INNOVATIVE STRATEGIES IN

Technical and Vocational

Education and Training

for Accelerated Human Resource

Development in South Asia

January 2014

© 2014 Asian Development Bank

All rights reserved. Published in 2014.

Printed in the Philippines.

ISBN 978-92-9254-419-5 (Print), 978-92-9254-420-1 (PDF)

Publication Stock No. RPT136125

Cataloging-In-Publication Data

Asian Development Bank.

Innovative strategies in technical and vocational education and training for accelerated human resource development in South Asia.

Mandaluyong City, Philippines: Asian Development Bank, 2014.

1. Technical education.            2. Vocational education.            3. South Asia.            I. Asian Development Bank.

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Contents

Tables, Figures, and Boxes

Tables

Figures

Boxes

Foreword

Skilled human resources are one of the major binding constraints to sustain high economic growth in South Asia. It is therefore not surprising that the findings from the study show that South Asian countries need to invest significantly in human capital to reap the benefits arising from the limited window of demographic dividend available in the next 3–4 decades and to move up the value chain. The findings are a reminder that the countries’ competitiveness and ability to move up the value chain in the longer term will come from innovation, knowledge, and skills, and not from cheap labor or natural resources, which tend to be short-lived. From the current low skills equilibrium linked to low global competitiveness index and human development index, the South Asian countries have a historical opportunity to leapfrog through strategic investment in human capital anchored on information and communication technology.

Asia 2050, published in 2011 by the Asian Development Bank, presents two scenarios: (i) the Asian Century with sustained high economic growth leading to doubling of Asia’s share of global gross domestic product (GDP) from around 25% currently to just over 50% by 2050; and (ii) the middle income trap for several countries, leading to much lower growth and GDP. The initial heavy reliance of the East Asian tiger economies on export-led growth, anchored on early investment in basic education, yielded the necessary skills to take advantage of short-lived cheap labor to build the foundation at the beginning of their journey to prosperity. They were able to quickly expand their investment in secondary education, technical and vocational education and training (TVET), and subsequently in higher education to supply skilled workers to sustain high economic growth and gradual transition to a knowledge economy. The rest is history.

A 2012 McKinsey report, The World at Work, noted that South Asian countries, along with some developing economies in Africa, will contribute 60% of the labor force required by the global economy by 2030 due to demographic dividend arising from a growing young population in these developing economies and shrinking working-age populations in advanced economies due to aging. The same report also noted that developing economies, including in South Asia, will face a surplus of low-skilled workers, while there will be a shortage of medium and highly skilled workers.

This regional report, prepared with financial support from Australian Aid, is based on eight country-level reports on TVET and higher education. The report has sought to identify priorities in TVET and higher education on how to meet the emerging needs for skilling and/or upskilling a large number of young people to turn them into a productive and competitive force in both the domestic and global labor markets.

We will continue to learn more about emerging opportunities and seek viable options to support South Asian developing member countries in their efforts to improve the skills and knowledge of their populations to become more productive and competitive, leading to inclusive and sustainable growth.

Juan Miranda

Director General

South Asia Department

Asian Development Bank

Preface

The report highlights a number of strategic areas for further dialogue and improvements. In technical and vocational education and training (TVET), it reconfirms that the system remains fragmented, with many ministries involved in each country in providing TVET services although there has been progress in developing and approving national skills development policies, setting up apex bodies to coordinate TVET, and moving toward a unified quality assurance framework. The report notes that the overall provision remains marginal against the actual labor market needs; private sector and employer involvement is limited, as are mechanisms to promote public–private partnerships; and funding remains only a fraction of the projected needs for TVET with an absence of sustainable financing mechanisms such as levies or tax incentives exercised by over 65 countries in the world.

The report emphasizes three major areas to elevate the importance of skills development to reap the benefits offered by the demographic dividend and to move up the value chain: establishing and/or restructuring existing institutions for effective coordination and institutional autonomy to flexibly respond to emerging labor market needs; establishing a single, unified, and sustainable funding window to expand performance-based quality skills training programs to meet the huge needs for training many more people for domestic and overseas labor; and enhancing quality assurance to meet national and international standards, including preparing training packages, training trainers, and building a robust monitoring system.

In higher education, the report highlights the global trends during the past 20 years: elite to mass higher education, emergence of private higher education, increased reliance on tuition, autonomy with accountability, and emergence of special types of higher education. It also highlights the need to establish new institutions for quality assurance, to conduct high-quality research, and to develop specialized institutions. As emerging new practices, the report notes strategic planning, income generation, budget allocations through funding formulas, a focus on applied research, and public–private partnerships. It also points out shortcomings, such as weak quality assurance systems, lack of importance given to applied research, weak autonomy and accountability, and existence of only a few specialized institutions.

Noting that cheap labor or abundant resources are no longer a comparative advantage, it recognizes productivity gains driven by innovation as the real advantage. Highlighting the trend toward global integration, creation of a global labor market, and move toward a knowledge economy and information society, the report calls for constant innovation to generate new knowledge and to apply such knowledge. It underscores the need for a flagship university in each country that would serve as the standard for its move toward having a world-class higher education system offering relevant and quality undergraduate and postgraduate programs. The report recommends depoliticizing higher education institutions, providing institutions more autonomy with increased accountability, diversifying and expanding resources for higher education, and defining a national higher education strategy.

This publication is one of the two-part regional report on TVET and higher education. It presents the findings of the regional technical assistance project Development Partnership Program for South Asia—Subproject 11: Innovative Strategies for Accelerated Human Resource Development in South Asia. Three country-level workshops were held during the first week of December 2012 in Sri Lanka (1 December), Nepal (3 December), and Bangladesh (5 December) to validate the findings and to seek consensus among some of the key stakeholders around major recommendations and next steps.

The findings emanate from country-level analyses supported by national consultants in each of the three focus countries—Bangladesh (Md. Mohiuzzaman for TVET and M A Mannan for higher education), Nepal (Devi Dahal for TVET and Hridaya Bajracharya for higher education), and Sri Lanka (Sunil Chandrasiri for TVET and higher education with initial inputs from Dayantha Wijeyesekara on TVET)—as well as desk reviews of Bhutan and the Maldives by the national coordinator, Nicholas Tenazas, based in Manila. The regional reports were prepared by Richard Johanson (TVET)