Global mega trends such as the rising role of technology, climate change, demographic shifts, urbanization, and the globalization of value chains are changing the nature of work and skills demands. To succeed in the 21st century labor market, one needs a comprehensive skill set composed of:
- Cognitive skills, which encompass the ability to understand complex ideas, adapt effectively to the environment, learn from experience, and reason. Foundational literacy and numeracy as well as creativity, critical thinking, and problem-solving are cognitive skills.
- Socio-emotional skills, which describe the ability to navigate interpersonal and social situations effectively, and include leadership, teamwork, self-control, and grit.
- Technical skills, which refer to the acquired knowledge, expertise, and interactions needed to perform a specific task, including the mastery of required materials, tools, or technologies.
- Digital skills, which are cross-cutting and draw on all of the above skills, and describe the ability to access, manage, understand, integrate, communicate, evaluate, and create information safely and appropriately.
The development of skills can contribute to structural transformation and economic growth by enhancing employability and labor productivity and helping countries to become more competitive. Investment in a high-quality workforce can create a virtuous cycle, where relevant and quality skills enable productivity growth and foreign direct investment, which result in more and better jobs for the current workforce and more public and private investment in the education and training system. This, in turn, increases the employability and productivity for both the current and future workforce.
Yet, most countries continue to struggle in delivering on the promise of skills development. There are huge gaps in basic literacy and numeracy of working-age populations, as 750 million people aged 15+ (or 18 percent of the global population) report being unable to read and write, with estimates being nearly twice as large if literacy is measured through direct assessments. Large-scale international assessments of adult skills generally point to skills mismatches as well as large variation in the returns to education across fields of study, institutions, and population groups. Employers in many developing countries report that a lack of skilled workers is a major and increasing bottleneck for their operations, affecting their capacity to innovate.
The COVID-19 pandemic has brought the pre-crisis vision of equitable, relevant, and quality skills development into sharper relief, adding unforeseen urgency to the calls for reform and highlighting the huge costs of inaction.
The key issues countries need to tackle for skills development are:
- Access and completion. Across the world, investments in education and skills development—from preschool through post-secondary education to vocational training—have high returns. The wage penalty for low literacy is nine percentage points in Colombia, Georgia and Ukraine, and 19 percentage points in Ghana. And the opposite is also true: in Brazil, graduates of vocational programs earn wages about 10 percent higher than those with a general secondary school education. Still, provision of equitable access is a challenge in many low-income and middle-income countries. Furthermore, many students who manage to enroll in education or training programs do not complete their studies and miss out on obtaining formal qualifications, which can dramatically reduce the return on the educational investments in terms of lifetime earning potential.
- Quality. Many young people attend schools without acquiring basic literacy skills, leaving them unable to compete in the job market. More than 80 percent of the entire working age population in Ghana and more than 60 percent in Kenya cannot infer simple information from relatively easy texts. For those who access technical and vocational training at secondary and post-secondary levels, returns can vary substantially by specialization and institution. In particular, technical and vocational training (TVET) systems in many countries face challenges related to quality assurance, resulting in perceptions of the vocational track being a second-best option compared to general secondary or tertiary education.
- Relevance. Technical and vocational education and training —which can last anywhere from six months to three years— can give young people, especially women, the skills to compete for better paying jobs. Nevertheless, more needs to be done in terms of engaging local employers to ensure that the curriculum and delivery of these programs responds to labor market needs.
- Efficiency. Challenges related to governance, financing, and quality assurance also impact the efficiency of skills development programs. The resulting unnecessarily high costs can limit opportunities for disadvantaged youth and adults to access these programs.
The good news is that the evidence on what works and what does not in skills development, and for whom, is growing. At the World Bank Group (WBG), we support governments around the world in designing, implementing, and learning from reforms and programs aimed at addressing the most fundamental challenges of skills development. Click on the "Solutions" tab to learn more about our solutions to skills development challenges.
Last Updated: Jul 21, 2021