Kiva Innovations: Investing in technical and vocational education

September 11, 2012

By: Rebekah Chang

Youth unemployment is becoming a global issue.

In December 2010, Mohamed Bouazizi’s self-immolation captured the Tunisian public’s attention and triggered protests that ended with the toppling of the oppressive Ben Ali regime. Bouazizi worked in the informal sector as a vegetable seller to support his family of eight. Following years of harassment, he was driven to set himself on fire after being slapped in the face by a policewoman for paying an insufficient bribe for his unlicensed vegetable cart. This story of a frustrated, "unemployed" (in the official sense) young man highlights why the issue of global youth unemployment is so important today.

The official global youth unemployment rate is forecasted to reach 12.7% this year, and will stay sustained at this high level until at least 2016. This statistic only captures the high level of youth unemployment in the formal sector and does not account for youth who have become discouraged from seeking formal employment or are unsuccessfully trying to make a living in the informal sector.

According to the ILO's 2012 report on Global Employment Trends for Youth, it may take four to five years for jobs rebound. Meanwhile, many of the 75 million unemployed young people will completely give up looking for work.

United Nations Secretary General Ban Ki Moon, in a recent message for International Youth Day, stated that “a large number [of youth] have no immediate prospects and are disenfranchised from the political, social and development processes in their countries.” He also spoke of a need for urgent measures to prevent the creation of a “lost generation.”

The education angle

Education is crucial to addressing youth unemployment. In a past blog, my colleague Ian Matthews discussed the need to invest in individuals’ skills and knowledge to increase economic activity and expand institutional capacity.

The education system needs to equip youth for work, but in both the developing and industrialized worlds, there are glaring mismatches between the education system and the job market. While there is an abundance of unemployed youth, there is notably a job skills shortage in many countries.

Is technical and vocational education a viable solution?

There's a current debate on the advantages and disadvantages of technical and vocational education. The case against technical education includes high expenses due to the need for specialized facilities and equipment, the prevalence of inefficient and ineffective public technical education providers, and the common stigma attached these programs that they are inferior to general education.

However, technical and vocational education systems, when designed flexibly to meet market needs, can help address structural unemployment and more broadly encourage economic growth. Technical and vocational education programs focus specifically on providing job-related skills for disadvantaged students who do not have the financial means or academic achievement necessary for higher general education.

In this way, technical and vocational education presents a complementary approach to general education, rather than an alternative. However, to be stronger in their roles, technical and vocational education systems need to reorient themselves to better meet the present demand for job skills. This includes focusing on equipping workers for “high-skill” jobs and technological changes and also better preparing individuals like Bouazizi for working in the informal sector. Private providers tend to be more efficient and effective than public providers in this regard.

Addressing financial shortfalls

One major challenge to reforming these programs has been access to financing. Both technical education and general education at the secondary and university levels in developing countries has experienced a dearth in funding in recent decades, particularly given international donors’ focus on achieving universal primary education, in accordance with the Millennium Development Goals.

There is a vital need to address financial shortfalls for technical and vocational education institutions that are strong performers. Kiva Field Partner CampoAlto in Colombia is one such institution. Prior to CampoAlto’s presence in Bogota, there were few technical education options, particularly for low-income students, but CampoAlto has popularized vocational training in the city and opened up opportunities for women and individuals living below the poverty line.

To meet the needs of its students who are limited in the times they can take classes and in their travel budgets, CampoAlto offers a flexible course schedule with early morning and late night shifts, and CampoAlto is expanding its presence in the country.

Kiva’s zero-interest capital is being used to offer a loan program to students who can’t afford tuition otherwise. Kiva is also supporting Field Partner Maharishi Education for Invincibility Trust (MEIT)’s student loan program in South Africa. MEIT incorporates technical education aspects into its business and environmental management curriculum by providing direct skills training and personal development tools.

At Kiva, we are working to help students who are seeking to gain job skills through a technical education, in South America, South Africa, and other parts of the world.

Rebekah Chang is an intern for Kiva’s Strategic Initiatives team, looking for new partners and loan products to extend opportunities and access to more people around the world. She replaces Ian Matthews. Rebekah has an M.A. in Development Economics and Conflict Management from Johns Hopkins University School of Advanced International Studies. Send her your feedback on this blog series at blog@kiva.org.

This is part of a larger series on Kiva’s strategic initiatives and innovative loan products, which are designed to expand opportunities for more borrowers. Kiva is excited to partner with schools that provide loans to disadvantaged students all over the world.