Human capital development has played a vital role in the success of thriving economies. However, when the skills of workers fail to align with the needs of industry, the mismatches and imbalances in the labour market can keep an economy from reaching its potential.
Findings from the latest World Bank Enterprise Surveys indicated that between 10% and 15% of employers in the Philippines, Indonesia, Laos and Malaysia, and 18% in Cambodia report having difficulties finding workers with the right skills for their operations. Less than 5% of companies in Thailand say they experience this drawback.
Skills mismatches affect not only the rich countries in the Organisation for Economic Cooperation and Development (OECD) but also developing economies, including those in Southeast Asia. Studies show a significant number of workers whose training is out of sync with their employers' real needs.
For example, around 37% of workers in Thailand and 43% in Singapore are mismatched with regard to their field of education, compared to the global average of 40%. On average, 22% of workers are underqualified and 16% are overqualified for their occupation.
In Singapore, people in their 40s and 50s are the group the country is most concerned about when it comes to tackling skills challenges, according to Tze Chin Ong, chief executive of SkillsFuture. Many of these people are struggling to make the transition that has been forced on them by social and economic megatrends.
"They have expected to live under the former paradigm -- go through formal education from primary, secondary to tertiary level, get into a job, stay there, and retire -- based on the skill sets they learned from school," Mr Ong said at a virtual forum hosted by the OECD about human capital development in Southeast Asia.
Given how the Covid-19 pandemic has critically affected many business operations, skill demands and employment scenarios have changed in many sectors. Many workers lost their jobs -- temporarily or permanently -- and some will need to be reallocated to other sectors if they want to remain employed. That will requires upskilling and reskilling in many cases.
However, the pandemic has also had a substantial impact on skills improvement. In many cases, learning and work-based programmes must be conducted online, so people with a less conducive home learning environment have a greater risk of falling behind.
Looking at the broader perspective, the world has changed a lot as a result of digitisation and the trend toward longer working lives; hence, most people will need to upskill and reskill at some point in their working lives, said Mr Ong.
El Iza Mohamedou, head of Centre for Skills at the OECD, pointed out that field-of-study mismatches can also be a problem for people when they are forced to accept a lower-level job due to a lack of field-specific knowledge. As a result, they may also experience "significant wage penalties".
Skills mismatches, therefore, represent an inefficient allocation of resources that leads to bottlenecks that hold back further economic growth, Ms Mohamedou said.
Occupational mismatches can also happen when there is a lack of job opportunities in a specific field, or when other segments offer more attractive working conditions. As such, workers will embark on careers in which they have no grounding.
Like mismatches, skills imbalances are another major constraint for companies and countries seeking to foster innovation, productivity and competitiveness.
Imbalances in the workforce occur when the supply and demand for skills are not in sync with each other.
According to the OECD, Thailand and Malaysia tend to experience shortages in low-skill jobs, particularly those that require simple and routine tasks or some physical effort. This is in contrast to most countries where there is a surplus workforce in low-skill careers.
The Thai labour market falls short when it comes to filling high-skill occupations, however. In Malaysia, by contrast, high-skill occupations generally are not affected by imbalances, although there is a dramatic shortage in certain high-skill careers such as teaching professionals.
Meanwhile, middle-skill occupations in Thailand and Malaysia show the strongest surplus due partly to a high number of skilled agriculture, forestry and fishery workers.
Imbalances by skill types also need to be taken into consideration. In many countries, there is a pronounced shortage of workers who have strong problem-solving and social skills experience. On the other hand, technical skills are in balance in most labour markets worldwide.
However, Thailand still falls short when it comes to certain specific social and cognitive skills, such as service orientation and mathematics skills.
To tackle these mismatches and imbalances, policymakers, employers and individuals need to focus on education-labour market alignment and adopt skills matching approaches to ensure that no one is left behind.
"The best protection against automation is to build the skills of our population," says Andreas Schleicher, director of education and skills at the OECD. SUPPLIED
MEGATREND IMPACTS
Most of the panelists at the forum emphasised that a combination of megatrends such as globalisation, digitisation and technological progress, among others, had created a profound effect on labour markets globally.
Technological progress, for example, is transforming the way individuals live, work and consume as digitisation, artificial intelligence and automation are increasingly prevalent in the workplace. Without tech skills, workers are unable to gain the benefits that technological advances have to offer, or are limited to just rudimentary usage of these advances.
Southeast Asian countries are more vulnerable to automation than some of their counterparts, as a large proportion of jobs in the region could be automated or subject to unprecedented changes. The most highly affected sectors are manufacturing, construction, wholesale and retail trade, hotels and restaurants.
With the labour market facing rapid changes, decision-making is more important, but also more difficult, said Andreas Schleicher, director of education and skills with the OECD, adding that automation, new forms of work and the polarisation of labour markets pose a challenge.
"The best protection against automation is to build the skills of our population," he said. "But in the time we're living in today, what matters more is the capacity of people to solve complex problems, to manage complexities and to have social and emotional skills."
Information and communication technology (ICT) skills, numeracy, management, communication, STEM (science, technology, engineering and mathematics) and problem-solving skills, for instance, all feature prominently in digital-intensive industries. The more our economies are digitised, the better they can extract value from these skills in people, according to Mr Schleicher.
Currently, it is estimated that 30-40% of 15-year-olds, primarily from disadvantaged backgrounds in many countries, want to get into jobs that will no longer exist by the time they graduate. That's because those jobs are at high risk of automation.
"The more tech talent, the more skilful the labour is," says Ruangroj Poonpol, chairman of the Kasikorn Business Technology Group. SUPPLIED
"When we educate people, it's not just about providing them with the right skills, but it should also give them a better sense of the future they are going to face," added Mr Schleicher.
In Indonesia, where the labour market has suffered greatly from Covid-19, the official unemployment rate has soared to 7% with some 9 million workers affected, said Bambang Brodjonegoro, minister of research and technology and head of the country's National Research and Innovation Agency.
Human capital development is one of the four pillars of Indonesia's drive to achieve developed-country status by 2045, said Mr Brodjonegoro. This insides an emphasis on mastering digital knowledge and 21st century skills for the younger generation.
Critical thinking, creativity, collaboration, ICT and media mastery, and leadership are seen as prerequisite skills for the younger generation as it embarks on the world of work.
"Human capital development in Indonesia needs to make sure that programmes and curricula match the needs of society and industry 4.0," he said.
Indonesia will also focus on vocational education while enhancing certain fields of study, especially maritime science and biodiversity, he added.
"Human capital development in Indonesia needs to make sure that programmes and curricula match the needs of society and Industry 4.0," says Bambang Brodjonegoro, minister of research and technology. SUPPLIED
RESHAPING SKILLS
As Southeast Asian countries strive to overcome skills challenges, they are taking advantage of the opportunities many of the current trends provide. New skills strategies are being devised to reshape their future workforce and promote resilience.
In Singapore, SkillsFuture is the main strategic response to trends related to the future of work and longer working lives, said Mr Ong, adding that it is not just a government policy but a national movement.
SkillsFuture reaches out to everyone in the ecosystem, including individuals, employers and other partners. It informs individuals about choices of education and training while offering career development based on skills mastery.
A key component of the movement is the so-called enterprise pillar. SkillsFuture works with large enterprises, also known as SkillsFuture Queen Bee companies, to reach out to small and medium-sized businesses and support their employer-initiated skills development efforts.
In Singapore, people in their 40s and 50s are the group that needs the most help when it comes to skills challenges, says Tze Chin Ong, chief executive of SkillsFuture. SUPPLIED
Queen Bee companies in Singapore include Bosch Rexroth, SAP, SMRT Corporation Ltd, and SP Group, according to the Ministry of Education.
In addition, Mr Ong highlighted SkillsFuture Enterprise Credit (SFEC), which gives employers a one-off S$10,000 credit to be used for business and workforce transformation needs, as well as job redesign initiatives and specialised training programmes.
As Southeast Asia grows in economic importance, making sure its labour force has the right skills is important to countries that have invested in the region. Among them is the OECD member South Korea, which has completed more than 400 projects in the region since 1990 under the Asean-Korea Cooperation Fund (AKCF).
The Korean government contributes US$14 million annually to the AKCF for projects that benefit all Asean countries, according to Pyo Jung-hwa, director of the Asean Cooperation Division at the South Korean Ministry of Foreign Affairs.
Korea is currently spending $7 million from the AKCF to carry out a three-year programme on technical and vocational education and training (TVET) called TEAM, which stands for TVET for Asean Mobility, said Ms Pyo.
Running from 2020 to 2022, the TEAM programme aims to strengthen technical and vocational education and help the region adapt to changes brought about by the fourth Industrial Revolution, she said.
A core component of the TEAM programme is a labour market information system, which will provide insights into current labour trends in the region.
"This is to build a foundation that will strengthen the Asean TVET ecosystem to be more responsive to the labour market and industry demands and reduce the gap between the demand and supply of vocational skills," said Ms Pyo.
The programme also aims to upgrade the TVET national qualification framework and quality assurance systems in Cambodia, Laos, Myanmar and Vietnam. As well, it seeks to provide more learning opportunities such as cross-border internships, faculty exchange programmes and skills training to 100 practitioners and 400 trainees in priority areas.
Skills mismatches represent an inefficient allocation of resources that can hold back a country's economic growth, says El Iza Mohamedou, head of the OECD Centre for Skills. SUPPLIED
In Thailand, the Kasikorn Business - Technology Group (KBTG), an affiliate of Kasikornbank, is also working on skills development with a particular focus on educational technology (EdTech), said Ruangroj Poonpol, chairman of KBTG.
KBTG sees potential to disrupt the world of education and support skills development by investing in startup companies such as SkillLane, an EdTech accelerator that provides online courses aimed at developing a broad range of field-specific skills.
SkillLane works with universities to provide online degree programmes, he said. Individuals can choose to pursue a master's degree that can be completed within as little as six months.
Another venture backed by KBTG is InsKru, which is an online community for teachers to share content, tips, tactics, teaching methods and test plans with each other. Almost 10,000 teachers are now on board with potential to have a positive impact on some 200,000 students in Thailand, said Mr Ruangroj.
To date, KBTG and its parent bank have invested in 14 EdTech startups. Last year, the company provided almost 500,000 free learning hours for individuals to upskill and reskill in fields including programming and data science.
"The more tech talent, the more skilful the labour is," said Mr Ruangroj.
When more workers are equipped with future skills, such as data science, social skills, data engineering and programming, the country will have a better chance to move forward and propel the economy, he added.