Artificial intelligence (AI) is expected to have an outsized impact on global job markets. Workers in economically weaker countries may be hit the hardest. To mitigate an AI 'job-pocalypse,' new approaches to Vocational Education and Training (VET) are urgently needed.
Artificial Intelligence (AI) is reshaping the world in the 21st century, enabling machines to do what only humans could before. From image recognition in robotics, security, and healthcare, to realistic media generation in entertainment, advertising, and product design, it has never been clearer that AI algorithms and systems are revolutionising various fields of human endeavour. But how is AI going to affect the future of work and employment?
Recent breakthroughs in the capabilities of AI have brought into the spotlight a pressing concern: the capacity for AI to disrupt job markets globally. The International Monetary Fund warns that the negative impacts of AI will be felt most by countries which rely heavily on low-skilled labour and have large populations susceptible to poverty. Although this describes the vast majority of countries, it is most applicable to developing nations, who are likely to be most critically affected by the rise of AI. For instance, a recent World Bank report has warned that AI could automate up to 85% of jobs in Ethiopia, 77% in China, and 69% in India. It is imperative that workers in such markets acquire new skills or switch to different occupations to remain employable. If AI displaces millions of workers without creating new opportunities for them, it could lead to significantly heightened inequality and poverty.
VET is an answer to the AI ‘job-pocalypse’
As the AI revolution takes hold, developing countries must act immediately to counter its potential impact on their job markets. These countries need to equip workers with skills that AI cannot easily replicate; skills that require a human touch. For example, service-based sectors depend heavily on human-to-human interactions that require soft skills such as creativity, empathy, problem-solving, and critical thinking – these are the skills that are going to be integral for the future of work. With this in mind, it is crucial that developing countries invest in Vocational Education and Training (VET) systems. These systems can provide low-skilled workers with the necessary training and hands-on experience to develop a toolkit of skills that will be essential in the era of AI.
Inaccessible, insufficient, ineffective: Challenges facing modern VET systems
Despite the capacity for VET systems to provide workers with the necessary skills to remain employed in the face of massive tech-enabled job displacements, such systems still face many challenges in developing countries that hinder their effectiveness and impact.
The first issue is that VET is simply too expensive for low-income individuals. In Timor-Leste, for example, the average cost of a one-year VET program was $1,200 in 2017; that is 60% of the annual per capita income. High VET costs are prohibitive to the people who need it the most, decreasing its overall effectiveness and its capacity to affect positive change in the most endangered areas.
The second issue is that VET systems in developing countries are often poorly financed and resourced, undermining their quality and long-term sustainability. One UNESCO report highlights how a large number of VET institutions in the developing world lack essential resources, such as infrastructure, equipment, materials, curricula, qualified teachers and trainers. These elements are the keystone to any basic education system, and the inability for VET systems to access them impedes their ability to deliver effective training programmes. On top of this, some VET institutions suffer from chronic underfunding from both private and public sources, hampering their ability to innovate, expand, and improve.
The third issue, and perhaps one of the most significant problems with modern VET systems in developing countries, is that it does not guarantee job opportunities for graduates. The same UNESCO report reveals how VET graduates in developing countries end up in low-skilled, low-paid and insecure jobs in the informal sector, where they lack social protection and decent working conditions. Moreover, such VET programmes are not aligned with the current and future needs of the labour market, resulting in a skills mismatch and the underutilisation of human capital.
Breaking barriers: An innovative model to enhance VET quality and affordability
The first two issues stem from the way VET systems in developing countries are structured, indicating the imperative need for a comprehensive overhaul to enhance affordability and secure ample funding for the provision of top-tier educational resources.
LabourNet, a social enterprise based in India, is a prime example of an effective and scalable private sector approach to VET that addresses these two elements to effectively equip low-skilled workers with the competencies necessary to thrive in the modern job market. By delivering livelihood services, including training, certification, placement, financial inclusion, and social protection across multiple sectors, such as construction, manufacturing, beauty, and agriculture, LabourNet is improving the lives and incomes of millions of informal workers in India. While the organisation’s core training focuses on interactive, soft skill building, LabourNet has also recently begun to create AI-centric learning pathways.
In 2018, the Global Institute for Tomorrow (GIFT) worked with LabourNet during its Global Leaders Programme (GLP) to develop a business model that would significantly improve the vocational training experience for workers. The result was the creation of four subsidiaries: LabourSkills, LabourJobs, LabourBiz, and LabourSave, each working in tandem to make LabourNet’s services more accessible and to diversify revenue streams.
LabourSkills and LabourJobs would strive to equip low-skilled workers with the skills and training necessary to succeed in a rapidly changing job market. By offering specialised skilling services to corporate clients, advanced skills training programs for workers, and international migrant labour training, LabourSkills would generate new sources of income while providing low-skilled workers with the tools they would need to secure stable job placements. LabourJobs would support this effort by creating a job marketplace that analyses supply and demand, partnering with companies to create a comprehensive database of employment opportunities, and ultimately improving job placements for vocational education and training (VET) graduates.
LabourBiz and LabourSave would be focused on making VET more affordable and accessible for low-skilled, low-income workers. LabourBiz would use corporate and institutional investments in LabourNet as collateral for microfinance initiatives, who would then provide loans to LabourNet students. LabourSave, meanwhile, would encourage low-skilled workers to save money by providing favourable interest rates and partnering with banks to collect deposits in underserved areas. This initiative would ensure that low-skilled workers have access to the financial services they need to save for future needs, such as education, entrepreneurship, or unforeseen circumstances.
The employability of VET graduates is not an issue, it is the policy
An improved VET system like LabourNet’s would do a fantastic job at ensuring workers can both afford vocational training, and acquire valuable skills. However, it does not address the third issue of the poor employability of VET graduates. Even with programmes like LabourJobs, which seek to ensure VET graduates obtain formal work opportunities, the lack of employment of VET graduates is fundamentally a policy problem: current systems do not incentivise employers to hire VET graduates.
The solution here is simple. Governments, particularly those in developing countries, need to craft and deploy policies to make jobs related to vocational training more valuable. These policies can tackle an array of areas, like improving the perception of VET education through social campaigns, or strengthening the linkages between VET providers and industry demanded skills.
The German vocational training system is a well-recognised example of how successful policy frameworks can support workers in today’s rapidly evolving job market. The German system involves employers and social partners in the design and delivery of vocational training programmes, ensuring that the skills taught are relevant, up-to-date, and in-demand. Additionally, it provides high-quality and standardised certification for vocational training graduates, which is recognised and valued by employers across Germany and beyond. The success of the German system is captured well by the numbers: In 2019 alone, there were approximately 1.4 million VET graduates in Germany, accounting for 5.3% of the total labour force. The unemployment rate for these graduates was only 3.2%, and an impressive 70% of German companies expressed satisfaction with their employment of VET graduates.
These statistics demonstrate the German system’s effectiveness in preparing workers for the job market and supporting their successful transition into the workforce. They also show that a reworked vocational training system like LabourNet’s – which brings affordability and tangible skills – can be a powerful tool for enhancing employability and competitiveness when coupled with adequate policies.
Rethinking and elevating VET will be crucial for developing countries in the AI era
The 21st century is being increasingly defined by the capacity for technology to do what was once only possible of humans. The new era of artificial intelligence is changing the landscape of work and employment as we know it – and developing countries are at risk of bearing the brunt of the industry upsets and job displacements caused by this. This is why developing countries must invest in innovative VET systems to equip low-skilled workers with essential skills that are quickly going to become highly sought after by employers.
While trailblazing approaches like LabourNet’s can make VET more accessible and affordable, it is essential that they are paired with government policies that incentivise employers to hire VET graduates – only then can VET systems truly be harnessed to safeguard the most vulnerable from the adverse effects of AI and enable them to stay competitive in this constantly evolving job market.
Eric Stryson is Managing Director of the Global Institute For Tomorrow (GIFT) in Hong Kong. He possesses expertise in governance, business model innovation, leadership transformation, talent development, and sustainability. He coaches leaders from business, government, and civil society to critically examine their roles, look beyond conventional wisdom, deepen their understanding of global issues, and take ownership of their impact on their organisations and society at large.
