By clearly defining the core system you’re trying to change, and how skills fit into it, you can adapt your language, tools and approach more effectively.

Picture the classic MSD doughnut. Supply and demand in the middle, with the juicy bits buried around the edges in the elusive supporting functions, rules and norms.

Hidden away in the sprinkled list of functions is often the word ‘skills’. Or perhaps ‘training’, ‘information’ or ‘human resources’.

This reflects the mainstream view of the need for improved skills in market systems: skills are potentially important, but they are one of many leverage points. Our argument, in this blog post, is that skills are much more than just a supporting function. Skills Development systems have their own complex dynamics, with different actors, values and norms at play. To elaborate, we highlight one key lesson from a deep dive analysis of more than 15 Skills Development projects.

Swisscontact has been involved in designing and implementing numerous classic MSD projects over the years: from KATALYST to PRISMA, M4C to Trademark East Africa’s Export Capability Programme. Possibly less known to the MSD community, is that the organisation has an equally large portfolio of Skills Development projects that apply our systemic approach, from school-based vocational education and training, to upskilling and reskilling within firms, to labour market insertion processes (e.g. career guidance and job matching services).

Over the past two years, a small team within Swisscontact has supported learning exchange between these two different groups of projects, and the practitioners that lead them. The major insight is that there are two distinct ‘types’ of Skills Development projects, that differ in their scope and aims, and their intuitive alignment with a market systems approach.

Production and skills market system

1. Skills as a supporting function

First, there are sector-focused projects (e.g. tourism/hospitality, healthcare, ICT and agriculture) focused on inclusive market development, where a key constraint to growth happens to be skills of workers in that industry. Here, skills are a supporting function to a core market system, and the skills system can then be further analysed to understand root causes and to develop interventions.

This is a familiar analytical move for MSD practitioners – many agriculture projects for example will focus on inputs or transportation as a vital supporting function that is not performing well. However, it’s less common to focus on skills themselves – perhaps because skills are embedded in people, and therefore less tangible. Or perhaps because the skills (and education) system itself is complex, unfamiliar and dominated by public sector players.

The key point is that in these types of projects, adequate skills are a means to an end – productivity/innovation/etc. in a different market. While there might be some interest in the deeper structures of skills systems (i.e. curriculum and standards, quality assurance, entry requirements), they are only a priority if they solve the pain point in the core market. 

An example is Swisscontact’s Construya project in Colombia1, which aims to improve the resilience of informal urban housing towards earthquakes. The project goal is a more dynamic construction market in informal housing, and the skills of construction workers are a key constraint.

The project has leveraged larger businesses that supply building materials to help encourage and organise training of informal workers, drawing on an influential network of small retail shops, and the credibility and scale of a national public sector training provider. In this context, improved skills in construction-related occupations are the means to an end (better housing, less risk to homeowners), but the project is not trying to transform the entire vocational training system. Rather, it targets a few key actors and focuses on buy-in and ownership from the private sector to drive adoption of targeted training.

Construya highlights some of the key considerations for intervening in Skills Development as a supporting function:

  • Who does, and who pays: what are the incentives for workers vs employers vs supply chain actors to invest in skills? How will training be certified or recognised, and how do they transfer within the existing system?
  • In-house vs Outsourced: do firms have the capacity and reputation to deliver internal training? When is it advantageous to engage an outside training organisation? How might that grow the ‘market’, and what are the trade-offs in terms of tailoring the training?
  • Word of mouth, influence and economies of scale: particularly for low skilled or informal workers, it can be challenging for companies to find the time and space to bring together a big enough group to be worth the effort. Understanding the social networks, and the relative influence of local retail shops (supplied by the bigger firms), was key to accessing large enough number of workers to even organise training in the first place.

2) Skills system as the core ‘market’

In contrast, some projects focus on improving the skills development system itself – often framed in terms of Technical and Vocational Education and Training (TVET) – to better serve learners who might work in a wide array of different sectors.

Here, more emphasis is placed on government policy and the structures and different purposes of the education system, beyond jobs and employment. This second type of project is further from the comfort zone of a typical MSD project. Even familiar MSD terms – like ‘market’, ‘customer’, ‘supply’ and ‘demand’ and ‘private sector’ – can have negative connotations if taken out of context by practitioners in skills/education.

An example is Swisscontact’s Skills Development Programme (SDP)2, which aims to transform the TVET system in Cambodia to improve quality and relevance of training, and to support local TVET actors to drive solutions.

SDP’s systems approach includes an analysis of 30+ supporting and regulatory functions, and the interconnected issues related to labour market demand, TVET provider capacities, and quality assurance from government.

The project has developed embedded governance structures that build much-needed linkages between different government ministries (i.e. Labour and Economy), between national and provincial levels, and between TVET providers and employers. SDP supports systemic change by combining local interventions with provincial TVET providers and other system actors with strong linkages into higher level policymakers to drive uptake of ideas at a wider scale.

SDP highlights some crucial considerations for taking a systemic approach to standalone skills systems projects:

  • Analysing all the functions of a TVET system, including interconnected systems (i.e. specific sectors and labour markets).
  • Facilitating change at multiple levels: from individual TVET providers to relationships between TVET, businesses and government, to multi-stakeholder platforms for governance of the system as a whole.
  • Understanding the political and social incentives for change in public sector and in educational organisations.
  • Leveraging strong policy networks to drive scale not only through replication but also through policy change and implementation.

These two examples illustrate two ends of a spectrum and lead to a key takeaway: applying a systems approach to both kinds of projects is equally legitimate.

Our review of 15 projects found that every project has a slightly different design. Many are hybrid, where some components focus on a particular sector (e.g. tourism and hospitality), and others on strengthening the TVET system as a whole across numerous sectors.

The main points are that by defining clearly what the core system is that you’re trying to change, and how skills fit into that, you can adapt your language, tools and approach more effectively.

This blog was originally posted on the MSD Hub as part of the MSS Learning Series

1 Financed by the Hilti Foundation, among other donors. As part of the Swisscontact Development Programme, it is co-financed by SDC (Swiss Agency for Development and Cooperation, Federal Department of Foreign Affairs FDFA).

2 Financed by SDC (Swiss Agency for Development and Cooperation, Federal Department of Foreign Affairs FDFA).

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