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Background

THE JORDAN NATIONAL AGENDA

His Majesty the King promulgated Royal Decree in 2005 establishing the National Agenda Steering Committee (NSC) tasked with improving the quality of life of Jordanians through the creation of income-generating opportunities,  improvement of standards of living and the guarantee of social welfare. The NSC through multi-stakeholder consultation process focused on political and socio-economic transformation, including Employment Support and Vocational Training. National Agenda recommendations relating to the Employment Support and Vocational Training are in two main categories: (i) Institutional Framework Restructuring; and (ii) Targeted Employment Programs. The Agenda noted the many factors affecting the quality of output from the vocational training sector including: (i) substandard vocational training services and student intake; (ii) lack of basic tools and resources to conduct hands on training; (iii) a cadre of instructors with low levels of relevant work experience in their respective fields; and (iv) and weak linkages with the employer community. As a result, graduating students from the VTC and other training providers, lack the required technical and soft skills required for employment, causing 78 per cent of employers surveyed to express the need to retrain graduates.

THE CHALLENGE IN TVET

The combined forces of globalization, technological change and liberalization of markets are creating a more and more competitive economic environment and changing the very nature of work and work organization. At the same time as opening new job opportunities are increasing workers’ vulnerability.
In this environment, the quality of the labour force has become a major determinant in the competitiveness and adaptability of enterprises, workers and the economy; it also poses a challenge to the vocational education and training (VET) systems to meet the rapidly and continuously changing labour market demands.

VTC training systems face a multiple challenges and in order to equip workers who are already employed with new skills and competencies, they need to develop a system of continuous in-service training that can respond flexibly and rapidly to labour market requirements. Also, there is a need to offer young people the sound education and broad initial training that will give them a solid basis for continuing training throughout their working life. What is the role of the state and the non-government sector in adapting VET to the changing requirements of the labor market, and in its governance and delivery?
The Employer Driven Skills Development Project, funded by the WB, as multi-donor project, was initiated to restructure the VTC to become a market driven system with active involvement of the industry.

RETHINKING THE ROLE OF THE STATE AND THE PRIVATE SECTOR IN VOCATIONAL EDUCATION AND TRAINING: A HISTORICAL PERSPECTIVE

The world of work is evolving and with it, the role of the state in VET. The far-reaching transformation of the global economy is compelling governments and the private sector to rethink their development strategy in general, and VET in particular. Looking back at how the role of the public and private sectors has changed over the years, three broad stages can be discerned.

  1. Unstructured and unregulated VET:  Historically, the private sector has played a major role in developing the knowledge and skills it needed, through the family, religious institutions and at the workplace. Until recently, unstructured and informal apprenticeship was the usual means of acquiring the competencies that served as a passport for entry into skilled occupations
  2. Supply-driven, state-dominated VET:  As part of development planning in more recent times, the VTC assumed a dominant role in providing structured vocational education and training services. There are two main considerations underlying the role of the state in VET. The first is its responsibility to ensure that all citizens have access to education and training opportunities and services so that they can become useful members of society. The second revolves around the argument that, since society, as a whole is the intended beneficiary of such training, the public should bear at least part of its cost. This second stage was characterized by the establishment of national vocational training authorities. Some enterprises recognize the importance of a well-qualified labor force and are dissatisfied with the quality of workers provided by the VET system, have set up their own training centres.
  3. Start of public/private collaboration:  Apprenticeship has evolved in line with production practices; there has been a shift in towards in-service, hands-on training by the enterprises themselves. This combination of on-the-job training by enterprises with vocational education and training in schools and institutions has been an important step in public/private collaboration. That said, however, the extent of the private sector’s actual involvement in the design, development and governance of VET has varied widely.
  4. Market-driven VET: The growing recognition of the need for continuous training throughout a person’s working life linked to basic education and broad-based initial training has encouraged governments to involve the private sector in the development and delivery of VET and to develop market-driven mechanisms to make it competitive and responsive to demand. A more entrepreneurial spirit has accordingly been introduced that tailors the content and delivery of training to enterprise needs, attention has been given to cost recovery and criteria have been devised to regulate the quality of the training delivered by the private sector. A more conscious effort has also been made to involve the private sector in the development of training policy and its delivery. In its most advanced form, the system is driven by the private sector, while the government establishes the overall framework and provides the necessary incentives to motivate the collective effort. Public VTIs are subjected to the same market forces as private providers and are devolved to local authorities, to sectoral/industrial bodies or to the institutes themselves so as to make training more demand-driven and to recover the cost of delivering it.

THE BASIS FOR A NEW FORM OF ROLE SHARING

The reason why there are several interconnected factors behind the recent moves by the state to seek the collaboration of private-sector stakeholders in VET:

  • the fiscal crisis, which has resulted in a chronic shortage of public funds to meet the increasing demand for training;
  • the rise of the market economy and  growing recognition of the private sector’s critical role in skill development;
  • the rapid and continuous changes in technology, workplace organization and practices and skill requirements, resulting in a demand for life-long and continuing training and a need to reform the system of initial training;
  • the inability of public VET systems to respond quickly to new labor market requirements.

The scope and effectiveness of the state’s role in VET is central to, and inextricably linked with, the role of other institutions within the non-government or private sector. The questions are: what are the fundamental tasks of the government which lie at the core of its mission, the tasks that it must take the lead in, and those which it is best at? What should be the size and scope of state action? The determining factors are the characteristics of the state and how it differs from other institutions in society.

  1. New skill requirements and the need for private sector involvement:  The world in general is in the process of transition from an industrial era to one of information and communications – often referred to as the knowledge society. The new society requires a different kind of learning, one that enhances “trainability” thus employability. For the individual, learning for employability means developing the capacity to find, keep and change employment, or to generate self-employment. Employable skills facilitate the vertical and horizontal mobility of workers in the labour market and their continuous adaptation to changing technology and new forms of work organisation. For the worker, learning for employability means life-long learning and the acquisition of competency in flexible skills that enhance mobility and job security.Learning, however, does not automatically lead to employability. Employability is determined more by the ability to transfer core competencies from one job to another and from one enterprise to another rather than by job-specific skills. It requires a sound educational foundation and a broad initial training upon which continuing learning can build throughout a person’s working life.

    It may be said that training for employability rests at the core of the new paradigm. It calls on the capacity of the individual to adapt to changes in work and its organization, to combine different types of knowledge and to build on them through a lifelong process of self-learning. The development of an employable skills profile has been proposed, for example, by the Canadian Task Force on Transition into Employment, as a basis for developing curricula in secondary schools. The concept could be expanded into initial training programmes for youth as well as retraining programmes.

    The core knowledge, skills and attitudes that enhance employability may be grouped as:

    • intellectual skills for diagnosis and analysis, innovation and learning to learn;
    • social and interpersonal skills involved in communication, decision-making, teamwork and adaptability, positive attitudes and behaviour, and the ability to assume and discharge responsibilities;
    • business and entrepreneurial skills, including the development of an entrepreneurial attitude at work, creativity and innovation, the ability to identify and create opportunities, calculated risk-taking and an understanding of basic business concepts such as productivity and cost and skills for self-employment;
    • Multiple technical skills in generic areas which are central to a number of occupations that facilitate occupational mobility.

    The question is how to reform state-driven VET systems to deliver such training in response to the new requirements created by multi-faceted and rapidly changing labour markets.

    The nature of skill development in today’s world requires closer links to the private sector. Moreover, the challenges are too complex and the available resources too scarce for any single player, be it public or private. The question, therefore, is how to foster a collective effort to enhance the relevance, effectiveness, efficiency and equity of VET systems and to make use of the comparative advantages of the public and private stakeholders to their mutual benefit.

  2. Core functions and capacity of the government:  As put by the World Bank in its World Development Report (1997), in the current environment the state needs to match its role to its capacity. It must, accordingly, focus on those core public activities where it has the necessary strength and capability and, for the rest, seek the collaboration of other stakeholders in the private sector which have a comparative advantage.The power of the state lies in its legitimate use of regulatory power and in its jurisdiction over its citizens. In addition to creating an enabling environment for economic growth and employment generation, there are three core tasks in the field of VET that are specific to the government:
    • laying the foundations for, and ensuring the maintenance of, an overall national VET policy and system and regulating the system through an appropriate framework of laws and regulations;
    • mobilizing collective investment in VET and searching for incentives;
    • Protecting the public (especially vulnerable and at-risk groups) from exploitative practices and ensuring equitable access to VET opportunities.
  3. Separation of policy, system development and financing from delivery; participatory governance of VET:  The separation of policy, system development and financing from delivery lies at the heart of demand-led vocational education and training and increased private sector participation in VET. While the design of the national training policy and system is one of the core functions of the state, it is increasingly recognised that, in the interests of efficiency and effectiveness, this must be shared with the private stakeholders in responding to changing labour market requirements.
    • Private stakeholders can make an important contribution to the design and development of national VET policies and systems, such as: providing relevant and up-to-date information on labour market requirements and occupational information and guidance;
    • reflecting private sector concerns in the government’s policy and implementation strategies and in the relevant laws and regulations;
    • ensuring the relevance of VET to labour market requirements;
    • participating in the institutional framework for policy design and training delivery;
    • determining the modes of training delivery;
    • establishing standards for certifying the quality of the training institutions, managers and teaching staff, and the level of competency imparted;
    • co-financing VET;
    • designing the content of VET so as to reflect labour market requirements;
    • Evaluating and providing feedback on the overall performance of the system.

    The role of the private sector partners in designing VET policies and systems varies among countries and sectors. In many developing countries, their involvement is restricted to the presence of employers’ and workers’ representatives on training boards and committees. Their effectiveness in shaping VET policies and systems depends largely on the existence of a strong public policy in favour of private sector participation, the strength of the private sector institutions, their level and quality of representation, a participative culture and effective machinery to enable them to reflect their concerns and the realities of the world of work.

    Decentralizing the design and implementation of VET by region or by industry can be an important source of dynamism, creativity and initiative that is highly responsive to local demand and changing local needs. The role of the state in VET continues to be very important, complementing the local initiatives rather than restricting them. Fiscal incentives, for example, are needed to encourage local providers to offer services that they would not otherwise supply, thereby developing the local training capacity. The state can also encourage the creation of advisory committees composed of representatives of the social partners and other stakeholders in order to secure their participation in the governance of the system. Public funds are used to encourage private initiative and involvement rather than to maintain the system, and this permits a considerable saving in resources. In this way the government motivates and supports the overall development of VET instead of controlling it, which might otherwise have the effect of subduing local initiative and dynamism.

  4. Competitive, market-led delivery and regulation of VET through financial incentives:  There is a growing call for the delivery function to be made subject to market forces and to be transferred increasingly from the state to private providers. Exposing the providers to market forces in this way increases the flexibility and responsiveness of training to labour market demand and to technological and structural change. By encouraging a greater diversity of providers, competition in the open market also gives consumers a wider choice and may improve the quality of training offered.In this process, the government has to subject itself to the same incentives and competitive mechanisms as the private sector. For instance, in contracting out VET, it uses performance-based contracting, relies on market information, market assessments of quality, standards and recognition. Competitive delivery obliges public VTIs to improve their performance so that they can compete with private providers, sell their training and consultancy services and charge fees.

    Financial incentives are the principal tool for shaping the training system and stimulating investment by private stakeholders in skill development. They also enable governments to determine the rules of the game that the public and private partners are playing, thereby influencing their behaviour so as to ensure that national, regional and sectoral goals and equity targets are achieved. Government regulatory action uses incentives to solicit greater private investment and to induce private beneficiaries to share the cost of training. Incentives give signals to training providers depending on whether training funds are disbursed on the basis of budget allocations or grants, competitive bidding or through contracts based on performance or enrolment. Incentives may be directed towards providers and consumers, enterprises, public VTIs, proprietary agencies, voluntary agencies, as well as individuals. For instance, instead of allocating budgets directly to institutions, some governments award public training contracts on a competitive basis according to the providers’ performance and output in order to direct them towards certain priorities such as raising the number of graduates, the standard of achievement or the rate of placement. Funds may also be offered to consumers in the form of vouchers so that they can purchase training on the open market from any training provider. Various methods of cost recovery can be introduced to enable public providers to sell their services on the open market. The government itself may be a major purchaser of such services, thus largely determining the terms and conditions under which they are delivered.

    Other incentives used to expand enterprise-based training programmes could take the form of tax rebates, or grants to reimburse training expenditures. This could cover the cost of in-service training and the wage cost during the training period. These measures need careful planning and execution so that they will not result in subsidizing training that the enterprise would have carried out anyway. Compulsory financing of training through training taxes may be used to raise the level of training beyond that which is provided by the free market and encourage a move towards the concept of lifelong learning

    In short, a number of factors determine whether state support should be in the form of direct delivery of training or through incentives and subsidies. Continued state involvement is normally required where the complexity, high capital cost and difficulty of providing a specific type of training, or the experimental nature of the training, mean that private providers are unlikely to undertake the necessary research and development work.