Making higher education relevant can unleash growth

Higher education has emerged as a major economic issue in many countries because of its importance in preparing young people for the job market. Yet it is often not seen as relevant to the needs of the economy, an International Finance Corporation conference heard in Dubai on Tuesday.

This is in part due to a mismatch between what is taught and the skills required in a growing the private sector.

While in the past the focus was on increasing access to higher education, that is no longer enough, Dimitris Tsitsiragos, IFC vice president for Eastern and Southern Europe, Central Asia, Middle East and North Africa, told the World Bank Group agency’s private education conference, which opened on Tuesday.

“We all know that the jobs issue – especially access to 'good jobs' – has taken centre seat in this region, particularly after the events since January 2011,” Tsitsiragos said, referring to the Arab Spring protests that began last year.

With the current situation in the Arab world, “it is very important to step up [education] provision,” said Guy Ellena, IFC’s director of the Europe, Middle East and North Africa services sector.

However, it is not just about the Arab world. Countries in Latin America, Africa and Asia are also seeing high graduate unemployment and a mismatch between skills and jobs.

In the past the public sector was a big employer of graduates. But with the tightened fiscal conditions being experienced in many countries, this sector can no longer be relied on to absorb those with higher education.

Instead, young people will need skills more appropriate to the private sector, and institutions will have to cater for those needs, the conference heard.

“Today’s globalised world requires high quality and relevance of post-secondary education…to ensure that youth have the necessary soft and hard skills and tools to meet the dynamic needs of the private sector and market-driven economies in most countries,” Tsitsiragos said.

“But it is a ‘chicken and egg’ situation – while the private sector needs to grow to be able to create jobs, the private sector cannot in fact expand sufficiently without workers with the right skills.”

The IFC, which is the private sector funding arm of the World Bank, is supporting a number of education providers and private firms that can provide skills training. It is also providing loans to private higher education institutions that can meet the demand for higher skills.

A number of private education providers, private equity firms and financial institutions were invited to the conference, with the IFC hoping to link education and skills providers with funders.

“The IFC is the lead player and is uniquely placed to make connections, drawing together all sectors,” said Svava Bjarnason, IFC’s principal education specialist.

Many financial institutions cannot invest long term in emerging economies because they do not understand the nature of the risks. “We try to help local finance providers to understand the education sector,” Bjarnason told University World News.

The Dubai conference is the first time the IFC meeting is being held outside of its base in Washington DC, and has meant a timely focus on the Arab World.

Quality higher education and market relevance are particularly important in the Middle East and North Africa, with youth unemployment rates in the region averaging around 25% – higher than other regions in the world. Female youth unemployment is even higher, reaching over 30%, Tsitsiragos said.

Unemployment is particularly high among graduates and even higher among educated women. “This is primarily because education systems in the region do not adequately address the needs of labour markets, ultimately producing graduates who are not competitive in the workplace,” he said.

Enterprise surveys conducted by the World Bank Group indicate that a high proportion of firms in the region see lack of skills as hampering their operations and growth.

The proportion of firms identifying skills as a major obstacle is in the range of 30% to 60% in countries such as Egypt, Jordan, Yemen, Saudi Arabia, Lebanon and Syria – well above the world average of around 20%, and the averages in emerging regions such as East Asia and South Asia, which fall in the 15% to 20% range.

The lack of the right kinds of skills could be the reason why most workers in the region are
employed in the informal sector, instead of in formal and well-paying or ‘good’ private sector firms.

According to International Labour Organisation and UN population data in 2010, the share of the Arab world’s working population holding a formal job was only 19%, while 81% were in the informal sector. Many of these people will have to be brought into the formal economy in order to propel economic growth.

The aspirations of youth across the globe, and especially in the Arab region, are very high, Tsitsiragos said. “We cannot lose time in helping this generation, and those to come, in reaching these aspirations.”