Integration from the Center (Workforce Development/Education/ Training/Skills)

The best place to see the emerging, more integrated role of labor intermediation (connecting people to work) is via the systems to improve human capital and skills. This tight connection is precisely because the main objective of improved skill development is to link first with immediate employment and then build a career over time. The more systematic preparation of the workforce over a person’s lifetime is now more commonly called “workforce development.” Workforce development seeks to connect the range of transitions building to career paths - school to work, learning on the job, work returning back to school. It can also be built within specific economic sectors, as will be discussed below as sectoral economic development. Workforce development involves the whole spectrum of education and training: from improved basic schooling through reforms to university education, including reforms and modernization to technical education, vocational training, short-term skills training, apprenticeships and basic work skills.

I am calling this integration from “the center” because the skills nature and content of work is so central to the quality of fitting the right worker to the right job. Surveys of skill mismatches have made clear that better aligning the skills of the workforce to labor market demand can reap gains in both employment and productivity. Countries with large labor forces show some of the biggest mismatches: Brazil (61%), India (58%) and Turkey (52%).5 Poorly aligned training and education lie at the heart of skills mismatches, but they are not always correlated with poor quality education and low enrollment. The Europe and Central Asia (ECA) region has highly regarded grade-school education as well as some of the highest enrollment rates at all levels of education, including university-level education with the exception of a few lower-income countries like Uzbekistan and Azerbaijan. Nonetheless, skill shortages were reported by the region’s major employers to be the second greatest constraint to growth after tax rates.6

It is hard to attract new investment, foreign or domestic, in better jobs without a well-developed labor force to match. Ireland, a country that used a national skills strategy in the 1990s to attract foreign investment in first hardware and then software, and to realign its secondary and university cur- riculums to emerging employer demands, has among the lower skills mismatches in Manpower’s 2015 survey (11%), up though from 2% in 2014.7

Workforce development is multi-level; improving the curriculum and employment-related content of training and advanced education aids a better fit of a worker to a job, and in a feedback loop, employers learn more specifically about what skills they are looking for, improving both their hiring processes and their in-house training. As workforce development needs to correlate directly with local labor market demand, many large countries, such as the United States, approach it with distinct state- level workforce development councils and career pathways to in-demand professions. Advancing skills development at a national level through the reform and modernization of human capital institutions and the workplace has taken on a new impetus via national skills strategies around the globe. South Africa’s National Skills Development Strategy 2011-2016, for example, promotes the growth of the FET (Vocational-Technical) Colleges, better workplace learning, and improved public sector delivery.8

It is more realistic to understand workforce development as a dynamic process to continually fit workers to increasing and deepening skill levels rather than a static one-time hiring decision from one service. Intermediation within workforce development is multi-point as well, with industry, public, and non-profit actors. Industry needs feedback to not only affect hiring, but also how jobs are defined and what qualifications are sought. As a small illustration only, Box 5.1 presents the tourist region of Riviera Maya south of Cancun, Mexico, which set out to try and reduce job rotation and get a better qualified workforce to serve an increasingly competitive tourism industry.

In Riviera Maya, the local hotel association found as they worked with both the major hotels and with local vocational-technical colleges, offering short courses, work shadowing and other learning methods for high school- level students in their hotels, they could influence and help modernize the curriculums, and get a more reliable (e.g. more willing to stay longer) stream of high school-level employees they had previously written off. The process also enabled employers to articulate better the new skill needs in areas like refrigeration and mechanics, standardizing their hiring better across the industry and sending signals to the local technical schools and universities about what the new competitive demands are in their industry.

Box 5.1 Riviera Maya, Mexico: Strategic Growth in Tourism, Integrating from the Right and Center

Riviera Maya, south of Cancun on the Yucatan Peninsula in Mexico, had a perhaps enviable problem in the developing world. By 2008, it was creating jobs fueled by foreign investment in large hotels on a beautiful stretch of beach close to less well-known Mayan ruins but far enough from the party-friendly all-inclusives in Cancun. The Riviera Maya hotel association, Association Hoteleros de Riviera Maya (AHRM), knew the growth was unsustainable though. International tourism was becoming more competitive, European visitors were demanding higher-end services which meant more staff with higher

Box 5.1 (continued)

levels of training, such as eco-friendly maintenance. But in 2008, the hotels were busing in low-skilled labor from poor areas of Mexico and job rotation was way too high. The local vocational-technical schools had such a poor reputation that they were not a source of hiring, and hotels were going it alone to hire any workers they could find; the public employment service only had an office in Cancun and wasn’t serving their market.

The AHRM led a human capital development initiative with local voc-tech schools, large and small hotels, and the Education and Labor Ministries that is changing hiring and training in Riviera Maya and the industry’s competitive position in the process. The key instruments of change include:

  • From the “Center”: engagement with local vocational- technical schools to start changing curriculums and providing more work opportunities and job orientation for upper secondary students, including hotel staff visiting schools and school instructors coming to hotels. Key for international competitiveness, it is the leading local hotels in the region who have led the higher standards. What is being created is a dynamic workforce development process in which hiring practices (who, when, how) are changed simultaneously with changes in training methods and curriculum.
  • Multi-channel intermediation: job-matching instruments and players both multiplied and diversified. The AHRM expanded its own intermediation service, listing jobs for hotels, referring candidates, and streamlining and improving hiring by developing standard job profiles so that job seekers could hunt among hotels and see how one job led to a career stream within the industry. The public sector opened a new office in Riviera Maya to attend to increased local demand. Links between internships and job placement happened more automatically. The hotels report they are getting better qualified candidates and are using upper secondary students in place of college graduates who were often the ones prone to higher job rotation.

Box 5.1 (continued)

From the “Right”: Riviera Maya has kept up high growth levels, increasing dramatically investment and number of rooms while upgrading the quality of the workforce. Importantly, it is growing as a higher-end destination with less downturn in the low season which is enabling it to position itself well to maintain and continue this growth and add even more to new job creation. Riviera Maya now exceeds Cancun in hotel rooms and occupancy and is the leading tourism destination in Mexico.

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