Yunnan is a medium-sized Chinese province with abundant natural resources and high levels of ethnic diversity. Although Yunnan is still one of the poorest provinces in China, it has experienced rapid economic growth rates over the last decade and is expected to maintain an annual growth rate of 10 percent or higher. The recent national Bridgehead Strategy has further positioned Yunnan as a strategic gateway in the Southwest region, providing tremendous new opportunities for its development. Faced with an increasing demand for skills, especially for professional and technical workers and operative frontline workers, the stock of skills among Yunnan’s current labor force appears insufficient. The lack of required skills has been the most commonly cited problem in the hiring of highly skilled professionals and technical occupations, as well as operative frontline positions. In addition, the mismatch of wage expectations poses a major issue for firms hiring high-skilled managers, professionals, and technicians. For construction workers and operative frontline jobs, the lack of applicants is an issue.

This report consists of three parts. The first part, Skills Challenges: Demand, Gaps, and Mismatch, examines the sources of the mismatch of supply and demand for skilled labor in Yunnan. The second part, Education and Training, sets out the challenges facing Yunnan as it seeks to strengthen the Technical and Vocational Training and Education (TVET) system, improve access to education and the quality of educational outputs, encourage more robust work-based and rural training, and invest additional resources in general education. Finally, in Conclusions and Policy Implications, the report lays out specific policy proposals that cross both sector lines and address sector-specific issues. The policy recommendations for cross-subsector issues are focused on governance and coordination, industry participation, quality assurance, financing TVET, and monitoring and evaluation. For subsector - specific issues, recommendations are focused on non-formal training, incentives and technical assistance for work-based training, and pre-primary education.