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

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.