This BERF Evidence and Learning Note, Punjab Skills for Competitiveness, is the first in a series. BERF’s Evidence and Learning Team has been asked by the World Bank Group to produce up to four Notes on lessons learnt from DFID programmes that illustrate how best to promote private sector engagement and investments to ensure the optimal design for skills decision-making. Programmes and projects shortlisted for selection were required to demonstrate ‘good practice’ and clear evidence in engaging the private sector to build skills for competitiveness against nine criteria identified by the World Bank. Factors to be considered included:
- Diagnostics that identify the specific skills issues faced by firms
- Collaborative approaches to skills development
- Business development training as well as workforce training
- Private sector delivery of skills interventions
- New approaches to financing private sector skills delivery
- Raising the demand for skills where it is currently low
- Impact of strengthening the private sector/employer voice in the system
- Demonstrated ‘bottom line’ return to training for firms and individuals
- Incentives for marginalised groups
Punjab Skills Development Fund is an independent, not-for-profit company established by the Government of Punjab and DFID and competitively tenders training to deliver skills courses tailored to the needs of the poor as well as those of employers. The Fund has been able to scale up, expand across all of Punjab province, and pilot innovative approaches, such as: cost-sharing arrangements with firms; fee-paying training; and job facilitation services for training programme graduates.
Since its launch in 2010, the Fund has been successfully established an effective business model for financing skills training. By providing competitive grants to skill providers, it has been pivotal in creating a private sector skill providers market. The Fund trains poor men and women in a variety of trades that will lead to income generation. Further, by bringing more private sector training providers into the market and getting them to compete against each other, the Fund has achieved a unit cost per trainee that is considerably less than in the public sector (in some cases up to 50%).
BERF’s Evidence and Learning team has established through research and stakeholder consultations that well-targeted skills development policies are the key to developing and maintaining a competitive edge in an increasingly globalised economy. While there are clear arguments to be made about the government subsidising skills, the research showed that meaningful private sector engagement with skills policy is essential to ensure quality and relevance. Targeted groups such as women and young people are vulnerable and underserved in the skills market globally, but are also a source of great potential for the development of skills for competitiveness at scale.
A strong, evidenced based private sector driven fund can succeed in competitive grant funding of training service providers. The research cautions however, that for the long term, donor and or government funding would be required, pointing to the need to build a mechanism that can address the question of long term financial sustainability.