Shortage of industry-ready workers is a ‘critical bottleneck’ in the growth of ASEAN economies

Author: Carolyn Hong | Date: 30 Nov 2016

New study suggests the private sector needs to take the lead in providing skills training

A shortage of industry-ready skilled workers could become a critical bottleneck to the continued rapid growth of southeast Asia’s five largest economies, according to a recent study by the Singapore Management University.
 
While the five countries – Singapore, Malaysia, Thailand, Indonesia and the Philippines – are at different stages of economic growth, they face the common challenge of getting enough skilled staff to meet their goals of becoming knowledge and technology-intensive economies.
 
The study said this was further compounded by rapid global changes such as disruptive technologies that are making certain jobs obsolete in key fields like information communications technology, tourism, electronics manufacturing and financial services.
 
To bridge the skills gaps, the study recommended the southeast Asian economies look to the private sector, especially large corporations which have proven to be successful in creating skills training to meet their own needs.
 
One of the study’s authors – associate professor Tan Kim Song from the School of Economics, Singapore Management University – said there were major differences among the five countries, particularly in terms of the public sector’s capacity and due partly to resource constraints.
 
In general, public sector education and training institutions are often unable to equip students with the skills needed by industry, as they tend to be slow and overburdened. “We feel that the public sector capacity may not change in a short time,” said Tan.
 
But in all five countries, the private sector has demonstrated the capacity to fill the skills gaps, for instance in the auto industry in Thailand. Tan said the private sector’s track record in building up skills had, in fact, been one of the biggest success stories in the region.
 
This includes large businesses, which have successfully set up training institutions to meet their own needs. Corporations are quick to recognise changes and the skills needed at a given time, and being light on their feet are also able to move with greater flexibility to adapt their training programmes.
 
The study recommended that the private sector be given more leeway to lead skills training for its industries, with a lighter regulatory approach.
 
Governmental support can be given in the form of incentives, as well as coordinating the private sector’s skills development efforts. It also recommended that governments take steps to overcome inherent societal prejudices against technical education.
 
The study focused on these five countries, as the core members of the Association of Southeast Asian Nations (ASEAN), whose economies are the main engine of growth in Asia Pacific. They are growing at an annual average of five per cent despite a sluggish global economy.
 
It also provided a detailed study of each country. The most developed, Singapore, is seeking to push the technological frontier but faces a tight labour market situation.
 
Malaysia and Thailand are both aspiring to become technology and knowledge-intensive economies, and need to upgrade the science and engineering skills of their workers. Indonesia and the Philippines have difficulties in equipping workers with job-specific skills required by key growth industries, resulting in high youth unemployment.