The World Bank In Skills

In recent years, skills development has become a priority among developed and developing countries alike. Having a skilled workforce has been recognized as paramount to boosting competitiveness in an increasingly global and interdependent economic environment, fostering innovation and business creation and increasing productivity. As individuals with the right skills and knowledge are more likely to find employment, skills development can also have positive effects in reducing unemployment, raising incomes, and improving standards of living.

Equipping the workforce with job-relevant skills has proven to be a challenge around the world. Mismatches between skills demand and supply are a common occurrence; school leavers and graduates struggle to find jobs that are commensurate with their education and training while employers struggle to fill vacancies. Employers lament the scarcity of skills considered essential for business competitiveness in the current economy that demands quick adaptation, innovation and flexibility. Unexperienced youth have trouble finding employment, but so do experienced workers with outdated skills.

The World Bank Group, in its quest to end extreme poverty and promote shared prosperity, has joined efforts with countries and multilateral development partners to ensure that individuals have access to quality education and training opportunities and that employers can find the skills they need to operate. It provides financial and analytical assistance to governments in a wide range of areas, from system and institutional development (e.g. establishing a quality assurance authority or a levy-grant scheme), to training provision (e.g. providing training vouchers to vulnerable youth or financing re-training of unemployed adults).  

Important knowledge gaps remain on how best to design specific policy interventions on skills. For this reason the World Bank Group is also engaged in program and policy research and analysis.  Among the portfolio of analytical work on skills, there are two initiatives which have applied standardized tools in several countries, generating internationally comparable data: STEP Skills Measurement and SABER-Workforce Development (WfD). The STEP program consists of two survey instruments that collect information on the supply and demand for skills in urban areas: a household survey and an employer survey. It has been implemented in waves, the first in 2012 in Bolivia, Colombia, Ghana, Lao RD, Ukraine, Vietnam, and the Yunnan Province (China); the second in 2013 in Armenia, Azerbaijan, Georgia, Kenya, and Macedonia FYR; and the third in 2016 in Serbia, Kosovo, Libya, and the Philippines. SABER-WfD focuses on the institutional structures and practices through which education and training policies are articulated and implemented and has been implemented in more than 30 countries around the world.  

Skills are at the core of improving individuals’ employment outcomes and increasing countries’ productivity and growth. This is particularly relevant as today’s developing and emerging countries seek higher sustained growth rates. Most of them face serious demographic challenges—from a “youth bulge” of new job-seekers in Africa and the Middle East, to a demographic transition of shrinking labor forces in Eastern Europe and Central and East Asia.

As countries become richer and move up the value-added chain, the skills demanded will change. Bottlenecks will become more evident, constraining growth. Increasingly, labor productivity will depend on high-level cognitive skills (such as analysis, problem solving, and communication) and behavioral skills (such as discipline and work effort). These higher productivity skills are what employers now demand.

The STEP framework

A simple conceptual framework—Skills Toward Employment and Productivity (STEP)—can help policymakers, analysts, and researchers think through the design of systems to impart skills that enhance productivity and growth. Pulling together what is known about the elements of a successful skills development strategy, it can guide the preparation of diagnostic work on skills, and subsequently the design of policies across sectors to create productive employment and promote economic growth.

The framework focuses on five interlinked steps:

Step 1. Getting children off to the right start

By developing the technical, cognitive, and behavioral skillsconducive to high productivity and flexibility in the workenvironment through early child development (ECD), emphasizing nutrition, stimulation, and basic cognitiveskills. Research shows that the handicaps built early in lifeare difficult if not impossible to remedy later in life and thateffective ECD programs can have a very high payoff.

Step 2. Ensuring that all students learn

By building stronger systems with clear learning standards, good teachers, adequate resources, and a proper regulatory environment. Lessons from research and ground experience indicate that key decisions about education systems involve how much autonomy to allow and to whom, accountability from whom and for what, and how to assess performance and results.

Step 3. Building job-relevant skills

By developing the right incentive framework for both pre-employment and on-the-job training programs and institutions (including higher education). There is accumulating experience showing how public and private efforts can be combined to achieve more relevant and responsive training systems.

Step 4. Encouraging entrepreneurship and innovation

By creating an environment that encourages investments in knowledge and creativity. Emerging evidence shows this demands innovation-specific skills (which can be built starting early in life) and investments to help connecting people with ideas (say, through collaboration between universities and private companies) as well as risk management tools that facilitate innovation.

Step 5. Facilitating labor mobility and job matching

By moving toward more flexible, efficient, and secure labor markets. Avoiding rigid job protection regulations while strengthening income protection systems, complemented by efforts to provide information and intermediation services to workers and firms, is the final complementary step transforming skills into actual employment and productivity.