Industry-led TVET programs can upgrade workers’ skills for Industry 4.0

A new Asian Development Bank (ADB) study is pushing for industry to lead the development of technical and vocational education and training (TVET) programs to make them stronger and more relevant in the Fourth Industrial Revolution (4IR).

The ADB study, published this month, noted the poor quality of TVET programs and their lack of relevance to the skills required by industry in Cambodia, Indonesia, the Philippines, and Vietnam.

The report, which highlights the need for skills development in Southeast Asia, said that amid fears about the anticipated loss of millions of jobs arising from automation, 4IR can also create new opportunities for quality jobs.

“While many jobs will indeed be lost as a result of automation, new jobs will emerge through the adoption of technologies that will increase worker productivity and competitiveness of nations, thereby leading to greater prosperity,” it said.

The study estimates a positive net effect in all sectors analyzed: 39% for garments and 2% for tourism in Cambodia, 14% for food and beverage (F&B) manufacturing and 1% for automotive manufacturing in Indonesia, 11% for IT-BPO and 10% for electronics in the Philippines, and 34% for agro-processing and 12% for logistics in Vietnam.

However, to tap the new opportunities from Industry 4.0, countries must increase investments in skills development and companies must exert greater efforts to upskill their workforce to perform new and higher order roles that complement machines.

The study thus recommended the development of industry-led TVET programs targeting skills for 4IR. “Courses and credentials for 4IR in each focus industry need to be developed to strengthen TVET programs and thus build on existing mechanisms for industry engagement.”

The report mentioned that Generation, an independent nonprofit founded by the global management consulting firm McKinsey & Company, is a good example of an industry-led program.

“Of the more than 30,000 people who have graduated from its programs in 13 countries, 81% were employed by 3 months after graduation and earning salaries 2-6 times higher than previously. While the program covers a broad range of occupations, it includes a strong focus on developing skills for 4IR technologies, including digital marketing and the development of automated processes using robotics.”

For their part, labor or manpower ministries could support industry-led TVET programs by working with industry associations and education institutions to develop such programs, it added.

Similarly, training institutions will need to work with industry to address skills shortages and lack of preparation for the workplace for 4IR.

The study found that there are “significant mismatches in perceptions on skills preparation” between employers and training institutions.

While 96% of training institutions in Indonesia believed that their graduates were well prepared for work, only 33% of employers in F&B manufacturing and 30% of employers in automotive manufacturing agreed.

In Cambodia, almost 90% of employers reported that graduates were inadequately educated or trained before being hired. Large shares of employers in other countries similarly reported that they did not find graduates adequately prepared for entry-level positions.

Employers in the surveyed industries stressed the importance of training and skills development. Together, these industries could need training programs sufficient to raise 169 million workers’ skills from competence adequate for 2018 to competence demanded in 2030.

“Although on-the-job training will be critical to skills development in all industries, education and training institutions will still need to prepare graduates better for entry-level positions,” the paper said.

Encouragingly, most training institutions reported high engagement with businesses.

However, some may struggle to keep pace with the rate of change in skills demand. For example, almost half of training institutions surveyed review and update their curricula less than annually, and again only about half provide information on job market conditions to their students.

Additionally, over half of training institutions reported that they already had dedicated programs for 4IR skills, and an even higher share in all four countries reported plans to develop or expand programs for 4IR by 2025.

While this is an encouraging trend, the ADB report said it is critical to assess the quality of such training, as well as its relevance and alignment with employer needs.

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