Low skills perpetuate poverty and inequality. Skills development can reduce unemployment, raise incomes, and improve standards of living. Helping young people develop skills makes economic sense.
One third of the working age population in low- and middle-income countries lack the basic skills required to get quality jobs, leaving them unable to achieve their full productive potential and limiting economic investment and growth.
The challenge is further exacerbated by a rapidly changing global economy that increasingly requires workers to be innovative, flexible and adaptive. According to World Bank calculations, more than two billion working-age adults are not equipped with the most essential literacy skills required by employers. Among young adults under the age of 25, the number is about 420 million worldwide.
Foundational skills, such as literacy, provide critical scaffolding for young people and are a prerequisite for numeracy, problem solving, and socio-emotional skills. Helping young people develop these skills makes economic sense. Unskilled workers are forced into unemployment or are stuck in unstable low-wage jobs that offer little career mobility or growth. As they age, they become increasingly vulnerable to job losses and labor market shocks.
The results are devastating on a national level as well. Low skills reduce labor force productivity and make investment less attractive, decreasing the transfer of technology and “know-how” from high-income countries. Low skills also perpetuate poverty and inequality because the private sector can’t flourish in a country that doesn’t have a skilled workforce to sustain it.
Broadly, there are three types of skills:
1. Cognitive skills include literacy and numeracy. They refer to the ability to understand complex ideas, adapt effectively to the environment, learn from experience, and reason.
2. Socio-emotional skills refer to the ability to navigate interpersonal and social situations effectively and include leadership, teamwork, self-control, and grit.
3. Technical skills refer to the acquired knowledge, expertise and interactions needed to perform a specific job, including the mastery of the materials, tools, or technologies.
Access. Government policies must promote equity in access to education and learning. Across the world, investments in education—from preschool through higher education—have high returns. The wage penalty for low literacy is nine percentage points in Colombia, Georgia and Ukraine, and 19 percentage points in Ghana. And the opposite is also true: In Brazil, graduates of vocational programs earn wages about 10 percent higher than those with a general secondary school education.
Quality. Many young people attend schools without acquiring basic literacy skills, leaving them unable to compete in the job market. More than 80 percent of the entire working age population in Ghana and more than 60 percent in Kenya cannot infer simple information from relatively easy texts.
Early drop out. For every 100 students entering primary education, just 35 complete upper secondary school. Catching up later without foundational skills becomes nearly impossible. Indeed, evidence shows that second chance adult education programs have limited success and on-the-job training usually favors workers with more education and skills. Second-chance programs provide an important opportunity to get low-skilled youth back on track.
Cost. Whether a young adult has resources to continue training is a strong predictor of how much education he or she will pursue. In Brazil and the United Sates, the cost of post-secondary education is cited as a top reason for failing to continue in education and training. In many countries, social norms limiting women, minorities, and disenfranchised youth also contribute to the skills challenges.
Relevance. Technical and vocational education and training—which can last anywhere from six months to three years— can give young people, especially women, the skills to compete for better paying jobs. Nevertheless, a wide range of training programs exist, from teaching specific skills to sparking entrepreneurship and more needs to be done to ensure a relevant curriculum. Less than a third of training programs have positive results for earnings and employment and even those that are successful are costly, with returns that rarely justify the investment. Private sector partnerships and workplace training have been important in helping create programs that match the needs of the labor market and teach critical skills.