Multi-Donor Trust Fund on Labor Markets, Job Creation and Economic Growth: Sri Lanka


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  • Based on responses to the question “What problems did you encounter?” – CONDITIONAL on answering “yes” to experiencing any problems. The number of observations ranges from 50 (for both Tech & Crafts) to 115 (Services). Note that one occupation, with 1 observation (Skilled Agr/forestry/Fishery workers) has been included to keep the graph/scale more legible.
  • There is variation in cognitive and technical skills by 1) rural/urban (urban population uses more cog and tech skills) and 2) TVET (individuals with TVET use more cog and tech skills) 3) apprenticeship (individuals with apprenticeship use more cog and tech skills)
  • Multi-Donor Trust Fund on Labor Markets, Job Creation and Economic Growth: Sri Lanka

    1. 1. STEP Skills MeasurementSri LankaApril 28, 2013The World Bank1
    2. 2. Outline Rationale Phases and Activities of the Study Country Context Key Findings Lessons2
    3. 3.  No prior engagement in the skills sector, focusing onvocational & technical education But the Bank is active in both general and higher education sub-sectors GoSL’s vision is to become a competitive middleincome country (MIC), as described in its ten-yeardevelopment framework – Mahinda Chintana GoSL is concerned about the quality and relevance ofeducation & training systems, identified skillsdevelopment as one of the priority areas in itsdevelopment framework GoSL requested the Bank’s technical assistance in thearea of the skills sectorRationale |3
    4. 4.  The Bank responded to GoSL’s request with aproposed programmatic skills study in FY10, beforethe launch of the STEP SurveysObjective of the Study to provide analytical inputs about critical policy issues on thedemand and supply of skills; to engage the GoSL and key stakeholders in an informed dialogueon policy directions and options for development of the GoSL’sskills development strategy to achieve the government’s vision ofa competitive MIC;Rationale (cont.)|4
    5. 5. • Phase 1 Studies (FY11)– Education, training and labor market outcomes• Status and trends in skills development• Training and Labor market outcomes• Phase 2 Studies and Activities (FY12-13)– Demand for skilled labor• HH Skills Measurement Survey (as part of STEP)• Employer Skills Survey (as part of STEP)– Skill Supply• Review of the costs and financing of TVET (includinggovernance and management)• Private TVET and public private partnership• SABER Workforce Development Study– South-South Knowledge Exchange Program• Phase 3 (FY13)– Final ReportPhases and Activities of the Study|5
    6. 6. • Sri Lanka’s economy has grown rapidly over thepast decade achieving 8% growth in 2011• “Mahinda Chintana” envisages increasing percapita GNP from $2,000 in 2005 to $4,000 by2016 through equity-led growth• Sri Lanka is the most educated country in theSAR region– Compulsory and free education up to grade 9– 98% enrollment of 5-14 year olds– 86 % completion of junior secondary• Skills is one of the main priorities in MCCountry Context|6
    7. 7. Key Findings: Employer Survey (1) |70 10 20 30 40 50 60Finding workers with previous experienceHigh employee turnoverTVET of workersLabor availabilityPay taxes and EPF/ETF, etc contributionsTotal salary costEmployment protection legislationGeneral education of workersMinimum wage rateWhat labor factors are the most problematic for firms’ operations? %The studies (ES, STEP) identify lack of skills as one of themost important constraints for firms’ growth anddevelopment
    8. 8. Key Findings: Employer Survey (2) |80 20 40 60 80 100ManagersProfessionalsTechniciansClerksServiceSalesCraftsPlant/machine operatorsElementary occupationsOtherApplicants did not like workingconditionsApplicants expected too highwagesApplicants lacked skillsNo or few applicantsSkills constraints of recently hired worker, % of firmsFirms that identify skills as a severe constraint report substantially loweroutput
    9. 9. Key Findings: Employer Survey (3) |There are substantial mismatches betweeneducation and skills supply and demand9Percent of population by education and percent of employers identifyingeducation levels for highly skilled and low skilled workers
    10. 10. Key Findings: Employer Survey (4) |• What matters the most to retain an employee?1. Job specific skills and literacy2. Numeracy, English and team work3. Other soft-skills• Substantial share of employers are not satisfiedwith types and levels produced by– General education – more than 60 percent– TVET system – almost 50 percent10
    11. 11. Key Findings: Employer Survey (5) |• Firms use different strategies to cope with skillsshortages:– Hiring - even though many firms are in contactwith educational sector providers, many firms (70percent) use informal channels– Training – 40 (60) percent of the firms providefirm-based training for high (low) skilled workers– Contracting out - 5 (11) percent of firms use thisstrategy for high (low) skilled workers11
    12. 12. Key Findings: Household Survey |12Share of population with cognitive skills by education level, 15-64 year olds0102030405060708090100readingwritingnumeracyreadingwritingnumeracyreadingwritingnumeracyreadingwritingnumeracyreadingwritingnumeracyreadingwritingnumeracyreadingwritingnumeracyreadingwritingnumeracyno education below primary primary (grade5)lowersecondary(grade 9)passed GCE-O passed GCE-A bachelor master+lowmediumhigh
    13. 13. Key Findings: Household Survey |13Change in technical skills by education-15%-10%-5%0%5%10%15%20%25%computermechanicEnglishphysical-10%-5%0%5%10%15%opennesspresentationteam workChange in soft skills by education• Technical skills are shaped both by general education (uppersecondary and above) and TVET.• Except for openness personality traits seem not to be formed in theeducation system
    14. 14. Key Findings: Skills and Labor Market Outcomes |Employment• Writing, numeracy, teamwork, and long-termperseverance are associatedwith lower likelihood ofbeing unemployed• Technology, computer andpresentation skills areassociated with lowerprobability of beingunderemployedSelf-employment (informaleconomy participation)14-24%-22%-11%-3%-2%17%10%7%-30% -20% -10% 0% 10% 20%interpersonalteam workmechanicdecision makingperseveranceEnglishcomputertechnologyChange in probability of being self-employed by skill
    15. 15. Key Findings: Skills and Labor Market Outcomes |Earnings• returns to higher education (A-levels, bachelor’sdegree, and above) and to TVET have been rising butneither formal nor informal apprenticeship improveswages;• self-reported reading, writing and numeracy do not haveadditional returns once education is controlled for;• use of computers and other technology, English skills, andmechanic skills are associated with higher wages;• Socio-emotional skills (extraversion, openness, emotionalstability, agreeableness) are valued in the labor market;15
    16. 16. Key Findings: Household Survey |16• Employment:– Only numeracy and perseverance are significant• Wages:– Cognitive: not significant– Non-cognitive:extraversion, openness, agreeableness, perseverance, decision making– Technical: technology, mechanic and machinery use skills– TVET graduates have higher wages than individualswithout TVET– No returns to apprenticeshipSkills and Labor Market Outcomes
    17. 17. Key Findings of An Overview of the Skills SupplySystem (1)• Sector Performance– Poor quality of teaching and learning – largely as aresult of outdated curricula, acute shortages of trainedstaff (especially with industrial experience); changingtechnology also presents a further challenge, sincemany staff are not up date with new knowledge andtechnology; and TVET institutions lack modernequipment and technology• Cost and Finance– Inadequate public funding, but also inefficiencies in theuse of available resources– Lack of incentives for income generation/cost recovery– Resources are not linked to performance17
    18. 18. Key Findings of An Overview of the Skills SupplySystem (2)• Private provision– Private provision is still limited.– Inadequate registration and accreditation, largely due to the lack of staff.• SABER – Workforce Development– Strong commitment to skills development – considered as a nationalpriority, aligned with the country’s economic development plan;– Significant progress in the development of NVQ, but it needs to be reviewedon a regular basis to make the system more flexible and improve training;– Partial progress has been made in the involvement of employers, who areinvolved at the national level, but more needs to be made to establish afully-demand driven skills development system.– Inadequate national coordination of TVET activities at the national level;– Inadequate institutional autonomy– Lack of labor market and sector performance information18
    19. 19. Key Findings/Strategic Priorities19Sri Lanka is facing a major skills constraint as it moves from afactor-driven economy to an efficiency-driven economy. TheGovernment identified skills development as a priority area toprovide “skills for all”.Tentative strategic priorities include:• The quality and relevance of TVET programs needs to beimproved so that they become both more attractive for youths andmore relevant for employers.• A demand-driven should be developed, employers playing acentral role.• The provision of TVET should be further diversified, byincreasing the role of the private sector; and• The TVET system needs to be adequately resourced, and fundsallocated must be used efficiently and linked to performance.
    20. 20. Key Findings of the Study (cont.) |20• Flexible and accountable governance mechanisms areneeded at all TVET levels, with their componentscoordinated not only with each other but also with allsystem stakeholders.• The skills needs of the informal sector should beaddressed with specifically targeted mechanisms.• The skills needs of companies relying on enterprise-based training need to be specifically addressed.• The monitoring and evaluation system, including labormarket information system, needs be strengthened.
    21. 21. Lessons |21• Finalizing questionnaire takes a lot of time!• Establishment of the study team (e.g., survey consultant, local surveyfirm, research analyst) takes time• Obtaining sampling frame from the Department Census and Statistics(DCS) is very difficult especially for the employer survey– Last firm Census is 10 years old– The sampling framework was requested in July 2012, obtained in mid-October2012• Implementation – required the review and approval of severalMinistries and Agencies (e.g. Ministry of Youth Affairs and SkillsDevelopment, Ministry of Public Administration).• Survey results are very useful to provide a diagnostic analysis of skillsdemand and analysis, but a detailed analysis of economic sectors(e.g., manufacturing, tourism, service) and sub-education sectors(e.g., primary, secondary, TVET, higher education) require largersample sizes, increasing the cost of the surveys.• Ownership of the Government is essential!
    22. 22. Thank you22