Changing the Trajectory of Growth Through Skills Development

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Human resources are Bangladesh’s truly renewable resource. It seems like a no brainer that skills development needs to be front and center of any development strategy for the most densely populated country in the world (not counting Singapore and Bahrain). The next part of this development strategy should be to send our skilled human resources all over the world, and particularly to countries with declining populations, to meet their skilled workers needs.

Bangladesh’s GDP at market prices is $173.9 billion with an annual GDP growth rate of 6.12% (2014, World Bank). The country has grown 6.2% on average over the last 10 years and over 5.7% on average over the last 15 years. This may appear mGDP Growth Chartodest in a country where businesses demand 40% plus growth rates, but on a macro-economic level this is amazing despite all the environmental, political, educational challenges we face on a daily basis. Very few countries have managed to achieve this kind of positive growth year on year over 15-20 years. In order to achieve growth rates in excess of 8%-10%, there has to be significant investment in education – the type of education, namely skills development, which leads to increased productivity at all levels of enterprise.

The potential for achieving double digit GDP growth rates is well within reach of Bangladesh, the 8th ‘wealthiest’ country in the world in terms of human resources potential. Out of a nearly 155 million population, 62.7% are 15 years of age or older while 80% of the population is below 40 years of age. These resources remain untapped as they are mostly unskilled.

More than 75% of the population of Bangladesh lives in rural areas and the highest concentration of workers (92%) are in the informal economy where most work in agriculture. Around 59.3% of the population is economically active and part of the labor force, while the remainder is not. As much as 60% of the entire labor force is between the ages 18-35. Out of this, approximately 88% of the workers are employed in the informal economy. Around 40% of the total labor force in Bangladesh lacks any form of education and possesses little or no skills. Another 24% has education up to the fifth grade. None of these individuals qualify to attend government sponsored vocational training as the minimum level of education is completion of the eighth grade. As such, only 3% of the entire population is enrolled in vocational education.

The segment of the Bangladesh population that can afford it, prefer to send their children to colleges and universities to get bachelor’s and master’s degrees in the hope that as university graduates they will get better jobs. Students spend on average five years of their lives and as much as Tk. 5,00,000 for a graduation from a private university. However, a large majority of the graduates and post-graduates in fact end up with jobs that they could have done with a high school education and some skills oriented training. It is not uncommon to see BBAs and even MBAs beginning their careers at salaries paid to drivers of private cars or less. The average salary earned by a graduate across Bangladesh is approximately Tk. 7,500 per month. The ROI on a university education is therefore very low for most graduates.

This is largely because these individuals have not learned the necessary skills that employers need and as such employers pay minimal salaries because of the real and perceived need to train these individuals to perform their tasks on the job. Like it or not, another reason for this atrociously low average salary among graduates is a demand and supply issue – there are just not as many graduate level jobs in Bangladesh. This is exacerbated by the continuously increasing number of individuals with bachelors and masters degrees. It has got to the point that many companies are hiring graduates as peons.

What we really need are graduates of world class skills training and accreditation centers who can come into the workforce anywhere in the world and add value to their employers from day one. In the UK and across the world, employers are turning to business and technical education institutions to supply them with individuals that have the skills they need rather than individuals who are equipped only with a degree. For example, the Edexcel certified Higher National Diploma (HND) is a sought after qualification by employers regardless of where the HND was earned because the diploma focuses on teaching students the skills they will need on the job and because the stringent quality controls in place ensures that a HND graduate in the UK, Nigeria or Bangladesh has received the same rigor and have learned the same things.

The business case for moving away from the traditional degree based hiring to skills based hiring is that this leaves the employer with the flexibility to hire people that can do the job from day one rather than waiting three to six months to be trained for the necessary skills to do the job. There is an early adopter advantage for those employers who decide to individuals with skills rather than just degrees- they get people who can do the job immediately and don’t have to worry about losing them since not many other companies are hiring people without university graduation.

Technical Vocational Education and Training (TVET) has focused on developing the skills of factory workers, but there is a case to be made to individuals who attend universities that learning the skills that employers are seeking is a far better investment of their time and money as they will have marketable skills that guarantee success in the workplace.

Individuals who do end up with university degrees would benefit from a finishing school that focuses on developing soft marketable skills needed to succeed in an office environment – interviewing skills, CV preparation, existing transferable skills identification and enhancement, English and Bengali communication – both written and spoken (including focus on neutralizing accents), etc.

There is a real opportunity now to work towards bettering peoples’ lives through the development of skilled employees who can fill the stations at manufacturing and service enterprises at all levels of institutions inside and outside Bangladesh. The old saying, if you build it they will come, applies fully here. Industries have claimed that one of the main impediments to their growth is the availability of skilled workers – workers with the training to perform the types of work industries need. As such, instead of setting up manufacturing industries, where they would need to convert unskilled workers to semi-skilled and skilled workers (which takes significant time and effort), businesses have focused on trading businesses (import mainly) where worker training required is minimal. In essence, the skilled worker need is outsourced to other countries as evidenced by the fact that Bangladesh continues to be an import dependent country with significantly increasing negative balance of payments annually.

The availability of a trained workforce would encourage the establishment of industries that are currently only being considered in the greater Dhaka and Chittagong areas. The current focus that is putting an inordinate amount of population pressure in Dhaka and Chittagong is the result of this chicken or the egg dilemma – which comes first the industries or the trained workers to run these industries. Vocational training institutes are based in these cities because individuals looking for work come here. They come to Dhaka and Chittagong because majority of the industries are being established in these cities. Industries are being established here because this is where entrepreneurs find the highest concentration of trained workers. However, because of this concentration, there is significant attrition as industries poach workers from each other and also as workers are able to secure jobs more easily once they have accumulated some experience. This high attrition prevents the industries from wanting to invest in training their workers and therefore have to be content with the mediocre talent they are able to find in the market. This impacts the productivity in the factories and the quality of workmanship of products from Bangladesh.

Workers are coming to Dhaka and Chittagong at great personal cost to them in search of work and training. Their hope is to be able to earn enough money to be able to feed and clothe their dependents. Their lives are full of hardship as they live mainly in small shared quarters in these large cities and often in squalor. They try to earn enough money for an existence and send some money home to care for their families. Imagine a scenario where the work comes to their part of the country such that they can at the very least live at home or very close to home and earn a living. Factories would benefit from less mobile workers resulting in lower attrition and the ability and willingness to invest in the developing worker’s skills further over time. However, this cannot happen overnight.

There are countless sectors to focus on in terms of capacity building of human resources in Bangladesh and it is important to focus on the sectors that have the greatest need and can provide the highest return on investment. The low hanging fruit in this regard is still the RMG sector from management and supervision to worker level capacity building.

Employees will justifiably command more money as employers begin to see the benefits of hiring better skilled people such as better productivity, better quality products, less wastage, less customer complaints and increased orders for their better quality products. Imagine a scenario where even smaller factories are willing to pay higher than minimum wages for new entrants because these new entrants are coming into the industry with the necessary skills and therefore a productive from day one.

Over the next ten years, Bangladesh has the potential to grow at more than 10% (compared to 6% today) and create more than 15 million jobs (directly and indirectly) in labor intensive industries where it has a strong comparative advantage. Bangladesh has also the potential to become competitive in skill intensive industries, which should ensure high sustained growth beyond the next ten years.

It is important to ensure that any skills development focuses on right sizing the skills to the jobs available. In addition to vocational training, a finishing school curriculum geared towards particular vocations would enable differentiation between semi-skilled and skilled.  This writer’s business model is based on the fact that Bangladesh can become the largest supplier of skilled individuals to nations around the world with negative population growth rates. This can only be possible if we can ensure recognition/benchmarking of the skills of our employees to international standards.

Some of the ideas presented here may seem Utopian by our current standards but if we don’t aim for Utopia what right do we have to expect the growth rates we are hoping for?

 

This article was earlier published in the Bangladesh Brand Forum Magazine: http://bangladeshbrandforum.com/magazine/flash/122013/#/26/

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