projects: in Hong Kong SAR levy confined to 2 sectors; in Singapore only for low skilled workers

Six main features of an effective sector skills approach An effective sector approach: Maximizes the use of financial incentives (cont)Maximizes the use of financial incentives (cont) –direct government subsidies: UK subsidies trainees wages and shares cost of training with companies; the Netherlands provides tax refund (15%) of trainees wages Uses government funding of sector skills bodies to ensure that they consider longer term government objectivesUses government funding of sector skills bodies to ensure that they consider longer term government objectives –Danger that if sector councils are responsive only to employers, longer term objectives may not be considered –In Canada, uses funding to ensure that its views on more general long-term policy are considered; In Singapore, government determines which parts of economy will grow

Six main features of an effective sector skills approach An effective sector approach: Ensures that some of the funds for public training goes through employer-led skills councilsEnsures that some of the funds for public training goes through employer-led skills councils – In New Zealand funding is provided to Industry Training Councils on per capita basis; in the Netherlands funds are tied to volume of training provided; in USA, Workforce Investment Act success due to employer involvement; In UK and Australia some difficulties with councils limited control of funding, and less responsive to employers needs Manages different interests between central government and provinces/states/ regionsManages different interests between central government and provinces/states/ regions –Difficult problem for federal systems with differences between federal and state/provincial needs e.g. Canada and Australia

Implications for creating a responsive sector system Ensure that the component parts of the system are aligned to the same objectivesEnsure that the component parts of the system are aligned to the same objectives Governments may choose the sectors which relate most closely to national objectivesGovernments may choose the sectors which relate most closely to national objectives Ensure that sector councils represent the real divisions in the economyEnsure that sector councils represent the real divisions in the economy Ensure clarity in functions of sector councilsEnsure clarity in functions of sector councils Ensure complementarity of research and labour market information between coordinating body and individual sector councilEnsure complementarity of research and labour market information between coordinating body and individual sector council Ensure effective performance monitoringEnsure effective performance monitoring

Concluding thoughts While no national systems can be directly transferred to others, many useful lessons can be learnt from observing other systemsWhile no national systems can be directly transferred to others, many useful lessons can be learnt from observing other systems This study has revealed key principles that drive the most effective sector systemsThis study has revealed key principles that drive the most effective sector systems Sector based approaches are proving to be very effective in matching skills needs to national economic developmentSector based approaches are proving to be very effective in matching skills needs to national economic development Many advanced countries using sector based approaches to develop their skills workforce and respond to challenges of globalizationMany advanced countries using sector based approaches to develop their skills workforce and respond to challenges of globalization