Skills in Bangladesh

Reducing resource leakages in skills programmes to achieve better employability and wage growth outcomes

Summary:

Overall, the performance of skills training programmes in Bangladesh has been poor. But some targeted programmes have done well because they have addressed relevant market failures with targeted funding and appropriate governance structures.
The design of skills training programmes, together with connections with relevant employers and the tasks and capabilities of monitoring agencies, affect the incentives of stakeholders in training programmes. This results in either low or high levels of resource leakage, impacting upon training outcomes.
If the design of financing for skills training does not explicitly consider the heterogeneity of trainers as well as the differences in the capabilities and requirements of potential employers and monitoring agencies, then adverse incentives are often created. Trainers, trainees and potential employers often capture training resources in a variety of ways that can be described as corruption.

The Corruption Issue

If training providers receive public funding to support some or all of their training but they also know that even if they provide high quality training, many trainees will still be unemployed or fail to receive higher wages, the incentives to on both supply and demand side are significantly reduced. Rent capture and collusion thus become attractive options involving providers, monitors, and even some employers.
This corruption cannot be stopped or blocked simply through better monitoring and enforcement of penalties, but by simultaneously changing the incentives of some stakeholders to start behaving differently by helping them see why providing high quality skills is a good business model on both the demand and supply side.

Theory of Change:

  • IF training is matched to the capabilities of employers, with additional programmes introduced to raise the ‘organizational capacities’ of potential employers so they can use improved workforce skills to raise productivity and profitability
  • AND IF funding for training programmes and monitoring are designed to reduce leakage while considering the heterogeneity of trainers and employers
  • THEN resource leakage from training programmes will be reduced
  • BECAUSE the rewards of more effective training outcomes will be sufficiently internalized by one or more stakeholders who will improve governance of funds for training programmes

Research Methods:

  1. The research will use econometric and other methods to test the relationships between:
  2. the type of training organization
  3. its financing model
  4. the monitoring agencies processing payments based on results assessment
  5. the capabilities of employers measured by observable characteristics like their exports and export-growth, size of employment or other characteristics and
  6. the probability of employment of trainees and wage increase they achieve through training.

Partners: Mushtaq Khan (SOAS); Sultan Hafeez ur Rahman, Wahid Abdallah, Arafat Uz Zaman Markony (BIGD-BRAC); Palladium Bangladesh (Sudokkho project)

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