Improving the Efficiency of Private Sector Investment in TVET
Ever since the establishment of the Technical Education and Skills Development Authority or TESDA, private sector participation and investment in technical vocational education and training (TVET) has been encouraged. The thinking is that, since the private sector is the major provider and end-user of TVET, it should invest more in TVET.
However, it should be pointed out that private sector investment already comprises the majority of investment in TVET. In 2002, for example, about 54 percent of investment in TVET came from the private sector. It is however, interesting to note that more than half of this (around 53 percent or $58 million) came from the trainees themselves who paid for their training. Meanwhile, companies invested $32 million (around 30 percent of the private sector investment) and non-government organizations or NGOs invested $14 million (around 13 percent). ("Investment in Technical Vocational Education and Training in the Philippines," p. 66; published by the United Nations Educational, Scientific and Cultural Organization's International Institute for Educational Planning)
When do we then say that these investments are worth it? While trainees and companies and NGOs may differ in the details on how they understand efficiency, the ultimate parameter for any investment in TVET would seem to be the ability of the investment to put manpower in jobs. The trainee pays for his training because he wants to get into a job; the company participates in on-the-job or dual training programs because it wants to help produce people that are skilled in positions that are in it (whether right now or in the future); and schools invest in TVET because they want their graduates to be qualified for jobs that exist inside the various firms.
The clarity of this parameter may vary to each of these stakeholders (some TVET institutions, for example, seemed not too concern on seeing to it that their graduates find jobs until TESDA began asking them to report where their graduates have gone after graduation) but, at least in theory, this is the reason why TVET exists. (Historically, a primitive form of TVET--apprenticeship--indeed directly linked training with work: the father taught his son his trade, and the son taught his son the same, and so on.)
There are several things that may be considered in making private sector investment in TVET more efficient. These include lessening the gap between the investment and the jobs available, training the right people for the right jobs and continuously adjusting to reflect new industry/workplace realities.
Narrowing the Gap Between the Investment and the Jobs Available
Any investment in TVET should be as efficient as buying prescription medicine: you pay for what is needed. This is not however what usually happens. Both the buyers (students, mainly) and the sellers (schools, local government units and others) of TVET are often not fully aware of what qualifications are needed in the labor market and thus their transactions often produce outputs (TVET graduates) that are not needed or only needed in small volumes by the labor market. The primary losers here are the students because they invest in something that is not the exact thing they need to land a job--something like buying a mobile phone that needs a lot of configuring and visits to the technician before you can fully use it. Not only the supply side (students who graduate and join the labor force) suffers here. Eventually,those on the demand side encounter difficulties too: companies cannot find workers that possess the exact technical competencies required by the vacancies and thus will need to train or upgrade them thus incurring productivity costs while their new workers are trying to learn the ropes. Again, the purchase of a misconfigured or broken cell phone analogy applies.
This problem can be corrected when there is a good flow of labor market information from the employers to the TVET providers and the trainees or workers, and when this information is correctly translated into training by the TVET providers. Easier said than done, but this seems to be the only way to narrow the gap between the investment in TVET and the jobs available.
The Right People for the Right Jobs
Not all TVET trainees can be trained as call center agents just because a certain area needs a lot of them; nor can all trainees be trained in welding, just because there is high demand for these in the labor market. When a person is trained in a qualification where he does not have the aptitude for, it will be very difficult for him to attain full productivity even if he passes its training requirements or passes the competency assessment. When the person cannot attain full productivity, any investment or resource consumed in training him cannot be maximized. Thus, persons who want to enroll in a training program should first see to it that they have aptitude for the qualification where the training leads and TVET institutions should administer aptitude and similar tests to prospective trainees or at least require documents that indicate their fitness for the course such as their National Career Assessment Examination (NCAE) result.
Continuous Adjustment
Because the ultimate destination of any investment in TVET is the workplace, it should be directed towards what the workplace requires. The workplace, however, is a moving target; it continuously changes as market requirements change. Because of this, investments in TVET ought to change also in terms of direction based on these new market realities. Thus, TVET graduates need to continuously acquire new training to keep them updated, schools need to adjust their curricula, equipment, facilities and trainer qualifications; and companies need to let their on-the-job trainees or dual training students use new equipment or try new technologies.
Improving the efficiency of private sector investment in TVET is a must if that investment is to be expected to grow. However, this requires narrowing the gap between the investment and the demand of the labor market, putting the right people in the right training so the right people are produced for the right jobs and continuously tweaking the direction of the investments to follow closely what is needed in the workplace.
However, it should be pointed out that private sector investment already comprises the majority of investment in TVET. In 2002, for example, about 54 percent of investment in TVET came from the private sector. It is however, interesting to note that more than half of this (around 53 percent or $58 million) came from the trainees themselves who paid for their training. Meanwhile, companies invested $32 million (around 30 percent of the private sector investment) and non-government organizations or NGOs invested $14 million (around 13 percent). ("Investment in Technical Vocational Education and Training in the Philippines," p. 66; published by the United Nations Educational, Scientific and Cultural Organization's International Institute for Educational Planning)
When do we then say that these investments are worth it? While trainees and companies and NGOs may differ in the details on how they understand efficiency, the ultimate parameter for any investment in TVET would seem to be the ability of the investment to put manpower in jobs. The trainee pays for his training because he wants to get into a job; the company participates in on-the-job or dual training programs because it wants to help produce people that are skilled in positions that are in it (whether right now or in the future); and schools invest in TVET because they want their graduates to be qualified for jobs that exist inside the various firms.
The clarity of this parameter may vary to each of these stakeholders (some TVET institutions, for example, seemed not too concern on seeing to it that their graduates find jobs until TESDA began asking them to report where their graduates have gone after graduation) but, at least in theory, this is the reason why TVET exists. (Historically, a primitive form of TVET--apprenticeship--indeed directly linked training with work: the father taught his son his trade, and the son taught his son the same, and so on.)
There are several things that may be considered in making private sector investment in TVET more efficient. These include lessening the gap between the investment and the jobs available, training the right people for the right jobs and continuously adjusting to reflect new industry/workplace realities.
Narrowing the Gap Between the Investment and the Jobs Available
Any investment in TVET should be as efficient as buying prescription medicine: you pay for what is needed. This is not however what usually happens. Both the buyers (students, mainly) and the sellers (schools, local government units and others) of TVET are often not fully aware of what qualifications are needed in the labor market and thus their transactions often produce outputs (TVET graduates) that are not needed or only needed in small volumes by the labor market. The primary losers here are the students because they invest in something that is not the exact thing they need to land a job--something like buying a mobile phone that needs a lot of configuring and visits to the technician before you can fully use it. Not only the supply side (students who graduate and join the labor force) suffers here. Eventually,those on the demand side encounter difficulties too: companies cannot find workers that possess the exact technical competencies required by the vacancies and thus will need to train or upgrade them thus incurring productivity costs while their new workers are trying to learn the ropes. Again, the purchase of a misconfigured or broken cell phone analogy applies.
This problem can be corrected when there is a good flow of labor market information from the employers to the TVET providers and the trainees or workers, and when this information is correctly translated into training by the TVET providers. Easier said than done, but this seems to be the only way to narrow the gap between the investment in TVET and the jobs available.
The Right People for the Right Jobs
Not all TVET trainees can be trained as call center agents just because a certain area needs a lot of them; nor can all trainees be trained in welding, just because there is high demand for these in the labor market. When a person is trained in a qualification where he does not have the aptitude for, it will be very difficult for him to attain full productivity even if he passes its training requirements or passes the competency assessment. When the person cannot attain full productivity, any investment or resource consumed in training him cannot be maximized. Thus, persons who want to enroll in a training program should first see to it that they have aptitude for the qualification where the training leads and TVET institutions should administer aptitude and similar tests to prospective trainees or at least require documents that indicate their fitness for the course such as their National Career Assessment Examination (NCAE) result.
Continuous Adjustment
Because the ultimate destination of any investment in TVET is the workplace, it should be directed towards what the workplace requires. The workplace, however, is a moving target; it continuously changes as market requirements change. Because of this, investments in TVET ought to change also in terms of direction based on these new market realities. Thus, TVET graduates need to continuously acquire new training to keep them updated, schools need to adjust their curricula, equipment, facilities and trainer qualifications; and companies need to let their on-the-job trainees or dual training students use new equipment or try new technologies.
Improving the efficiency of private sector investment in TVET is a must if that investment is to be expected to grow. However, this requires narrowing the gap between the investment and the demand of the labor market, putting the right people in the right training so the right people are produced for the right jobs and continuously tweaking the direction of the investments to follow closely what is needed in the workplace.
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