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3.1.2 Training for the formal sector: Training priorities, resources and reorientation

Written by: International Labour Organization

Article Overview: Despite oft-repeated government pronouncements about the need for concerted efforts to improve the skills of the poor, responding to formal sector training needs has remained the top priority for most public sector training institutions during the 1990s.

3.1.2 Training for the formal sector: Training priorities, resources and reorientation

Despite oft-repeated government pronouncements about the need for concerted efforts to improve the skills of the poor, responding to formal sector training needs has remained the top priority for most public sector training institutions during the 1990s. If anything, this bias has increased during the last decade as concerns have mounted about the need to re-shape training systems to meet the challenges of new (post-fordist) production and organisation technologies, international competition, and globalisation. Recognition that international comparative advantage in most of the key growth sectors is now largely determined by human resource endowments means that training systems must be at the forefront of the process of skills-driven economic modernisation. In short, the need to ensure national inclusion in a rapidly globalising economy has taken precedence over the continued exclusion of the poor from training provision.

There is a mass of evidence that demonstrates convincingly that good quality, relevant training does make a major difference to improving the productivity of formal sector enterprises, especially those producing tradable goods where attaining international competitiveness is critical for sustained export-led growth. In contrast, training needs for MSE are often difficult to identify and effective training demand in many activities remains limited. It is hardly surprising, therefore, that most governments are reluctant to alter significantly resource allocations in favour of the informal sector.

These new demands for increased training provision come at a time when budgetary support for public training institutions in many countries has been declining rapidly as a consequence of stringent fiscal belt-tightening. As a consequence, core VET institutions have had their work cut out just finding ways to maintain their current training activities, let alone think about developing training for clienteles who are generally unable to pay. With increased de facto and/or de jure autonomy, public sector training institutions are seeking to generate new sources of revenue from both enterprises and individuals. Unless, therefore, governments and other donors make available earmarked funding for training the poor, it is unlikely that these institutions will reorient their training activities in support of these groups.

Another important consideration is that the design and delivery of training for the formal sector tends to be relatively straightforward compared to training for the poor which, typically, needs to be closely integrated with other support measures which are usually provided by other institutions. These additional costs and risks of providing training for the poor can be a major disincentive for public training institutions.

In many countries (particularly in Latin America), the funding of public sector training institutions relies to a large extent on training levies collected from registered, formal sector enterprises. This has meant that governments have often felt constrained in the extent to which levy resources can be 'diverted' to meet the training needs of informal sector enterprises, nearly all of whom make no levy contributions (see Castro, 1996).

EMPLOYMENT AND TRAINING
PAPERS
43
Learning to change: Skills
development among the
economically vulnerable and
socially excluded in
developing countries
Paul Bennell
Employment and Training Department
International Labour Office Geneva
First published 1999

Related Articles
  2.1.2 Lack of provision and system reorientation
  3.2 The private sector: Training priorities, resources and reorientation
  7.3.4 Labour market reform: Mainstreaming skills development for the poor
  7.4.1 Governance and organisation
  3.1.4 Overall resource availability: Training priorities, resources and reorientation

Article Tags: budgetary support, comparative advantage, concerted efforts, contrast training, current training, developing training, effective training, formal sector, growth sectors, informal sector, international competition, international competitiveness, last decade, pronouncements, public sector training, resource allocations, resource endowments, shape training, top priority, training institutions



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