Enhancing effectiveness of TVET system

Jai-Joon HUR

Korea Labor InstituteKorea Institute of Development Strategy

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Contents

• Prolog• Observations from TVET systems• Frequently cited cases and their dis-

tinctive features• General discussion for working out a

TVET strategy• Diagnosis and approach suggested

for Columbia

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Prolog

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Education & Human Capital

• The ultimate source of economic develop-ment

Effect of Knowledge on GDP : Korea vs. Mexico

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Policy Fields in Education and HRD

Regular Schools

Early Child-

hood Ed-ucation

Higher Educa-

tion

Basic Ed-ucation

Vulnera-bles/

Under-ex-plored

TVET

Vanguard BrainLabor

Market

Life-Long Learning

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Observations on TVET systems

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Observations [1]

• All the performing countries have similar reasons, while each of non-performing country has its proper reasons.– Therefore, there is no ‘one-size-fits-all’ solution in

achieving a performing TVET system.– If we[you] are not happy with ours[yours], we[you]

should find our[your] own way!– Simple benchmarking does not help much when trying

to establish a performing HRD system.– However, we can discuss about a good system in a

common context– Of course, it helps to know how other countries’ expe-

rience

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Observations [2]

• An effective system requires, and is accompa-nied by, industrial dev’t either as a natural consequence of entrepreneurship or as a result of the government’s effective development plan, and performing actors. – Actively industrializing Columbia already secures at

least one necessary condition to achieve a good TVET system.

– There are four actors in a TVET system: firms, schools and training facilities, gov’t regulators or coordinators, and present and future labor market participants

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Observations [3]

• A good TVET system is a synonym of a good governance among actors of TVET.– A TVET system is a combination of insti-

tution and actors in the system.– A good governance is the one leading to

actively participating actors by relevant coordination, a leadership, incentive mechanism, regulation, support, etc.

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Frequently cited models and their distinctive features

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Frequently cited benchmark cases

• German model– firms and schools w/ cooperative tradition;– dual system w/ competitive SMEs

• Korean model– government and firms w/ motivated labor market

participants; – rapid growth w/ proactive and effective gov’t plan

• US model– firms and labor market participants w/ well-func-

tioning incentive mechanisms; – growth w/ innovative entrepreneurs

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Features

• Germany, Switzerland– very performing TVET practices w/ hidden champion SMEs– dual, 1+2, 2+1, …

• Korea, China– very much growth-driven TVET– planning of industrial development and preparing a com-

prehensive package of an industrial dev’t including HRD

• US– specifically strong in higher education, rather than in

overall education system

• Government’s role: Korean > German > US– Coordinating roles of the government function non the

less

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General discussion for working out a TVET strategy

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Government’s role

• Training market is a typical one characterized by market failure– In any country, gov’t intervention, implicit or explicit, is desir-

able and inevitable in the training market

• The government can influence TVET system via regula-tions on and incentives to schools and training agencies.– Once a performing governance is established, the govern-

ment’s role become less visible.– The government’s role does not seem primary in German

model, least visible in US model

• And via industrial development initiatives, if any.– Skill provision plan being a part of it– An industrial development initiative → HRD plan for the initia-

tive → point reform or one point upgrading in the TVET system

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Firms

• A ‘firm’ is not only a simple production unit, but also an ‘organization,’ where workers interact to learn to produce and enhance productivity:

• Firms have an important function of skill formation (other than production) and are final training organization.

• Learning by doing is the best skill for-mation process of all.

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Common situation and behavior of today’s firms

• Because of fundamental changes in technology and the changing speed w/o precedent, each country is faced with common challenges.

• Firms have less interested than before in training general skills, but they want ready-made experi-enced workers. – This explains partly why mismatch claim is stronger than

before in many countries– Firms’ role in skill formation is being weakened critically

compared to 20 or 30 years ago.

• Firms are more interested in vanguard brains and general-purpose HC who can cope with rapidly changing economic environment.

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Increased probability of govern-ment failure

• These changes require more active role of the government, but they have also increased proba-bility of government failure.

• Failure is not limited to the government side. For example,– Ratio of higher education attainment in Korea is the

second to none and overall quality of HR is said to be good.

– However, Korea is not cited as a model country regard-ing the # of skilled engineers (by neither IMD nor OECD and development agencies)

– Privately, future labor market participants invest a lot, but w/ mediocre outcome in the labor market

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What we can do

• Sometimes doing nothing is better than doing something;– However, something is better than nothing especially

when there is a need for ‘priming water.’

• Instead of increasing investment on overall TVET, a ‘supportive approach’ seems appropriate or less risky– ‘supportive approach’: Invest on TVET as a part of indus-

trial development support package– Convenient to identify and select areas to concentrate

resources while minimizing possibility of misuse– It also holds true to Columbia

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Supportive approach

• To take a ‘supportive approach’ of TVET, it is growth condition, prospects or development plan of an industry which should be diagnosed together with national TVET characteristics and its way of functioning.– It is easier and less risky way to enhance effec-

tiveness of a TVET system.– A role of TVET in specific industry may be clear or

may not be specially identified because it can be satisfied by general TVET system

– The latter case is hardly true in most of developing countries

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For Columbian initiatives

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Public sectors

• Some good training centers in the private sector, but very weak public sector roles?– It is not simple to tackle all at once to improve this

situation: not only investment w/ appropriate financ-ing plan, but also blue print and implementation of a good governance and monitoring is necessary,

• Difficult to be ensured about the government and public sector’s capacity?– If no attempt is taken to identify challenges & bottle-

necks, or if no action is taken to those identified chal-lenges during a term of mandated office, it is proba-ble that if any investment is made, it may be mis-used.

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Firms

• Firms and association of firms not helping much?– It is necessary to look over how many firms provide

explicit training services via, for example, apprentice-ship and consequent employment, running training facilities to help necessary skill formation, etc.

– If their role is deemed not sufficient, make firms pro-vide skill formation services.

– Germany and Korea provide different examples of firms-school cooperation which is worth referring to

– In some areas of TVET, government can take initia-tives and let the firms to contribute in financing

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School system, or investment on schools and training

• Schools do not act up to firms’ skill demand?– The wider the gap between TVET/higher education

and the demand for skill is, the more costly train-ing cost is which is borne by firms

– Education in schools and universities is as much important for economic efficiency or higher pro-ductivity

– If schools and universities need changes, identify necessary factors in detail: Curricula? Teachers? Facilities and equipments? Way of interaction w/ firms and way of reflecting firms’ demand?

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Investment on new facilities

• When a diagnosis says that new facilities are necessary, ask what for and what kind and discuss them until they become persuasive.– Depending on the demand for skill expected new

facilities can be necessary.– But even in that case, it is necessary to think of

right type of facilities: cluster-based training cen-ter, university based research center, techno-park HRD center, etc.

• Misuse or abuse is already bad by itself, what is worse, it discourages trying of right ap-proaches.

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Labor market participants

• Labor market participants not moti-vated and active?– Probably the incentive structure in the

labor market for skill formation is absent or not functioning

– Usually targeted subsidy and regulations to promote job opportunity of that spe-cific skill helps w/ NCS in the specific area.

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Industrial clusters

• If functioning, industrial clusters, in general, provide motivations to de-velop HC both for firms and schools & universities.

• If TVET organizations and universities are not motivated, it is incentive structure which is absent, broken down or in trouble.

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Private sector commitment

• Start from paying attention to what private sector actors get from HRD– Even though firms as a whole benefit from HRD,

this does not suffice for each firm to commit it-self actively.

– Training has an externalities in the sense that cost-bearing firms and benefiting firms do not co-incide.

– Especially when a large gap is found in working condition between large and SMEs, final benefi-ciaries are large firms.

– Then SMEs will be reluctant to invest on HRD

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Origins of the three gaps

• If a shortage of relevant HC matters, it is, in gen-eral, not because of insufficient # of schools or training facilities

• i) Gaps in terms of quantity of relevant human capital, ii) gaps in terms of quality of that human capital and iii) gaps in terms of relevance of the education and training programs have the same origin of the matter!

• It is incentive structure of the training market, contents and motivation of schools and universi-ties, and the government’s coordination failure which is in the center of the matter.

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NQF and NCS

• A good NQF does not originate from refined NCS system.– If there is a system of signaling which matches skill and com-

petency with the demand for labor, that is a NQF.– Every country has a their own NQF, performing or non-per-

forming.

• A good NCS system or a prototype of good NCS system is generated during the process of industrial development.– Therefore, if industrial development is not sufficient, importing

or implanting other country’s refined NCS model will not lead to a corresponding labor market performance.

• The thing is not whether to introduce NQF or not, but to refine or upgrade the NQF/NCS to reduce mismatch.– If a diagnosis says that mismatch is large because NQF/NCS is

absent, it is not appropriate.

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Korea’s recent NQF/NCS initiative

• Korea’s first NQF system is the one which Korean government ar-ranged competency standards and its signal to the labor market.– The competency standards of the old NQF system were generated lit-

tle by little during the five-year-development-plan era of 60’s and 70’s.– It is in 1982 that the HRD-Korea was established to manage the quali-

fication system, and in 1985 that an agency for curriculum evaluation, which was succeed by Korea Institute of Curriculum and Evaluation from 1998, was established.

• Now, as the old NQF and competency standards embodied in the NQF was deemed failing to meet skill demand of firms and to send signal to the labor market, a radical renovation is launched since three years ago.– What is distinguished from the old one is that license and diploma ob-

tained in schools can match the competency standards that the mar-ket requires

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Survey on mismatch and utility of official licenses

• Mismatch survey by KLI(‘11): Answers given by those workers who took a job after school for the first time regarding the gap between the knowledge acquired in schools and job specifica-tion in firms– University: 14.0% – College: 26.0%– Vocational high school: 15.3%

• Utility survey on national qualification system by KUT(‘09-’11): out of 374 licenses, 35.1% deemed require improvement– 55 were given grade of ‘low’ – 76 were given ‘so so’

• When Korean firms newly recruited university graduates– Average span of retraining period: 19.5 month (‘07)– Average cost for retraining : US$55,000(’08)

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Thank You!