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The International Literature on Skills Training and the Scope for South African Application

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  • Sean Archer

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    (University of Cape Town)

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    Abstract

    Abstract: This paper aims to introduce selected issues from the international literature on skills training into the South African policy forum. Reform of national strategies in skills production has characterised a number of industrial as well as certain developing economies in recent decades. Their experience is potentially valuable locally. The main lessons are that skills training resembles education in being partly a public good. The acquisition of skills parallels the acquisition of knowledge. Training opportunities do have to be rationed by some mechanism, either through the market or by rules internal to an organisation engaged in training, but the content of the competency learned is a form of knowledge. More competency with economic value that is acquired by one person does not mean less of it is available for acquisition by another. Nor, secondly, can non-payers be wholly excluded from the benefits of training financed by others. For example, there are separate gains for fellow workers, for employers poaching trained workers, and for investors in new technology. So certain economic decision-takers can free-ride on such investments in human capital. As classic examples of market failure they make clear that simple allocation through a market is not at all adequate for a national system of skills training. The second lesson is that problems of information, incentives and market power preclude the emergence of a training equilibrium in which individual workers and employers pursue their interests successfully and therefore efficiently. In practice most training takes place on the job, where it is difficult for an outside agency like the state to influence investment decisions directly. Sensible roles for the state are to supply needed information, to put in place positive and negative incentives where needed, to provide accreditation that is credible in the market, to set up a framework of regulation that fosters informational transparency and constrains skills poaching, and to invest in high quality prior education for trainees flowing into occupational markets. An additional state function is to provide workable policy devices like ‘temporary migration programmes’ that enable active skilled labour recruitment from source countries. International precedents exist that show the way in a number of these expedients.

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    Bibliographic Info

    Paper provided by University of Cape Town, Development Policy Research Unit in its series Working Papers with number 07124.

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    Length: 92 pages
    Date of creation: Jul 2007
    Date of revision:
    Publication status: Published in Working Paper Series by the Development Policy Research Unit, July 2007, pages 1-92
    Handle: RePEc:ctw:wpaper:07124

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    Related research

    Keywords: skills training; on the job training; South African policy;

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    1. Acemoglu, D. & Pischke, J.S., 1997. "The Structure of Wages and Investment in General Training," Working papers 97-24, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Mary Gregory & Miriam Beblo & Wiemer Salverda & Ioannis Theodossiou, 2009. "Introduction," Oxford Economic Papers, Oxford University Press, vol. 61(suppl_1), pages i1-i10, April.
    3. James Heckman & Pedro Carneiro, 2003. "Human Capital Policy," NBER Working Papers 9495, National Bureau of Economic Research, Inc.
    4. Nicholas Oulton & Hilary Steedman, 1994. "The British System of Youth Training: A Comparison with Germany," NBER Chapters, in: Training and the Private Sector, pages 61-76 National Bureau of Economic Research, Inc.
    5. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," Working Paper Series rwp04-047, Harvard University, John F. Kennedy School of Government.
    6. Ludger Wößmann, 2008. "Efficiency and equity of European education and training policies," International Tax and Public Finance, Springer, vol. 15(2), pages 199-230, April.
    7. Elena Arnal & Wooseok Ok & Raymond Torres, 2001. "Knowledge, Work Organisation and Economic Growth," OECD Labour Market and Social Policy Occasional Papers 50, OECD Publishing.
    8. Louis S. Jacobson & Robert LaLonde & Daniel G. Sullivan, 2005. "Is retraining displaced workers a good investment?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 47-66.
    9. James J. Heckman, 2005. "Lessons from the Technology of Skill Formation," NBER Working Papers 11142, National Bureau of Economic Research, Inc.
    10. Claessens, Stijn, 2006. "Access to financial services: a review of the issues and public policy objectives," Journal of Financial Transformation, Capco Institute, vol. 17, pages 16-19.
    11. repec:nsr:niesrd:281 is not listed on IDEAS
    12. Lynch, Lisa M., 2005. "Job Loss: Bridging the Research and Policy Discussion," IZA Discussion Papers 1518, Institute for the Study of Labor (IZA).
    13. Finegold, David & Soskice, David, 1988. "The Failure of Training in Britain: Analysis and Prescription," Oxford Review of Economic Policy, Oxford University Press, vol. 4(3), pages 21-53, Autumn.
    14. Chiswick, Barry R., 2005. "High Skilled Immigration in the International Arena," IZA Discussion Papers 1782, Institute for the Study of Labor (IZA).
    15. Cörvers,Frank & Heijke,Hans, 2005. "Forecasting the labour market by occupation and education: Some key issues," ROA Working Paper 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    16. Bassanini, Andrea & Booth, Alison L. & Brunello, Giorgio & De Paola, Maria & Leuven, Edwin, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA).
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