Labour markets and enterprise training in African manufacturing

In 1991, the World Bank published a major policy study on skills development, 'Vocational and technical education and training: a World Bank policy paper' (indexed at TD/IRD 88.310). Ten years later, the Africa Region of the World Bank commissioned a series of studies about skill development in sub-Saharan Africa: to update information about the status of technical-vocational education and training in the region; to explore issues and recent developments; and to provide lessons and policy messages to guide skills development in the region. This review includes 14 thematic studies, a synthesis and a literature review.

This thematic study explores the current on-the-job training by enterprises in the manufacturing sectors of five African countries. Unlike the predictions of the competitive models of training, we find that enterprises pay for and provide general and specific training. In the context of imperfectly competitive markets, concerns about enterprises failing to invest in general skills, which are essential for preparing workers not only with the skills of the firm, but a wider range of skills that can benefit the economy and the worker by creating a more adaptable workforce, may be over-emphasised. We also find that firms that are foreign or large provide more training than domestic and small firms. Among workers, those with more education receive more training. These findings point to the selectivity of access to training. Those in the favoured tradeables sector will more likely have access to skills development for future income growth, as will those with higher levels of education. Exporting industries use higher levels of technology and, therefore, more educated workers. The importance of this is that there would be a large number of other workers outside these sectors and with lower levels of education, who would have lower access to skills development through the enterprise. This offers some guidance to targeting of training access on equity grounds to non-tradeables and to workers with lower education levels. Finally, we show that despite the noncompetitive nature of labour markets, trained workers receive significant wage premiums using propensity score matching methods. The policy importance of this finding should not be under-estimated. It tells us that the incentives for private investment in skills development are there in enterprises. It is a mutually beneficial situation for enterprises and workers with access to this enterprise training. Further incentives for enterprise training may be unnecessary for some workers. Again, this re-enforces the argument for targeting of public incentives for skills development. It does raise a policy issue for future research involving the potential widening of income distribution between those with access to training and those who have not. This is a concern for equity in many countries where growth and development and their benefits are unevenly distributed, and this situation should be monitored over time. Our findings suggest that targeted subsidies, especially at low skilled workers and employees in small enterprises, supplemented by regulation to certify skills and monitor training quality hold the potential to improve overall training in Africa. Targeting access to training can make sense under the conditions found in this study. The case for certification of skills and quality is more subtle. It may be important in an environment where there is asymmetric information: (a) on the skills of the worker [so] that the employer cannot judge and appropriately value [them] in terms of wages; and (b) on the quality of training provided by employers contracted by a government agency to provide training, both of which are common under imperfectly competitive markets.

Published abstract with additional information reproduced by the copyright owner.

Documents from the 'Vocational skills development in sub-Saharan Africa' study are indexed from TD/IRD 88.278 to TD/TNC 74.413. The final synthesis is indexed at TD/IRD 88.275. Show less