A market systems approach to skills development
A market systems approach to skills development
English
ILO
The International Labour Organization is the tripartite U.N. agency that promotes Decent Work through employment, social security, labour standards and social dialogue. Its work on skills development is guided by the conceptual framework on Skills to improve productivity, employment growth, and development agreed in 2008 by representatives of Governments, Employers’ Associations and Workers’ Associations. Research, policy advice, and pilot projects and technical cooperation programmes to apply good practices in different circumstances across its 185 member States aims to boost the employability of workers, the productivity and competitiveness of enterprises, and the inclusiveness of economic growth. The ILO Secretariat in offices in 40 countries works with Ministries of Labour, employers’ organizations, and trade unions to integrate skills development into national and sector development strategies in order to better meet current labour market needs and to prepare for the jobs of the future; to expand access to employment-related training so that youth, persons with disabilities and other vulnerable groups are better able to acquire skills and secure productive and decent work; and to improve the ability of public employment services to provide career guidance, maintain labour exchange services, and deliver active labour market programmes.For more information regarding the ILO’s work on skills and employability go to: http://www.ilo.org/skills/lang--en/index.htm; for ILO/Cinterfor's Knowledge Management Plarform, see: http://www.oitcinterfor.org

Anticipating and matching skills needs

Anticipating and building skills for the future is essential to a rapidly changing labour market. This applies to changes in the types and levels of skills needed as well as in occupational and technical areas. Effective methods to anticipate future skills needs and avoid potential mismatches include: sustained dialogue between employers and trainers, coordination across government institutions, labour market information systems, employment services and performance reviews of training institutions.
Lifelong learning

There is a critical need for a greater overall investment in education and training, particularly in developing countries. Education and training investments should be closely linked to economic and employment growth strategies and programmes. Responsibility should be shared between the government (primary responsibility), enterprises, the social partners, and the individual. To make lifelong learning for all a reality, countries will need to make major reforms of their vocational and education and training systems. School-to-work schemes for young people should integrate education with workplace learning. Training systems need to become more flexible and responsive to rapidly changing skill requirements. Reforms should also focus on how learning can be facilitated, not just on training for specific occupational categories.
Skills policies and strategies

Skills and employment policies should be viewed together. The full value of one policy set is realized when it supports the objectives of the other. For investments in education and training to yield maximum benefit to workers, enterprises, and economies, countries’ capacities for coordination is critical in three areas: connecting basic education to technical training and then to market entry; ensuring continuous communication between employers and training providers so that training meets the needs and aspirations of workers and enterprises, and integrating skills development policies with industrial, investment, trade, technology, environmental, rural and local development policies.
Youth employability

Globally, nearly 68 million young women and men are looking for and available for work, and an estimated 123 million young people are working but living in poverty. The number who are not in employment, education or training (NEET) stands at 267 million, a majority of whom are young women. Significantly, young people are three times as likely as adults (25 years and older) to be unemployed.
Skills development is a primary means of enabling young people to make a smooth transition to work. A comprehensive approach is required to integrate young women and men in the labour market, including relevant and quality skills training, labour market information, career guidance and employment services, recognition of prior learning, incorporating entrepreneurship with training and effective skills forecasting. Improved basic education and core work skills are particularly important to enable youth to engage in lifelong learning as well as transition to the labour market.
Case studies and good practices
Case studies that document good practices and illustrate the benefits and lessons learnt of particular approaches or methods in real practice.

Enterprises can drive business success and support inclusive economic growth by making investments into educating, training and reskilling of workers. Workers also face an imperative to proactively upgrade their skills or acquire new ones through training, education, and lifelong learning to remain employable, especially in the face of rapid transformation brought about by advances in automation and digitalisation.
A market systems approach to skills development has the potential to lead to more sustainable employment outcomes at scale, by taking a holistic approach to addressing both supply- and demand-side factors, as well as tackling the cost of skills development programmes and strengthening the link between market needs and the important role of regulation and standards.
Drawing on three case studies, this paper explores how a market systems development (MSD) approach to skills development can lead to employment outcomes and foster sustainable impact through systemic change that is owned, maintained, and further evolved by local stakeholders.
Labour market
Private sector
Skills anticipation
Skills mismatch
Bangladesh
Bangladesh has a strong track record of growth and development, even in times of elevated global uncertainty. A robust demographic dividend, strong ready-made garment exports, resilient remittance inflows, and stable macroeconomic conditions have supported rapid economic growth over the past two decades. A strong recovery from the COVID-19 pandemic continued in FY22, although a recent surge in commodity prices has presented new headwinds.
Bangladesh reached lower-middle income status in 2015. It is on track to graduate from the UN’s Least Developed Countries list in 2026. Poverty declined from 43.5 percent in 1991 to 14.3 percent in 2016, based on the international poverty line of $1.90 a day (1).
Like many of its Asian neighbours, Bangladesh faces a major challenge trying to develop modern, employability skills for tens of millions of young women and men. It has a large informal sector, which accounts for 94.7 percent of the total employment in 2017 (2). Youth continue to be highly affected by the lack of opportunities, with the share of youth aged 15-24 not in employment, education or training (NEET), estimated at 27.8 percent in 2020 (3).
TVET has a huge role to play in equipping the vast young labour force of 15-29 years referred to as the country’s “demographic dividend” with employability skills and providing enhanced support services to ensure a better transition from school to work. TVET may also contribute to reducing poverty by providing employability skills, particularly to those who drop out of school early and to a large number of unemployed and underemployed adults.
Despite many reform initiatives by the government, the TVET sector needs further strengthening through reform of policies and systems in the labour market. Enhancing industry-relevance of TVET qualifications will furthermore require closer Government cooperation with the private sector. For one and a half decade, the ILO has worked closely with the Government of Bangladesh and its Social Partners to reform the TVET sector and to improve access for people to increase their skills and employability, in particular youth, women and people from other marginalized groups.
The impact of the COVID-19 pandemic had detrimental effects on the TVET sector, due to the nation-wide closure of all educational institutes for one and a half years, starting on 17 March 2020. Most students’ learning was effectively abolished for this duration, and learning and certification was only possible through limited online learning facilities in existence at the time. Only recently has the TVET returned to its prior activity level.
The ILO landmark programmes aim to strengthen and improve the environment for industry skills development, address the mismatch between the supply and demand for skills training, and drive the increased employability of millions of young women and men. ILO’s support to develop the skills system in Bangladesh has focused on skills system governance, development of skills policies and qualifications frameworks; delivery of quality skills training, expanding access to TVET, and involvement by the private sector.
Sources
(1) https://www.worldbank.org/en/country/bangladesh/overview
(2) https://ilostat.ilo.org/topics/informality/
(3) https://ilostat.ilo.org/topics/youth/
Country Assessment and Priority (CAP) – Bangladesh strategy for skills and lifelong learning (2022)
Situation Analysis of Bangladesh TVET Sector (2019) https://www.ilo.org/wcmsp5/groups/public/—asia/—ro-bangkok/—ilo-dhaka/documents/publication/wcms_735704.pdf_