By 2027, around 1.1 billion workers, or 6 in 10 workers globally, will need to be retrained. This is due to shifting skills demand in the face of automation, digitalization, climate action, and other global megatrends. Skills demand is shifting so fast that nearly 39 percent of skills required for jobs today will transform and may even become obsolete.
These massive demands for re-skilling and up-skilling are occurring at a time when many young people are already struggling to transition from school to work due to skills mismatches. Over 20 percent of youth in low- and middle-income countries are not in education, employment, or training(NEETs). Among young women in lower-middle-income countries (LMICs), this rate rises to almost 40 percent. Around 450 million youth (7 out of 10) are economically disengaged, due to lack of adequate skills to succeed in the labor market. Further, 20 percent of firms (global average) cited workforce skills as a significant constraint to business development. This share is higher in specific regions. Approximately 34 percent of firms in the Middle East and North Africa (MENA) identify an inadequately educated workforce as a major constraint; this share is 55 percent in Latin America & the Caribbean.
Two types of skills are in high demand. First, higher-order cognitive skills, especially complex problem solving. A one standard deviation increase in complex problem-solving skills is associated with a 10–20 percent higher wage. Second, specific socio-emotional skills, especially adaptability and communication.In several countries, more than half of firms report shortages of workers with specific socio-emotionalskills, such as commitment to work. The ability to adapt quickly to changes is another socio-emotional skill highly valued by modern labor markets.
TVET systems can play a huge role in delivering on the massive skilling opportunities countries are facing today. With its unique focus on workforce development, TVET has the potential to contribute to employment and productivity to better support sustainable economic transformation. When TVET functions well, its graduates have the right skills for today’s jobs but are also prepared to adapt in the future as skills need change.
However, TVET is not a popular option among students. This is especially true in LMICs whereinTVET enrolls relatively few students, both compared to the number in corresponding levels of general education and to TVET enrollment in high-income countries. Across 72 LMICs, the percentage of secondary students enrolled in vocational programs was at 9 percent in 2000 and at 11 percent in 2020. However, economies that do TVET well, such as Netherlands, Germany, and Malaysia, experience high demand for this track. On average, the share of youth in TVET increases with a country’s income per capita, and it is below 10 percent in all regions except for Europe and Central Asia.
Demand for TVET is low because it is often considered a second-tier educational track. TVET students are more likely to come from more disadvantaged households compared to their peers in general education. In fact, socioeconomic status can affect not only entry into TVET, but the choice of specialization. Even those students who are genuinely excited about TVET may become discouraged by the sociocultural stigmas around TVET, misperceptions or uncertainties about its returns, or diminished prospects of continued learning opportunities after completion.
Three types of reforms can help TVET systems better serve the massive skilling opportunity offered by global labor market transformations (to learn more, see World Bank’s 2023 report, Building Better Formal TVET Systems). These reforms will not only help young people, labor markets, and economies, but also help TVET systems improve their own relevance, utility, and prestige. In line with the theme of ‘Harnessing the Ways we Learn’ within the Human Capability Initiative (HCI), these reforms will enable TVET systems to better harness unrealized opportunities by embracing more innovative approaches to skill-building. These reforms are: (i) flexible pathways; (ii) more demand-driven systems; and (iii) incorporate the science of adult learning.
First, there needs to be more flexibility between general and vocational tracks. Those who choose TVET should not feel that they are irrevocably closing the door to general skills-acquisition.. This is because the combination of general and technical skills is becoming highly valued. Further, even technical jobs are demanding more intensive higher-order general skills.
Second, flexibility through modularization and provision of hybrid TVET is important. This will help support learning opportunities at times and locations that fit learners’ needs. For example, the Philippines introduced micro-credentials that give credit for smaller learning blocks, that can be “stacked” into aggregated certifications and qualifications but need not be done consecutively. They provided online micro-credential learning in TVET for more than 1 million adult learners during COVID-19.
Third, another route to more flexibility is via Recognition of Prior Learning (RPL) schemes that validate professional knowledge acquired in the workplace or in formal or non-formal studies. For example, RPL in Bangladesh TVET system increased the probability of finding employment and improved employment quality, including earnings and worker confidence, particularly for women.
TVET programs need to respond better to the reality of the labor markets. In some economies this could mean responding to the needs of self-employment and the informal economy. In other cases, this could mean responding to the transition to more digital and greener economies. This is aligned with the ‘Harmonizing the Ways We Act’ theme within the HCI which emphasizes how impact multiplies whendifferent actors work in synergy.
One way to do this is through better information on student aptitudes, provide program offerings, labor market data by occupation etc. Skills assessments and career guidance can shape learners’ aspirations and labor market expectations.
Another way is to foster hands-on approaches including work-based learning via internships and apprenticeships. Inspiration can be drawn from the Educate! program, implemented in Uganda, Rwanda, and Kenya, which conducts an innovative curriculum for connecting upper-secondary students to TVET, focused on entrepreneurship and employability. This program has generated higher income, employment, and business ownership, particularly for females. Similarly, public-private partnerships in the automotive sector in Ghana, Morocco, and South Africa provide skills training funds for catalyzing training in priority sectors. This approach will also help ensure that TVET systems build transferable key socio-emotional skills such as teamwork, resilience, self-confidence, negotiation, and self-expression.
Digital technologies, such as virtual reality (VR) training, can provide hands-on experience in a scalable and inexpensive way. VR laboratories used to train learners on computer networking configuration and troubleshooting in Zambia were both performance-effective and cost-effective. Similarly, Ecuador’s ActiVaR program is piloting use by technical and technological institutes of virtual labs with computer-based and virtual reality technologies to deliver practical training. In China, Lenovo is working with tertiary institutes to train vocational students in high-tech areas, such as cloud computing.
TVET systems must also attract those already in the workforce, for upskilling and reskilling. To do this, they need to design their systems to work better for working-age adults, considering that adult brains learn differently. This can be done in three ways.
- First, the brain’s ability to retain new information lessens with age. Therefore, adult learning programs have a better chance of success if lessons relate to everyday life. Both practical exercises and visual aids are effective in adult learning because they help memory.
- Second, adults face significant stress, which compromises their cognitive capacity. Creating emotional cues linked to learning content—such as goal-setting—can be an effective strategy to increase adult learning.
- Third, adults face specific socioeconomic constraints. They have high opportunity costs in terms of lost income and lost time with their children, but TVET programs often have inflexible and intensive schedules. TVET programs with short modules delivered through mobile applications are particularly promising.
Disclaimer
This report has been prepared by The World Bank Group. The views and opinions expressed in this report are those of the authors and do not necessarily reflect the views, policies, or positions of the Human Capability Development Program (HCDP), the host of Human Capability Initiative (HCI) conference.
