How can developing countries better prepare students for the workforce?

This article was originally published on the World Bank’s Jobs and Development blog.

Bangladesh is about to benefit from a demographic dividend because of a youth bulge. The challenge for the education system is to leverage the rapid growth in the labour force into higher economic growth performance. This youth bulge, combined with the successful campaigns for universal primary education, is leading to huge increases in the supply of semi-educated labour. There is enormous potential for utilising this workforce productively by expanding post-primary education and training on the one hand, and by creating commensurate employment opportunities on the other hand.

Bangladesh’s economic growth so far has been driven by a replication approach in respect of low-productivity ready-made garment export, export of low-skilled labour, and expansion of micro-enterprises.  For the next stage of growth, we need to switch from replication to innovation. We need to increase productivity and develop skills. For this, the education system needs to be geared towards developing well-balanced people with appropriate skills and flexibility for adjustment. This will let them keep pace with increasingly competitive and globalized markets and rapidly changing technologies.

Educating broadly or deeply?

Less developed countries facing resource constraints face a choice between educating their population broadly ordeeply; either they can adopt a universalist approach of providing basic education for all or an elitist approach of emphasising quality higher education for the most talented. In East Asia, a universal approach to education in part led to high economic growth driven by manufacturing exports and without worsening of income distribution.  On the other hand, India’s ability to take advantage of the new possibilities in high-tech information services largely resulted from its long-standing investments in higher education.

Now, however, less developed countries like Bangladesh may not have to make this choice between the two alternative approaches to education. China and Vietnam, for example, have expanded primary and higher education simultaneously, recognising that success required both universal literacy and a cadre of highly skilled individuals capable of absorbing advanced technology.

The prevailing higher education system in Bangladesh has led to educated unemployment. There is an apparent paradox here. Not only has higher education been increasing rapidly, but there also seems to be excess demand for such education. The evidence of excess demand can be seen from several factors: the increasing and higher economic returns to education at the tertiary level relative to lower levels; the rapid proliferation of private higher education; and an increasing number of students opting to study abroad. Yet, the unemployment rates remain unacceptably high among educated and skilled workers.

The educational planners thus have to address a number of questions: Is expansion of higher education leading only to more educated unemployment because of absence of appropriate signalling by the labour markets? What kinds of skills are in shortage? What reforms in the education systems are needed to make college graduates employable, and to address the skill shortages? Clearly, the prevailing systems of higher education do not seem to incorporate enough technical and employability skills that could directly lead to better labour market outcomes.

The skill mismatch in the labour market is also related to a country’s capacity to take advantage of opportunities in the global markets, such as through technology adoption and development of new export industries.  Many technologies imported by the less developed countries from more advanced countries may not find suitable local workers, causing labour mismatches. Adapting these technologies to local conditions requires even more skills. Policies and institutions need to be in place to mitigate this mismatch and to make sure that the imported technologies are eventually adapted to local conditions.

There are also important equity issues to be addressed. Increasing returns to higher education along with unequal access may lead to a deepening of income and social inequalities. Studies have shown that the degree of access to education has replaced family ownership of land and other assets as the main vehicle of transmission of poverty and inequality from one generation to the next. The Bangladeshi education system has not been able to respond adequately to increasing demand, let alone extend access on an equitable basis. How far children from poor households can compete in a merit-based system of entry into higher education will depend on their access to quality education at the primary and secondary levels. So far the policy focus has been on getting these children to school in the first place. The time may have come to shift emphasis from the global agenda of education for all, to providing access to quality education and to higher education for the children from disadvantaged families.

Publication does not imply endorsement of views by the World Economic Forum.

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Author: Wahiduddin Mahmud is a Professor of economics, University of Dhaka and a member of the UN Committee for Development Policy.

Image: Afghan girls study at an open area, founded by Bangladesh Rural Advancement Committee (BRAC), outside Jalalabad city, Afghanistan. REUTERS/Parwiz.