Stephan Ulrich, Regional Programme Manager for Asia, SCORE Programme

In most countries, four out of five citizens work in a small or medium-sized enterprise (SME). Unfortunately, once employed, the staff of these SMEs rarely receive formal training. As a result, a large proportion of the population are not regularly refreshing their skills in order to remain productive and employable as they age.

With this in mind, many governments have set up programmes to incentivize SMEs to invest in training, including more than 100 countries that run national training levy schemes. Despite the investment, there is little evidence as to whether these schemes are spurring more training. Anecdotal evidence suggests that some training schemes have succeeded in delivering demand-driven services in a business-friendly way, while others have developed a poor reputation for being bureaucratic and inefficient.

In the ILO’s Sustaining Competitive and Responsible Enterprises (SCORE) Programme, we partner with public and private SME training schemes in many countries.  How does one design a good training scheme?  We reviewed the set-up, funding and functioning of four established SME training schemes in Singapore, Malaysia, Ireland and the United States, and it was clear that there is no single right way to run such a programme. Different countries found success with different solutions. Our new study, “Upskilling SMEs: How governments fund training and consulting”, deliberates the pros and cons of different design choices, extracting some key learnings from each:

Nuragro (Asociación de Familias) in Colombia decided to send their workers to SCORE Training due to the incentive provided by a public support programme.

1) Advantages and disadvantages of different funding models: Most SME training funding schemes are funded either by general tax revenues or by training levies. The advantage of funding schemes from general revenues is that funds can be allocated more flexibly. Training levies require setting up dedicated funding procedures to collect contributions from employers. Their advantage is that once they are in place, they are more likely to insulate training funds from competing demands that arise in the normal public budgetary process. However, the instrument is less appropriate for countries with weak economies, large informal sectors, and poor administrative capabilities. Where training schemes are not effective, they become unpopular with employers and some have been abandoned as a result.

2) Reaching large numbers of SMEs is challenging: The SME training funding schemes reviewed in this study reach between 7,000 to 20,000 SMEs per year. Despite the sizable reach, this still only represents 2 to 10 percent of SMEs in each country. At such a scale, outreach is determined by availability of funding and marketing efforts. With a substantial investment in resources required, working through intermediary institutions like employer organizations can facilitate business outreach.

3) Investments per enterprise vary considerably: Two schemes reviewed in this study priced their services at market rates, one scheme offered a small subsidy while one scheme fully subsidized its services. The right strategy will depend on the objective of the scheme. It can be helpful to undertake research to determine how enterprises are likely to react to different prices. The cost of training per business of schemes covered in this study range between 800 USD (for programs funding training) to 24,000 USD (including consulting) per enterprise in a year.

4) Pros and cons of working via intermediary institutions: Two schemes reviewed in this study interact with enterprises directly while two schemes work through intermediary institutions. Schemes interacting directly with enterprises need dedicated staff to reach out and interact with enterprises which can be challenging for bureaucracies (bureaucrats don’t always like to admit that). Schemes that fund intermediary institutions outsource this function to third parties that are more accustomed to interact with businesses. However, intermediaries need to be managed as well and come with their own administrative costs.

5) There are different paths to ensure quality of services: All four schemes reviewed in this study offer services to enterprises via specialized training and consulting service providers. Two schemes select providers through competitive bidding processes which helps ensure that service providers are qualified and cost-effective. One scheme leaves it up to firms to select the training provider, while one scheme registers and certifies training providers to ensure quality. The latter might be more effective assuming that standards are well designed, certification procedures are reliable and transparent, and the system is understood and accepted by enterprises. Building such a system comes with considerable cost for development and maintenance.

SME support schemes reviewed in this study:

Read the full report for more information, or contact ulrich@ilo.org.

Gao Yun, Representative of the ETI Office for South East Asia and Michael Elkin, Chief Technical Advisor of the ILO SCORE Programme

Improving SMEs workplace practices can help them achieve better productivity. The ILO’s SCORE Training programme is helping companies in China improve work conditions, and participants say it is working.

Small and medium enterprises (SMEs) make up 60 per cent of China’s national industrial output and create nearly 80 per cent of jobs.

They also tend to have lower levels of compliance with national labour laws – such as unregulated or excessive work hours or failure to adhere to legal wage rates and benefits – strained industrial relations, inadequate safety, and a lack of health protection for workers. And this can result in lower productivity.

So, how can SMEs engage in a global marketplace while facing increasing price competition and growing expectations from customers to provide improved working conditions?

We know there is a positive association between good workplace practices and positive enterprise-level outcomes including: decreased staff turnover, improved profitability and greater customer satisfaction. And ILO’s Sustaining Competitive and Responsible Enterprises (SCORE) Programme has clearly shown training can help achieve this – contrary to misconceptions that formal training for smaller enterprises is less tailored and more expensive, and the disruption to work is costly.

China first engaged with the SCORE Programme in 2009, initially working with the China Enterprise Confederation (CEC) in Liaoning, Chongqing, Sichuan, Zhejiang and Shanghai, to target sectors such as manufacturing of machines, auto parts and garments.

In March 2017, the ILO launched a new project to improve the productivity and working conditions in Guangzhou City, Guangdong Province, and Shanghai, under the SCORE Programme, in partnership with the UK based Ethical Trading Initiative (ETI), an alliance of companies, trade unions and NGOs that promotes respect for workers’ rights around the globe. This time, the project targets buyers rather than SME networks, setting a path toward ethical production from the top.

ETI members are participating in the joint project and sponsoring SCORE Training for their suppliers in China. These members include Boden, Inditex, Matrix, Mothercare, New Look, Orsay, Regatta and White Stuff, and represent a cross-section of the industries represented in the region, including: garments, sporting goods, shoes and handbags.

The ILO-ETI collaboration allowed for the provision of SCORE Training to 17 factories, suppliers to ETI members.

SCORE Training emphasizes the importance of closely involving the workforce, and building cooperation with management to support initiatives aimed at improving enterprise performance.

It also places an emphasis on establishing sustainable management systems to ensure that the good practices continue after training concludes.

SMEs – which have high job creation potential, but often also significant decent work deficits – are the ultimate beneficiaries.  And, in fostering cooperation, SCORE Training contributes to economic and social development as well as poverty reduction. It helps create a win/win situation.

After only 6 months, we are already receiving positive feedback from participants. One HR manager commented, “Before, workers and supervisors in the factory didn’t understand each other, they were not willing to cooperate on improvements. The SCORE Training has encouraged workers to participate, and only one month after the training, our workshop is already changing and has made great improvements. Workers have changed from passive implementation to active execution”.

SCORE Training, guided by an accredited SCORE trainer demonstrates best international practice in the manufacturing and service sectors.

The five SCORE Training modules cover:

• Workplace Cooperation;
• Quality Management;
• Clean Production;
• Human Resource Management;
• Occupational Safety and Health.

Each module includes a two-day classroom training for managers and workers, followed by on-site consultations with industry experts that help put the training into action in the workplace.

The ILO/ETI initiative is co-funded by develoPPP.de, a German Federal Ministry for Economic Cooperation and Development (BMZ) programme which helps German and European enterprises run long-term projects that combine business practices and development policy targets.

In addition to this partnership, ILO assists government agencies, training providers, industry associations and trade unions in emerging economies in Africa, Asia and Latin America to offer SCORE Training to SMEs.

The ILO SCORE Programme will enter its final and third Phase in November 2017, with funding until October 2021.

Jürgen Menze,
Disability Inclusion Officer

Including persons with disabilities as employees, customers and business partner is clearly the smart thing to do from a business point of view. Yet, while companies increasingly recognize the benefits of building and retaining diverse workforces, they often neglect disability in their inclusion practices.

What do businesses require in order to be successful in the long run? Internally, a workforce which can contribute to effective problem solving and innovation in a fast changing globalized economy. Externally, a positive reputation can help increase a company’s customer base and approval in society.

Including persons with disabilities as employees, customers and business partners can help companies meet these needs and be a step ahead of their competitors in the labour market of the future.

The business case for diversity has been well established by research in recent years. The benefits of diverse workplaces include an increased talent pool and employee satisfaction, strengthened customer orientation, improved innovation and creativity, as well as an enhanced company image.

So far, the bulk of research has focused on the impact of workplace diversity in terms of gender and racial diversity. For instance, a study of more than 500 organizations has shown that every 1 per cent increase in gender and racial diversity is correlated with a 3 to 9 per cent increase in sales revenues, respectively. While companies increasingly recognize the benefits of building and retaining diverse workforces, disability as part of diversity has mostly been neglected both in research and company inclusion practices. Accordingly, a survey of over 300 executives at multinational enterprises has found that respondents identify disability as the diversity area which would need most improvement in their companies.

At the same time, people with disabilities have gained increased visibility and recognition in societies across the globe.

In 1983, employers, workers and governments adopted the ILO Vocational Rehabilitation and Employment (Disabled Persons) Convention (No. 159)  and its accompanying Vocational Rehabilitation and Employment (Disabled Persons) Recommendation (No. 168) . Along with the widely ratified United Nations Convention on the Rights of Persons with Disabilities  (CRPD) of 2006, these and other international labour standards set the global normative framework for disability inclusion in the world of work.

This global momentum for disability inclusion is also reflected in the many disability references throughout the 17 Sustainable Development Goals (SDGs) , agreed upon by all UN Member States. The SDGs represent an unprecedented opportunity for companies to align their policies and practices with these global targets for 2030, including the achievement of decent work for all persons with disabilities.

Such global commitments reinforce the change of perceptions and expectations towards people with disabilities held by companies, people with disabilities themselves as well as their families and friends, and society at large. More than ever before, companies are expected to contribute to positive social change and more inclusive societies.

There are a wide range of measures and activities  companies can take to reap even greater benefits of diverse workplaces and include employees, customers and business partners with disabilities.

Key among them are a company policy on disability inclusion supported by senior management, disability awareness training for staff and managers and an increase of the accessibility in the company, including its physical environment, recruitment process, websites, information and communication systems as well as emergency evacuation procedures.

To be able to use their skills and talents to full capacity, job candidates and employees with disabilities who have a need for a reasonable adjustment should be accommodated throughout the employment cycle, i.e. in the recruitment process, during a person’s professional development or when returning to work after an absence.

To help implement these measures, companies can benefit from advice of external partners like organizations of persons with disabilities or national networks of disability-inclusive companies  and the ILO Global Business and Disability Network .

Moreover, in line with the ILO’s tripartite character, ILO Convention No. 159  and Recommendation No. 168  stipulate the involvement of representative workers’ organizations in promoting enabling policy and legal environments for businesses to employ persons with disabilities and thereby create greater workplace diversity to succeed in the 21st century’s world of work.

Including people with disabilities is not only smart, it is the right thing to do.

Rafael Diez de Medina, Chief Statistician and Director, ILO Department of Statistics

The 2030 Agenda for Sustainable Development explicitly recognises volunteer groups as stakeholders to support grassroots implementation of the 17 Goals. And yet, statistics on volunteers, the work they do, the skills and time they contribute to improve the lives of others are, for the most part, lacking. The International Labour Organisation (ILO)—in partnership with UNV—wants to change that.

The ILO Department of Statistics and the UN Volunteers have joined forces to scale up efforts to improve the global availability, quality and use of statistics on volunteer work. Starting this month, the ILO-UNV partnership will focus on assessing the current status of volunteer work statistics around the world; engage directly with countries to identify good practices and challenges in volunteer work data collection and analysis; and develop practical survey approaches and tools to support countries’ efforts.

When disasters strike, volunteers that in many cases include firefighters and other public emergency service workers are among the first responders, playing a vital role in relief efforts. In everyday life, in our schools and our neighbourhoods, volunteers are there helping to make our lives better and keeping communities together. At work, volunteers are the engine behind the non-profit sector and are contributing to the transformation of the world of work through their involvement in the cooperative movement, the growth of social enterprises and of public-private partnerships.

A group of volunteers in Sri Lanka help a family clean up the rubble left by the 2004 Indian Ocean Tsunami.

Global estimates place the number of volunteers worldwide at 970 million. Considering the hours they contribute, we are talking about the equivalent of over 125 million full-time workers – according to a study published by John Hopkins University.

Approximately one in four volunteers contribute their time and skills through organizations and the rest do so directly, helping their neighbours as well as their communities. In terms of economic impact, estimates place the value of volunteer work at US$ 1.348 trillion or 2.4 per cent of the entire global economy.

Joining global efforts to ensure the work of volunteers is counted and integrated into the development process, we have spearheaded a number of initiatives including the publication in 2011 of a Manual on Measuring Volunteer Work in collaboration with the John Hopkins Center for Civil Society Studies to provide countries with much needed guidance to develop their statistics on this important group of workers. In 2013, we led the adoption of new international statistical standards through the 19^th International Conference of Labour Statisticians (ICLS) that provide a framework to integrate volunteer work as part of official work statistics.

However, this is only the beginning. To translate these achievements into actual improvements in data availability requires a sustained effort with partners at global, regional and national levels. Our partnership with UNV will further strengthen the capacity of countries to make sure that volunteer workers and their contributions are fully counted and integrated into national development plans and policies.

As the world celebrates the United Nations International Volunteer Day (IVD) next month, we join this important occasion by making sure that the contributions that volunteers make to communities and to development around the world are properly counted. This year’s theme, ”Volunteers Act First. Here. Everywhere.” is particularly close to ILO’s vision of work as integral to human dignity and to achieving long-lasting peace and security. We look forward to updating the 20th ICLS on the progress made at its next meeting scheduled for 10-19 October 2018.

Paul Comyn, ILO Senior Vocational Skills and Development Specialist and Drew Gardiner, Youth Employment Specialist

This week, as we prepare ILO’s participation in the World Skills Competition 2017, taking place in Abu Dhabi, UAE from 15-18 October, we are left to reflect on a major theme which is troubling governments, employers, workers and young people across the globe – the so called skills mismatch.

This year’s World Skills Competition features 1,300 competitors, 100,000 visitors and 51 skills. The competition will cover a diverse range of vocational categories including mechatronics, information network cabling, floor tiling, patisserie, and plumbing just to name a few.

The ILO, as a conference coalition partner, will be involved in two major activities of the Competition, the WorldSkills Conference and the WorldSkills Youth Forum which comes under the theme “Skills strategies for a globalized world”.

Refocusing the debate on jobs and skills mismatch

The ILO’s SKILLS branch will lead a conference session on the topic of skills mismatch that will consider not only what causes skills mismatch, but also to better understand the different types of skills mismatches, the labour market impact they have and their relative importance.

Some 1,300 competitors will meet in Abu Dhabi for the World Skills Competition from 15-18 October. Copyright: WorldSkills International

High and persistent levels of youth unemployment, together with job vacancies that remain unfilled, are often attributed to mismatches between jobs and skills. The debate frequently focusses on why employers are unable to fill the vacancies they have. But this is only one form of skills mismatch. The problems faced by employers are technically known as skills gaps or skills shortages (which are a form of skills mismatch), but how important are they compared with other forms of skills mismatch like over-education?

The point here is not to underestimate the importance of skills shortages, as nearly 50 per cent of all European firms report difficulties in recruiting higher education graduates (Eurobaromater survey, 2010), but the evidence that these shortages are to do with skills rather than employment opportunities and conditions is actually weak, and whether they have any effect on the performance or income of these firms is also not clearly understood.

Future education aims to be transformative, building the knowledge, skills, values and attitudes that a citizen needs to be able to contribute to a more inclusive, just and peaceful world.” — Nesrine Saouli, WorldSkills Youth Forum Delegate from Algeria

One area that has received relatively little attention is the issue of over-education, which occurs when an individual possesses a level of education in excess of that which is required for their job.  After an extensive review of existing research, Prof. Séamus McGuiness of ESRI  established that a sizeable fraction of workers are in occupations that do not require as much schooling as they have acquired. Think, for example, about that taxi driver you encountered that holds a PhD, an example that points to a mismatch between jobs and skills.

The relative importance of too much vs a shortage of education or skills has important policy implications. In reviewing national skills policies that aim to address skills mismatch, the same review of research found that the majority of policy responses typically seek to address either skill shortages or skill gaps rather than the issue for which the best data exists, over-education. This challenge is further exacerbated by demand side gaps and the limited creation of appropriate employment opportunities.

“It is vital for a person to develop an entrepreneurial mindset so that one can push boundaries and take risks without holding back. It gives one and those around him/her, an opportunity to grow mentally.” — Buhle Success Makama, WorldSkills Youth Forum Delegate from South Africa

If there is a lack of comprehensive policies on employment and skills then there is a greater chance that productivity and economic growth will suffer. A balance needs to be struck between polices that simulate job creation through pro-employment economic policies, reducing skill shortages and skill gaps and removing constraints associated with surpluses in education and skills. A more integrated approach is needed.

What do young people think about jobs and skills mismatches?

The ILO’s Youth Employment Programme Unit has the unique opportunity to serve as a mentor for the World Skills Youth Forum, a parallel event to the World Skills Competition which brings together 300 young people to participate in a series of thematic think tanks. Some of the topics being discussed include “The Role of Skills in Building Tomorrow’s Cities and Villages”, “How can Youth be both Job Ready and Adaptable?” and “How can Skills be the Driving Force of Innovation?”

The Youth Forum provided a chance for us to hear from young people directly, through moderation of online forums and direct interviews with young people, on how they view the issue of skills mismatch.

“I believe that technology is giving us a spur to create new jobs that never existed before. It’s true that technology is taking over some jobs but why can’t we say that technology is ‘transforming jobs’ rather than replacing them”. — Alia Alkaabi, WorldSkills Youth Forum Delegate from U.A.E.

The importance of technology emerged as the major contributor to skills development and jobs for young people in the future. The Forum participants spoke about technology as the key to the modern economy, as well as the digitization of skills, jobs and future opportunities. They also cited collaboration, multi-tasking, problem solving and creative thinking as the key soft skills to reduce skills mismatch.

The youth delegates gave examples of policies and programmes that are contributing to reducing jobs and skills mismatches around the world. These included Taiwan, which is developing a TVET system geared towards the 10 skills needed in the workplace by 2020: cognitive flexibility, negotiation, service orientation, judgment and decision making, emotional intelligence, coordinating with others, people management, creativity, critical thinking, complex problem solving. They also mentioned the Telecommunication Regulatory Authority in Dubai which will launch robots that will transport documents and items to clients through drones. This may eventually reduce the number of staff at a company but will open up other employment opportunities for youth such as the management and maintenance of this new automated service.

What comes next?

ILO’s participation in the 2017 World Skills Conference is linked to major programme of work at the ILO, the Jobs & Skills Mismatch Global Product under development by the Employment Policy Department. The global product has been created because the governments and employers’ and workers’ organizations that make up the ILO, have expressed interest in the topic of skills mismatch and we are keen to ensure that the issues and challenges associated with measuring and interpreting skills mismatch are more widely and clearly understood. Readers are invited to engage with us through our Skills for Employment Knowledge Sharing Platform and the What Works in Youth Employment Platform.