Publication Type: Other
Countries: Bangladesh
Authors: SOAS-ACE
Publication date: June 2019
Keywords: Skills
Can new strategies target productivity and better skills to reduce fraud?
Research Question
Skills training by private firms in Bangladesh is not necessarily resulting in higher rates of employment, better paid employees or more productivity, and levels of fraud can be high. Private training providers (PTPs) in Bangladesh are usually incentivized to provide skills that generate employment: one-third of their payment per trainee is released when the trainee finds employment. In practice, there is significant fraud in overstating employment. Up to a third of public resources may be wasted in this way, and the true cost is much higher. How can an anti-corruption strategy improve skills training outcomes, reduce corruption and achieve better productivity outcomes for employers?
Key Findings Analysis of invoices from private training providers confirmed our hypothesis that training providers to supply high capability firms engage in less fraud in overstating trainee outcomes in order to claim payment. Our findings suggest that standard monitoring and audits are insufficient to control fraud – an alternative strategy is needed.
Implications Our anti-corruption analysis supports other evidence from Bangladesh that shows that feasible investments in firm organizational capabilities combined with simultaneous skills training can achieve productivity growth of up to 30% in less than a year. If firms achieve this kind of return, they are likely to seek out skilled workers, and training providers will have far less incentive to engage in fraud. We propose changes to the design of skills funding programmes to link PTPs to clusters of firms whose capabilities are being enhanced in parallel, to reduce fraud and improve skills training outcomes and productivity.
