Transcript Financing skills for work in education 2030: Contribution of private

Financing skills for work in Education
2030: the contribution of the private
sector
Borhene Chakroun
2016 London Conference on Employer Engagement in
Education and Training
22 July 2016
1
OVERVIEW
I.
TVET on the Global Policy Agenda
II.
Engaging Employers in TVET Financing
III. Case
studies
2
I. TVET ON THE GLOBAL POLICY AGENDA
3
EDUCATION AND TRAINING IN THE CONTEXT OF
THE SUSTAINABLE DEVELOPMENT GOALS
17 Sustainable Development Goals (SDGs)
SDG 4 : Ensure inclusive and equitable quality education and
promote lifelong learning opportunities for all
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SDG TARGETS RELATED TO TVET
SDG 4 : Ensure inclusive and equitable quality education
and promote lifelong learning opportunities for all
By 2030, SDG 4 calls on Member States to:
• Ensure equal access to affordable and quality TVET programmes
(target 4.3)
• Substantially increase the number of youth and adults with relevant
skills for employment, decent jobs and entrepreneurship (4.4)
• Eliminate gender disparities in education (4.5)
• Ensure that all learners acquire the knowledge and skills needed to
promote sustainable development (4.7)
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SDG TARGETS RELATED TO TVET
SDG 8: Promote inclusive and sustainable economic growth,
employment and decent work for all
SDG 8 calls on Member States to:
• By 2030, achieve full and productive employment and decent
work for all women and men, including for young people and
persons with disabilities, and equal pay for work of equal value
(target 8.5)
• By 2020, substantially reduce the proportion of youth not in
employment, education or training (8.6)
G.J. Kim
ASEAN+3 Forum on Dual Learning Systems and TVET Financing, 23 - 25 May 2016, Seoul, Republic of Korea
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Overview of the new UNESCO TVET
Strategy 2016-2021
Goal: To support the efforts of Member States
To enhance the relevance of their TVET systems and to equip
all youth and adults with the skills required for employment,
decent work, entrepreneurship and lifelong learning, and
to contribute to the implementation of the 2030 Agenda for
Sustainable Development as a whole
3 Priority Areas
1. Fostering
Youth
Employment
and
Entrepreneur
ship
2.
Promoting
Equity and
Gender
Equality
3. Facilitating
Transition to
Green
Economies
and
Sustainable
Societies
II. ENGAGING EMPLOYERS IN FINANCING TVET
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TEN KEY POLICY AREAS OF TVET REFORM HAVE BEEN IDENTIFIED FROM
INTERNATIONAL EXPERIENCE
1.
Enhancing responsiveness of TVET provision
2.
Changing Perception of TVET
3.
Reforming Qualifications Frameworks and building new learning pathways
4.
Establishing Post-Secondary TVET
5.
Empowering learners: Learner-centred pedagogies
6.
Work-based learning: Apprenticeship/in-service training
7.
TVET teachers and trainers
8.
ICT In TVET
9.
Good governance and partnerships
10.
Financing TVET
Source: UNESCO, 2015 & CEDEFOP, 2015
Growing Role of Employers
• Co-funding and co-management of TVET institutions;
• Establishing alliance for workplace learning amongst business representatives, educational
leaders, social partners, and employment offices;
• Analysing and disseminating data and projections on skills needs and gaps in established
and emerging sectors (Sector councils and Panels);
• Providing mentoring/job shadowing/career advice and business connections/networks
• Growing emphasis is being placed on private sector accountability and the broader
corporate social responsibility (CSR) agenda, whereby companies voluntarily bring social and
environmental concerns into their operations.
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TRAINING LEVIES AS POLICY MEASURE TO REINFORCE EMPLOYERS
INTERVENTION IN TVET
• Training levies are important tools to provide a pool of funding
which can contribute to the advancement of human capital.
• The potential of this type of fiscal instrument is especially
important for countries that have unstable public budgets.
• The review of the existing literature has pointed out that the vast
majority of the research work undertaken has followed a
qualitative approach.
• The need for Forecasts of the potential amount of resources that
could be raised by this type of tax.
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POTENTIAL DISTORTIONS OF THE LEVIES
Despite the potential of training levies to contribute to skills development, the existing
literature has also pointed to some distortions that it could create.
Levies could raise the cost of employing people,
Leading employers to either reduce the number of workers they employ,
Compensate for the additional cost by paying lower wages
Detrimental effect for small size entreprises
Source: Johanson, 2009 & Dickinson and Marsden, 2013
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DIVERSE LEVY BASE
Levy base
Country
Company profit tax
Jordan, Egypt (suspended)
Levy on foreign workers
Bahrain, Marshall Islands
Payroll
Belgium, Bulgaria, Cyprus, France, Greece, Hungary, Italy, Ireland,
Netherland, Poland, Romania, Spain, United Kingdom, Algeria, Morocco,
Tunisia, Singapore, Barbados, Bolivia, Brazil (for SENAI, SENAC and
SENAT), Colombia, Costa Rica, Dominican Republic, Ecuador, El
Salvador, Guatemala, Honduras, Jamaica, Nicaragua, Paraguay, Peru,
Uruguay, Venezuela, Benin, Burkina Faso, Central Africa, Chad, Côte
d’Ivoire, Guinea, Malawi, Mali, Mauritania, Mauritius, Namibia, Nigeria,
Senegal, South Africa, Tanzania, Togo, Zimbabwe
Fixed amount per worker
Slovenia
Value product
Brazil (SENAR), South Africa Agricultural Training Fund (SETA)
Social security fund
Panama
Source: adapted from UNESCO (2015).
DIVERSE SCHEME
We identified three main types of scheme:
1. Revenue-generating schemes
2. Levy-subsidies schemes
3. Levy-exemption schemes
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GLOBAL LANDSCAPE
Country
Bahrain
Brazil
Côte
d’Ivoire
France
Honduras
Hungary
Ireland
Jordon
Kenya
Korea
Malawi
Malaysia
Mauritius
Morocco
Nigeria
Panama
Singapore
South
Africa
Tanzania
Turkey
Rate
(%)
Revenue generating
1.0–
3.0
1.0–
1.5
1.6
P
1.5
1.0
1.5
0.7
1.0
1.0
0.5
1
0.5–
1.0
1
1.6
1.25
15
1.0
1.0
2.0
n.a.
Payroll tax exemption
Levy grant
Training
cost
reimbursement
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
n.a.
P
P
P
P
Source: Cambridge Econometrics’ elaboration based on Dar et al. (2003) and UNESCO (2015).
‘S’ SYSTEM IN BRAZIL

SENAI – the national training scheme

SENAC – a training fund which is commerce-specific

SENAT – a fund specifically for transport training

SEBRAE – a training scheme focused on servicing small businesses

SENAR: a training scheme for rural areas.
SENAI, SENAC and SENAT all impose a 1 per cent payroll levy on all industrial
enterprises, while SENAI charges an additional 0.5 per cent for companies with
more than 500 employees. SENAR applies a 2.5 per cent tax on the sale of
agricultural goods, while SEBRAE imposes a 0.3 per cent levy across all
sectors.
Source: Cambridge Econometrics elaboration based on Muller and Behringer (2012).
PROCESS FOR ESTIMATING REVENUE
HOW TO ESTIMATE THE REVENUE
the amount of revenue which could be raised for training purposes by means of a training
levy will mainly depend on the following two elements:
1. the (%) rate at which the levy is set; and
2. the base to which the rate is applied, such as: payroll (headcount or wage bill);
turnover; output; contract value; product value, production costs; or profits.
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KEY FACTORS IMPACTING THE REVNUE
Factor
Rationale
Relevant variables to categorize each
dimension
Economic context

Economic contextual factors directly affect the
participation of firms in the schemes.
National wealth (gross domestic product
– GDP), sectoral value added,
productivity, average wages, sectoral
employment (number of jobs), etc.
Labour market structure

Labour market factors seem to have an impact on TVET
(albeit a slight one);
Employment rates also affect the levy base since an
increase in the proportion of individuals who are
participating in income-generating activities will increase
the levy base;
Educational attainment levels of the population also
influence the revenue raised. In principle, more skilled
workers will be more productive and obtain higher
remuneration, which eventually affects the levy base.
Unemployment rates, labour
participation rates, educational
attainment level of the population,
expenditure on labour market training as
percentage of GDP, etc.
Institutional factors such as the size of the informal sector
directly affect the outcomes and disbursement of the
training funds. The size of the informal sector could also
help to explain a low amount of revenue raised.
Relative weight of the informal economy
and the relative weight of the public
sector over the total economy.


Institutional setup

Source: adapted from UNESCO (2015).
III. CASE STUDIES
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SUMMARY OF COUNTRIES RESULTS
Country
TVET system
Key stakeholders
Dominican
Republic
1% tax on payroll
0.5% tax on
employee bonuses
INFOTEP, trade
Size of the informal economy
unions and
– it accounts for more than
employer federation half of total employment
Cyprus
Senegal
Human Resource
Development Levy
(0.5% of employees
emoluments subject
to a cap)
Fixed contribution
(3% of eligible
payroll)
Main issues
HRDA, trade unions Rapid rise in external (EU)
and employer
training funds
federation
FFFPT, ONFP,
Others
Rapid increase in available
funding
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APPROACHES FOR ESTIMATING REVENUE
RESULTS FROM CASE STUDIES
Dominican Republic
Senegal
Cyprus
USE OF RESULTS
1. Stakeholders Platform (Dominican Republic)
2. Prioritisation (Senegal)
3. Planning (Cyprus)
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THANK YOU!