Higher-level skills hold key to job creation in developing countries

3 October 2014
ITC News

There are many jobs available around the world, and yet unemployment rates remain high, particularly in developing countries. This is because of a lack of high-skilled workers, said panellists at the World Trade Organization’s (WTO) Public Forum.

At a session on ‘Fostering skills and jobs through trade liberalization in developing economies’ on 3 October in Geneva, Switzerland, speakers said high unemployment rates are accompanied by low uptake of job vacancies. The discussion was organized by the World Trade Centre Mumbai and the All India Association of Industries.

‘There is a growing difference between what the education world produces and what labour markets, especially export markets, are looking for,’ Azita Berar Awad, Director of the Employment Policy Department, International Labour Organization. ‘We’re seeing a shifting towards high-level skills.’

Ms. Awad added that the skills gaps in the manufacturing sector are in maintenance, quality management, machinery repairs and laboratory-technician work. In the services sector, enterprises are seeking more managers, marketers, accountants and customer services representatives, as well as those who can speak foreign languages.

‘We need vocational training and innovative training, linking businesses with training, and increasing opportunities available through trade,’ said R. Meléndez-Ortiz, Chief Executive Officer of the International Centre for Trade and Sustainable Development (ICTSD). ‘There’s a need to match skills with jobs, depending on the type of job.’

Increased trade openness in a country is not enough to create jobs. Small and medium-sized enterprises (SMEs) in particular are disproportionately affected by high trade-facilitation costs and are more dependent than multinational corporations on a good business environment.

‘SMEs can be helped by business incubators to overcome some of these problems,’ said Rajesh Aggarwal, ITC Head of Business and Trade Policy. ‘Branding, marketing and improved packaging are key for SMEs to do business in developing countries. They also need help to navigate the maze of sustainability standards. The focus is on ensuring compliance and turning standards into opportunities, rather than barriers.’

Building up business competitiveness to create jobs and increase exports requires inputs from the government, as well as collaboration between the private sector and policymakers.

‘Trade openness can generate many benefits but only if complementary policies exist,’ said Ken Ash, Director of the Trade and Agriculture Directorate, Organisation for Economic Co-operation and Development (OECD). ‘To get better payoffs, you need policy packages. Look at the whole package that people and firms need, and not just individual policies.’

Governments should focus on developing policies that support the services sector, as it translates into the ability of enterprises to sell abroad, said Joe Francois, a professor of economics at the World Trade Institute in Bern. Services make up 50% of global trade.

‘The competitiveness of the services sector matters tremendously,’ he said. ‘A misregulated services sector is inefficient, raises costs, makes it harder to sell at home and abroad, and makes it harder to attract firms.’
Mr. Francois also stressed that businesses need to link to regional and global value chains by looking closely at the skill sets required in individual sectors. ‘The hard stuff has high payoff,’ he added.