Revisiting Active Labor Market Policies for Skills Development Programs in Bangladesh

Mohammad Nazmul Avi Hossain

edited - 26112408_1582568295122875_4002223214601812262_nHow often has human capital development been strongly termed as the driving factor of a nation? Surely, we cannot disapprove the evidences of human capital’s supremacy in making an economy robust. The macroeconomic confounding factors of a nation are “defacto” whereas human capital development acts as “dejure” to disentangle the differences in country’s prosperous transformation from developing to developed nation. The journey of Bangladesh towards a developing country will unsurprisingly rely on the utilization of its human capital optimally. Hence, labor market context is pivotal in terms of policy formulation and growth generation. In addition, the success of the nation in achieving SDGs will heavily rely on its status of the workforce, especially the youth in the labor force.

As per the latest labor force survey, the youth (aged 15-29 years) participation has reached to 20.1 million from 17.8 million recorded in 2005/06, where increased participation of female youth (7.0 million) played a crucial role. These stats are promising for a country that is riding on the airbus of consistent 6 plus GDP growth rate and entering into Rostow’s take off stage of economic development. However, the road to glory is illusive with only around 4.8 percent of youths obtaining university degrees, poor quality of education and disregarded Technical and Vocational Training and Education (TVET).

In the latest LFS, unemployment was recorded highest, 14.9 percent, among the population who completed higher secondary level of education followed by 11.2 percent who completed tertiary level. This is highly alarming in understanding the signals of education as a proxy of capabilities in the job market. Moreover, the skills development training programs led by Government, private and donor organizations are suffering from lack of vision in addressing the macroeconomic constraints such as “jobless growth” and “youth unemployment/underemployment”.

Active Labor Market Policies (ALMPs) are the universal sets consisting of the skills development training programs as sub-sets. In Bangladesh, several donors are working under bilateral and multilateral approaches in providing skills development training to poor and disadvantageous groups. Most of these skills development programs are focusing on capacity building of public-private partners and facilitating the poor to participate as trainees in training centers. Results are being obtained in generating increased employment among the target groups and enabling them to earn close to minimum wages. However, these results are far away from the asymptotical convergence towards employment generation and access to labor market in ensuring skilled jobs for a large population. Mostly, supply side factors are driving the existing training programs where private training service providers get support from a project/program to train poor with the help of aid. Two-fold question arises regarding the effectiveness of these kinds of typical TVET programs. First, how do these programs ensure the sustainability? Second, without involving employers and the demand side actors, to what extent these training programs are generating decent jobs for the trainees?  These questions do not have any straight forward answers though.

However, as per Brown, A. J., & Koettl, J. (2015) skills development programs should consider few major aspects in tuning the labor market’s functionality through training programs in order to improve the macroeconomic impacts of ALMPs. First, programs must bear in mind that “the indirect deadweight effect” lowers the cost-effectiveness of ALMPs. It refers to the resources of the policy that go to beneficiaries who would have achieved the objective of the policy even in its absence. Second, the effectiveness of ALMPs can be further undermined by the cream-skimming effect, by which only workers with high employment probabilities are selected into the program which may end up providing biased results. Third, the so-called locking-in effect (also called retention effect) refers to the lower probability of finding a job of ALMP participants compared to the unemployed who are not in ALMPs. Fourth, bringing unemployed workers back into work via ALMPs will increase their employment probabilities by the transition effect. This effect is the strongest for long-term unemployed workers, who during their unemployment suffer from skill attrition and loss of work routine. Fifth, the so-called competition effects highlight ALMPs’ role in strengthening outsiders’ position in the job market relative to insiders. According to the insider-outsider theory, labor turnover costs, firing costs as well as hiring and training costs for new employees give insiders market power, which they use to their own advantage, for example, to push up their own wages. Finally, it is the country context and overall macroeconomic enduring environment that discrepant the success of a skills development program. Need based industry driven training programs will benefit the labor market more. In addition, engagement of the private sector, employers and money generating business models of training service providers can comprehensively enhance the sustainable impact of skills development program. Integration of technology and digitization in skill development programs will open the new avenues for labor market.

More specifically, government policies intended to affect publicly-provided education and training will, in effect, determine the process of growth of the whole economy, promoting increasing returns to scale for Bangladesh.

Mohammad Nazmul Avi Hossain, Manager – Private Sector Engagement (Training and Employment), B-SkillFUL, Swisscontact 

Email: nazmulavi@gmail.com 

 

Promoting Youth Employment through SDGs

Andilip Afroze

The 2030 Agenda for Sustainable Development Goals is in its third year of implementation. The agenda commits to leaving no one behind by recognizing youth as its “critical agents of change”. Young generation is defined by UN as individuals aged from 15 to 24 years. There are in total 169 targets under 17 goals in SDGs. More than one third of these targets refer implicitly or explicitly to young people.

Youth receives the highest priority in the 2030 Agenda as eventually they are the one to experience its success or failure after 15 years. Also, this generation of youth is the largest ever in human history. Global youth population stands at 1.1 billion in 2018 that is 18 percent of the world’s population. Among them Asia and the Pacific region alone contains 60 percent of youth. (Advocates for youth)

Despite being such an important part of the world demography, this generation is facing global challenges like poverty, health risks, lack of quality education, unemployment and lack of decent work higher than the adults. A major challenge is the youth unemployment. The Report ‘Global Employment Trends for Youth 2013’ identifies youth as a generation at risk. In the context of young people facing prolonged job crisis, temporary and informal employment, and discouragement, the report states that it is not easy to be young in the labour market today. To solve this global crisis, 2030 Agenda puts great emphasis on promoting employment for youth.

There are four youth employment specific targets under two key SDGs: Decent Work and Economic Growth (Goal 8) and Quality Education (Goal 4). Under goal 8 three relevant targets are: achieving full and productive employment, decent work and equal pay for work of equal value for young people by 2030 (8.5), reducing the proportion of youth not in employment, education or training (NEET) substantially by 2020 (8.6), and developing and operationalize a global strategy for youth employment and implement the Global Jobs Pact of the International Labour Organization by 2020 (8.b). Relevant target under goal 4 is to increase the number of youth who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship substantially by 2030 (4.4). (ILO)

Targets have been set. However, satisfactory progress towards achieving the related targets is yet to come. According to ILO reports, overall condition of youth employment today has either deteriorated or remained similar to the launching year 2015. From 12.9 percent in 2015, global youth unemployment rate has increased to 13 percent in 2017. The rate is three times higher than the adult unemployment rate (4.3%). In fact, the ratio of youth unemployment to adult unemployment has been consistently close to three since 1995. In 2017, the highest rate is in North Africa (almost 30%), followed by Arab states (25.6%), Europe and central Asia (18%), Latin America and Caribbean (18%), Asia and Pacific (10.4%) (World Bank data). Secondly, the incidence of informal employment among youth remains stuck at 76.7 percent in 2017. In the case of NEET, roughly 25% of youth were NEET in some 28 countries in 2015, whereas in 2017 globally 21.8% of youth are NEET. This target 8.6 should be fulfilled by 2020. However, there has not been any substantial change till now. NEET young people are mostly female with rate of 34.4% globally.

Therefore, a long way to go before achieving the SDG targets for youth employment. International organizations are working relentlessly in this regard. However, global initiatives at best can assist rather than achieve the ambitious goals. Rapid action at national level is required as the underlying causes and solutions for these global challenges are actually country specific. Focusing on overall unemployment alone will not solve the problem either. Because globally youth unemployment has increased while unemployment rate has decreased. Related issues such as school to work transition, decent work, skill mismatch, young entrepreneurship, entry level constraints should receive priority in policy making. Another notable issue is data is unavailable for a large number of countries. For measuring progress towards SDGs, all related indicators in each country should be traced. A strong national statistical system is inevitable to solve this issue. Also progress reports need to present status of all 169 targets to point out where we stand and where we need to proceed. Recently published Sustainable Development Goal Report 2018 does not cover this. Also, the report has not focused much on youth. Regarding Global Jobs Pact, there is no recent progress report on implementation status.

Andilip Afroze, Senior Research Associate, SANEM.

E-mail: andaleep.afroze@yahoo.com

First published in the Thinking Aloud, 1 October 2018