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The Impact of Vocation Training on Employment

The Impact of Vocation Training on Employment
May 10
14:35 2019

There is likely to be very few educators, economists, or business persons who would argue against the value of improving a country’s human capital. Dating as far back as the late 1980’s with studies by economic giants such as Robert Lucas to more contemporary investigations, there have been an abundance of empirical examinations that reaffirmed the positive relationship between human capital and economic variables such as productivity.

Generally speaking, the expectation is fairly straightforward: employees who are better trained are likely to be more productive, a factor that helps to boost economic growth. For instance, economists Hector Sala and José Silva in their 2011 working paper, “Labour Productivity and Vocation Training: Evidence from Europe”, found that “when the percentage of highly [tertiary-level] educated workers is increased by 1 percentage point productivity growth is raised by 0.70 extra percentage points.”

However, as Sala and Silva’s paper’s title indicates, their work was especially targeted at measuring the impact of vocational training, an area of human capital development that is equally significant for the same foregoing reasons. Regarding technical skills development, the duo found that “one (1) extra hour of vocational training per employee, other things constant, generates 0.55 additional percentage points of productivity growth.”

On a final point from the aforementioned paper, it was found that the combined effect of education (both vocational and otherwise) rivaled other known boosters to productivity. As underscored by Sala and Silva (2011), “this joint effect amounts to 1.25 (resulting from the addition of 0.55 and 0.70), whereas 1 extra percentage point of R&D [Research and Development] expenditures over GDP would accelerate the rate of productivity growth by 1.19 percentage points.” This finding led to the reminder that policies that promote education, labour-market policies, and R&D cannot “be designed in isolation”.

This need for comprehensive policy planning is reinforced even by the discussion found in Acemoglu and Zilibott (2001), who pointed out that it is possible for two separate countries to have access to the same level of capital technology, but cross-country differences in technology-skills mismatch could generate conspicuous differences.

Clearly, the results discussed above are for jurisdictions outside Belize; however, even preliminary signs in Belize indicate that a similar (and expected) positive relationship between productivity and human capital exists. Of course, when it comes to vocational education specifically, data paucity makes it more challenging to empirically pin down the precise strength of the impact. Nevertheless, it is useful at a first glance to look at a few labour-oriented data that are available.

Firstly, recognizing the need for augmenting the pool of workers who possess vocation skills, it is useful to look at how we’ve been performing in terms of the relevant enrolment numbers. The Statistical Institute of Belize (SIB)’s Labour Force Survey reports inform that in the year 2000 there were only 592 persons enrolled in vocational education. In 2017/18, that number increased to 729, representing a 23% uptick when looked at in absolute terms.

However, when assessed in terms of percent of total school enrolment, the figures represent 0.76% (of total enrolment of 77,737) and 0.69% (of 105,268), respectively.

As can be seen in the accompanying image, between the years 2000 and 2005, there had been a noticeable downward trend in the percent of (total) student enrolments attributable to vocational education. This trend, however, was reversed in Fiscal Year 2005/6 when the additional technical institutions were opened in the Orange Walk, Stann Creek and Toledo districts. The latter fact is represented by the increase in Recurrent Expenditure allocated to the Center for Employment Training (CET/ITVET) in the Approved Budget Estimates for that same period.

Nevertheless, despite the allotted recurrent expenditure having plateued in the years 2008 to 2014, there had been signs of a return to a downward trajectory in terms of enrolment in vocational programs. However, while budget figures are not clearly delineated in more recent estimates, it is noteworthy that enrolment percentages for the years 2015, 2016 and 2017 have nonetheless increased to 0.64%, 0.68%, 0.69%, respectively.

As we return to the earlier parts of this discussion regarding the importance of vocational education, it is encouraging to see some increase in the number of enrolments relative to overall number of students. At the same time, it cannot be ignored that when compared to the total number of enrolments, the SIB data shows that not even one percent of our students are pursuing technical and vocational education.

Consequently, if Sala and Silva’s findings that an additional hour of training could help boost labour productivity could be extrapolated to Belize, then it is safe to say that priority ought to be given as to finding out why these numbers are not growing more aggressively, despite previous studies showing that the returns to vocational education is higher (relatively to primary and secondary education).

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