Education & Skills Mismatch
Young people need more comprehensive education that responds to labour market needs
Education is not the biggest bottleneck to youth employment but it is a major one. Figure 6.23 showed that AEO country experts consider lack of education and skills mismatches to be principal obstacles for young people in labour markets in about half the countries in the survey. Figure 6.24 showed that a lack of proper training is the third most cited reason by young people from North Africa why they do not find jobs.
The preceding analysis has established a number of facts about youth employment and education:
- The chances of being wage employed rather than in vulnerable employment are significantly higher for young people with more education. For those in employment wages are higher.
- Higher education is linked to higher unemployment among young people but lower unemployment among adults.
- Among those with higher education the unemployment rate varies by type of educational degree.
- Young people with education face a higher likelihood of unemployment and discouragement in MICs than in LICs.
- Discouragement and being out of the labour force are higher among young people with no, or only a little, education. Overall, NEET rates are lowest among young people with tertiary education.
The analysis suggests that much unemployment, and even discouragement, observed among educated young people are largely transitory phenomena and the result of queuing for good jobs by the better off. However, the length of this transition, which can often take many years, and the strong link between field of study and unemployment rate, suggest a serious mismatch between the skills young people bring with them when they leave the education system and those that are sought after in labour markets.
High vacancy rates in the presence of large scale unemployment confirm the existence of skills mismatches and are especially substantial in MICs. Although there are large numbers of unemployed young people and a constantly growing labour supply, many enterprises in Africa struggle to fill open positions. In Egypt, for example, about 1.5 million young people are unemployed (ILO 2011b), while at the same time private sector firms cannot fill 600 000 vacancies. In South Africa the situation is even more extreme, with 3 million young people in NEET and 600 000 unemployed university graduates versus 800 000 vacancies (The Economist, 2012a). Figure 6.29 shows that unemployment among those with higher education is much higher among youth in MICs than in LICs, suggesting that mismatches between the skills young people have and what the education system offers are greater as countries grow wealthier. A survey among recruitment and temporary work agencies conducted for this report in nine African countries shows that such agencies have a greater struggle to find suitable candidates with tertiary education in South Africa and Tunisia than in countries with much lower incomes such as Kenya, Ghana and even Niger.
Mismatches are not confined to university graduates but also strongly affect young people with secondary education. Figure 6.29 shows that broad unemployment is higher among the young with secondary education than those with tertiary education in LICs and just slightly lower in MICs. Taking into consideration NEET youth, Figure 6.11. showed that NEET rates are highest for youth with secondary education. Given that broad unemployment is much lower among adults with secondary education than among those with primary education or less, mismatches seem to be a serious problem for young people with secondary education. Figure 6.34, which will be presented in the next section, shows that among youth not in employment, those with secondary education have the highest proportion of respondents who provide “lacking employers’ requirements” as the reason for not being in work.
Figure 6.29. Youth employment and unemployment by education and country income groups
A complete absence of skills is a problem too, but skills mismatches seem more relevant. In a survey among experts on 36 African countries about the major challenges youth face in labour markets, 54% found a mismatch of skills between what job seekers have to offer and what employers require to be a major obstacle. They were 41% to identify a general lack of skills among job seekers as a major obstacle (Figure 6.30.). See also Box 6.9. on the improving levels of education in Africa.
Figure 6.30. Lack of skills versus skills mismatching
Skills mismatches point up a poor quality of education and the absence of linkages between education systems and employers as underlying problems. The recruitment and temporary work agencies surveyed reported a general lack of targeted education and frequent major discrepancies between candidates’ profiles and the skills required for a job. A shortage of technical and mechanical employees or electricians coexists with a surplus of workers in audits, sales and communication. In manufacturing in particular many of the positions that go unfilled are at a level that does not require tertiary education and does not pay the salaries that university graduates expect. What are required, rather, are the technical skills necessary to maintain equipment and supervise unskilled workers. Higher education systems in Africa need to become more diversified to meet the need for a variety of levels of skills and education. The rest of this section will analyse mismatches at each educational level in descending order.
At the tertiary level, young Africans are confronted with a university system which has traditionally been focused on educating for public sector employment, with little regard for the needs of the private sector. Often a degree from a tertiary institution is an entry requirement for government employment, with little attention paid to a specific skill set. At the same time tertiary education in technical fields tends to be significantly more expensive than in the social sciences, which makes expansion of such faculties more challenging for public education institutions. Private providers of education could fill this void, leaving the government with duties of quality control and oversight.
As a result African universities do not educate for African needs. As is shown in the preceding discussion of youth in NEET, unemployment rates vary by field of study. Graduates in technical fields such as engineering and information technology (IT) have less problems finding employment than those from the social sciences or humanities. At the same time these latter fields have much higher enrolment and graduation numbers (Table 6.3.) and consequently much higher unemployment numbers. According to African recruitment and temporary work agencies, the most difficult sectors in which to find candidates with tertiary education are those that need specific technical qualifications, such as the extractive industries, logistics, the chemical and pharmaceutical industries, manufacturing in general and agri-business (results from AEO survey). Given Africa’s comparative advantage in agriculture and the great potential for international trade in processed agricultural products, the low number of graduates in the area of agriculture is striking. With 2% of students specialising in agriculture the discipline occupies the same rank among graduates in Africa as it does in Europe, even though agriculture contributes 13% to Africa’s GDP compared to 1.4% in Europe (both for 2010, World Bank, 2011c). Agri-business is one of the few sectors for which finding high level managerial candidates is almost impossible in Africa, according to a large recruitment firm active in many African countries. Given the important role extractive industries play in many African countries, the lack of graduates available to work in the sector is similarly striking.
On a positive note, some sectors are educational success stories. The fields with the fewest problems in finding candidates are banking, education, commerce and IT and telecommunications. Banking and IT and telecommunications, in particular, are fast growing sectors, suggesting that the link between industry needs and tertiary education works well in these areas.
Table 6.3. What do students study? University graduation rates in Africa and the world (2008-2010)
|Education, humanities and arts||Social sciences, business and law||Science||Engineering, manufacturing and construction||Agriculture||Health and welfare||Services||Other|
|Sub-Saharan Africa||26%||44%||12% (3% ICT)||4%||2%||5%||0%||7%|
|North Africa||22%||51%||8% (1% ICT)||10%||1%||6%||1%||1%|
|OECD||25%||37%||10% (3% ICT)||11%||2%||11%||4%||1%|
Source: AEO data, UNESCO
With the aim of narrowing the skills gap and thus adjusting supply from graduates of higher education to the current needs of the labour market, some countries have changed education curricula. In 2008, the Ethiopian government introduced a policy designed to shift the balance of subjects in all public universities away from the humanities and towards the sciences and technology, on a 70:30 basis. The strategy is based on an assessment that graduates of medicine, engineering and technology generally have better employment opportunities inside and outside the country than graduates in the social sciences and, to some extent, the natural sciences (UNECA, 2011).
Universities must educate with an eye to African markets, improving education in technical fields and agriculture, and improving quality. This approach also includes more and better guidance to students to steer them towards employment in the private sector, away from enrolment in traditional public sector entrance subjects in the arts, humanities and social sciences.
Below tertiary level, the focus must be on expanding secondary level education. Returns to primary education are low. Academics believed for a long time that returns to education were linear, i.e. increase continuously with every year of education obtained (see for example Psacharopoulos and Patrinos, 2002). However, more recent evidence (see Kuépié et al., 2009 for results from urban West Africa, Dias and Posel, 2007 for South Africa and Teal, 2011, for a discussion of African evidence), suggests that returns are not continuous in years of education but linked to the level of education attained. Figure 6.31 shows that the likelihood of being wage employed increases strongly with a secondary school education (based on Gallup World Poll data, see also Annex 2). Household surveys show the same for the likelihood of earning a higher wage (AfDB, 2012). Primary education makes a small difference, compared to no education at all, in terms of labour market opportunities. In other words, returns to education are positive and strongly convex. Teal (2011) consequently observes that: “If in fact the earnings function is convex, so that the marginal returns to education are lowest for the individuals with the least education, giving priority to investment in primary education may have little impact on incomes unless the individuals affected by the reforms proceed to higher levels of education.” The fact that so many children and young people do not proceed from primary to secondary education (see Box 6.9. on education levels in Africa) despite the strong convexity of returns to education suggests that strong barriers are in place, such as high costs and poor quality of primary schools that do not prepare adequately for secondary school.
Figure 6.31. Probability of being wage employed by educational level (multivariate analysis with Gallup World Poll data)
Especially in MICs, changing economic structures are putting mounting pressure on education systems to go beyond primary education. South Africa is a good example. In the absence of the large manufacturing or agri-processing sectors that utilise low-skilled workers in most African countries, secondary education is often the minimum requirement for entry to wage employment in the formal sector. South Africa’s post-apartheid economic development was largely one of capital-intensive technological change in production methods and a shift towards skill-intensive services (banking, telecommunications) away from the low-skilled manufacturing which had previously been the employer of large parts of the labour force. The shift has led to stronger demand for skilled labour and less demand for unskilled labour (Bhorat and Hodge, 1999; Dias and Posel 2007; Banerjee et al. (2008); Fourie, 2011; Rodrik, 2006). Rodrik observes that “this structural change away from the most low-skills intensive parts – and resultant skills supply-and demand mismatches – is key to understanding the concentration of unemployment among the young, unskilled and black population.” Given these dramatic changes and the move of the economy towards equilibrium with demand for higher skills, the only chance for South Africa’s youth is a concerted effort in investing in better education. Africa is making progress with the provision of education but serious quality gaps remain (Box 6.9).
Box 6.9. Education levels in Africa and the world
Young people in Africa (and in sub-Saharan Africa in particular) have a very low educational profile compared to other regions in the world. In sub-Saharan Africa, the gross enrolment ratio at secondary level is 35%, and that at tertiary level just 6% (figure in this box). Although these levels are very low compared to other regions, they reflect rapid growth over the last decades. Based on current trends 59% of 20-24 year olds will have secondary education in 2030, compared to 42% today. Given Africa’s high population growth this translates into 137 million 20-24 year olds with secondary education and 12 million with tertiary education in 2030. In spite of this vigorous expansion large gaps remain in the quality of the education provided. Seventeen countries, including Mali, Niger, Ethiopia, Senegal, Côte d’Ivoire, Nigeria and Angola among others, have literacy rates of less than 75% (World Bank 2012b). The increase in the number of higher education graduates has often been at the expense of quality, as expenditure per student has been decreasing throughout Africa. Within ten years (1999 to 2009), the number of higher education graduates in low-income sub-Saharan African countries almost tripled (from 1.6 million to 4.9 million). It is expected that this figure will reach 9.6 million in 2020.
Secondary & tertiary enrolement ratios, by world region
Expansion is not enough. Quality and relevance of education must be improved to reduce the skills mismatch. The previous analysis has shown that the level of broad unemployment is especially high at secondary level, suggesting serious skills mismatches. Most general secondary education in Africa has long followed the ideal of providing the prerequisites for an academic education or a white collar (office) job in the formal (and urban) sector. Yet, as earlier sections have shown, only a small minority of young people have access to either of these options. Moreover, the skill set many formal employers are looking for is a more practical and applied one than that provided in most schools, including behavioural and interpersonal skills, as well as basic familiarity with concepts relevant to business.
Technical and vocational skills development (TVSD) has the potential to provide young people with more applied skills and better chances in the labour market. Skills can be obtained either through structured and specialised institutions or through on-the-job practical experience, or both – the so-called “dual” training. In a review of training programmes in 90 countries Fares and Puerto (2009) find that programmes that combine on-the-job and in-class training provide a combination of soft skills (behavioural skills) and hard skills (technical or administrative skills) that can have a significant positive impact on employment and earnings of programme participants. Dual training, such as internships or apprenticeships, allows young people to apply the theories learnt in class in real environments, to develop professional skills, such as time management and professionalism, and to gain practical experience (Angel-Urdinola et al., 2010). Our analysis of labour force surveys and household surveys finds higher marginal returns for vocational training than general secondary education in five out of eight countries (see Annex 2). Kuépié et al. (2009) show that returns to vocational education are higher than to general secondary education in urban West Africa.
However, TVSD provided by government has suffered from neglect and irrelevance. TVSD accounts for less than 5% of training among youth in Africa (AfDB and OECD, 2008). Where they exist, TVSD systems in Africa suffer from a shortage of qualified staff, obsolete equipment, ill-adapted programmes and weak links with the job market.
Instead traditional apprenticeship in the informal sector predominates. For instance, in Senegal some 400 000 young people are in apprenticeship annually, compared to some 7 000 graduates from the formal vocational training centres; and up to 80% of skill development in Ghana is through the apprentice system (AfDB and OECD, 2008). In urban informal sectors in West Africa apprenticeships in small (informal) firms and on-the-job learning account for over 90% of the training of young workers (Nordman and Pasquier-Doumer, 2011). The informal sector is also an important beneficiary of skills training. Kuépié et al. (2009) show that returns to vocational training are highest in the informal sector, emphasising the importance of practical skills for this sector.
Given the importance of the informal sector, TVSD systems must adapt to its needs in terms of skills and course structure, especially in rural areas. In view of the very large informal sector in African labour markets, vocational training should emphasise the qualification of workers in this sector. But the provision of public TVSD has often been inadequate as courses are rigid, and it is biased toward white collar jobs in the urban wage sector (Adams, 2008). Unresponsive TVSD is a particular challenge in rural areas, where this form of education could have significant impact on the lives of the poor by enhancing agricultural skills and productivity. Research undertaken in Tanzania in 2011 showed that of 23 vocational training centres in rural areas directly managed and financed by the Vocational Education and Training Authority, only three were offering training connected with the agricultural sector. In most African countries the situation is even more extreme, as in Malawi, where no agricultural training is provided in vocational centres (Dalla Valle, 2012). A recent World Bank report finds similar problems in Uganda, where government-provided vocational training does not reach young people in the rural non-farm economy because it is too focused on formal post-secondary training, offering courses of long duration, which people in informal sector enterprises cannot attend without losing their source of livelihood (Bakiene et al., 2012).
Instead of excluding informal sector training, governments should address poor identification of job seekers by introducing skills certification systems that attest to competencies and thereby facilitate recognition and comparison in the labour market, reducing asymmetric information between job seekers and employers (AfDB and OECD, 2008, World Bank, 2010). Certification and recognition contribute to building an employment history which will favour access to better employment opportunities in formal sector jobs. Benin, for example, created a Vocational Skill Certificate (national diploma attesting to the attainment of skilled worker level through a reformed traditional apprenticeship) and the Occupational Skill Certificate (certificate attesting to the completion of an apprenticeship) to recognise the skills acquired through informal apprenticeships. It has also put in place a consultative mechanism involving the National Federation of Craftworkers, local craft workers groups and the relevant ministry to steer the process (AfDB and OECD, 2008).
To be successful TVSD systems need a clear vision of the desired outcome and have to be focused on sectors with promising employment prospects. In many African countries responsibilities for TVSD are scattered across a large range of ministries and agencies and are not integrated with the overall education system. In Egypt for example TVSD centres are run by a wide range of 22 ministries and agencies, depending on the field of specialisation of the respective centre (AfDB and OECD, 2008, country note Egypt). In addition two ministries deal with education-related issues, namely the ministry of education and the ministry of higher education, and are also involved in developing TVSD specific policies and frameworks. In recognition of the need for coherence the Supreme Council for Human Resource Development was established in 2000. However, coherence continues to be work in progress. Effective TVSD systems must provide the economy with the skills it needs. In South Africa the sector education training authorities (SETAs), set up by the 1998 National Development Act, aim to identify the skill needs of industrial sectors (including skill shortages and gaps), as well as constraints on the effective utilisation of skills in relation to the objectives of the national skills development strategy. All training initiatives in the enterprises are competency-based, depending on the specific competences required by the world of work (AfDB and OECD, 2008).
African countries should strengthen partnerships with the private sector at all levels of education. The 2008 edition of the AEO showed that a deeper involvement of employers in the provision of in-service training has significant potential to increase the relevance as well as the cost-effectiveness of training systems. Close co-ordination with the private sector ensures that TVSD systems are aligned with the skills needs of the labour market. Partnerships with industry help accurately to define the qualifications for each trade and the content of relevant occupational standards. Moreover, programmes offered by the private sector, such as on-the-job training or internships, allow both firms and workers to obtain information on the other side of the market and eliminate constraints on information asymmetry problems, such as the unidentified quality of workers from the employers’ side, and unknown sorts of skills required from the workers’ side (Attanasio et al., 2009).
Africa trails other regions of the world in the proportion of enterprises offering training to their employees. Figure 6.32. shows that fewer than a third of formal firms in sub-Saharan Africa and the Middle East-North Africa (MENA) region offer training programmes for their permanent employees. Although this analysis is not restricted to young people, it shows that there is room for improvement in the involvement of firms in training and education. Both enterprises and governments must strive for closer co-operation and a stronger involvement of firms in the education of young people. Box 6.5. presents a successful example of training provision for young people in Africa by a large multinational company.
Figure 6.32. Firms offering training to its employees in Africa and the world
Box 6.10. Cisco Networking Academy.
The Least Developed Countries (LDC) Initiative launched by US-based IT company Cisco, replicated later by Cisco networking academies, is a good example of partnership between several organisations including the United Nations. Cisco set out to provide Internet-based learning and IT skills training in half the world’s 50 least developed countries including 11 West African countries (Benin, Côte d’Ivoire, The Gambia, Ghana, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Senegal and Togo). In 2008, over 9 200 students aged between 25 and 34 were enrolled throughout West Africa (YEN-WA, 2008). A survey of the LDC Initiative conducted in six countries showed that two-thirds of respondents found IT jobs after completing the programme and that 10% started their own businesses. Currently, 31% of students graduating from the courses are women, exceeding the target of 30% (OECD, 2009).