Building a Diversified Learning Ecosystem to Address the Skills Gap Crisis

TEXT: Amar Numanović

In October 2021, the Economist published an article titled “The Shortage Economy.” The cover picture showed empty shelves containing a single apple, which was designed to be reminiscent of a globe. A lack of basic supplies in stores, combined with surging prices, aroused anxiety and concerns, especially among low-income individuals or families without room to manoeuvre. The situation has not been easy for many companies, either: raw materials have become less available and more expensive.

These global economic anomalies have emerged as a consequence of two consecutive crises – the COVID-19 pandemic and the war in Ukraine – that disrupted global supply and value chains. Meanwhile, stimulus packages launched by governments during the pandemic led to an increased demand for goods and services. But amidst the pandemic and supply shortages, increasing attention has been focused on an even harder-to-solve shortage: skills shortages. The digitalisation leapfrog and the opportunity-driven Great Resignation triggered a global debate on skills gaps and shortages, but this structural issue was slowly worsening for years, only to become visible now to an extent that cannot be further ignored.

We are in the middle of great transformation that disrupts labor markets and requires innovative approaches to continuous and flexible skills development. In a widely cited report on high-tech leadership skills published in 2017, it was estimated that there would be a medium-term shortage of 500,000 IT professionals in Europe. Meanwhile, the findings of the 2020 Future of Jobs Report suggest that 40% of employees will require reskilling in the medium term. These labor market struggles cannot solely be addressed through formal education; non-formal education and structured informal learning play crucial roles in an increasingly dynamic learning environment. In other words, the education system paradigm, which has always been characterized by the idea of relatively “linear” education paths, is being replaced by the learning ecosystem paradigm, in which different types, sources and modalities of knowledge and skills building are seen as a complementary and intertwined means for human development.

Western Balkan economies

Like many other developing countries, the Western Balkan economies are nowhere near caught up with these emerging economic realities. The region is still coping to bring an outdated education system and learning outcomes closer to yesterday’s realities. Thus, they are unable to keep pace with the ongoing global techno-economic transformation, disruption in skills and career landscape, and consequential learning challenges.

Testing conducted by the Program for International Student Assessment (PISA) in 2018 revealed that all six Western Balkan economies perform below OECD averages in reading and mathematics. And according to the latest available Eurostat data, only 8.7–19.8% of individuals aged 25-64 participate in adult education and training in the four Western Balkan economies covered by the survey (Albania, Bosnia and Herzegovina, North Macedonia and Serbia). This is notably below the EU average of 43.7% or the Swiss average of 69.1%, indicating that life-long learning and upskilling among the adult population is not a widespread practice. On the flip side, the Regional Cooperation Council’s Balkan Business Barometer reports that in 44% of cases Western Balkan employers cite a lack of proper skills as the reason for unfilled vacancies. These three indicators, although referring to different topics, illustrate the scale of the skills gap in the Western Balkan region.

MarketMakers, as well as other Helvetas projects in the region, puts a strong focus on skills development as a way to bridge structural gaps in the labor market. MarketMakers started as a job creation program; the initial idea was to support private companies in overcoming market obstacles that hinder their growth and thus suppress the potential for creating new jobs. It quickly became clear that many industries, such as information technology (IT) or business process outsourcing (BPO), did not have a problem generating jobs, but struggled to find the right talent to fill vacancies.

This helped identify a gap in the skills development ecosystem. Public policy initiatives were focused on long-term improvements of the formal education system. Meanwhile, development programs placed a strong emphasis on the enhancement of vocational education and training or re-training schemes provided by education centers. The current unmet needs of industries that are unable to recruit a workforce has shown a need for a more innovative and experimental approach to tackling this issue. MarketMakers has devoted part of its resources and technical knowledge to filling the vacuum in the skills development ecosystem.

The company academy model

Despite being challenged by labor shortages, IT and BPO companies were reluctant to invest in solutions. Some companies organized internships and had ad hoc initiatives aimed at upskilling and, rarely, reskilling the unemployed labor force. Companies rarely looked to non-formal education centers to recruit retrained workers. This is because they need specific and up-to-date skill sets among potential job candidates, which is difficult to acquire outside the central industries’ knowledge-holders: IT/BPO companies.

Building on its previous involvement in skills development initiatives, MarketMakers designed and piloted a new “company academy” model from 2017-2020. Through the model, companies individually or jointly (as a cluster) deliver training programs based on their internal expertise. The model is commercial, meaning that participation fees are attached to the program to ensure sustainability. Participating companies’ primary motivation for delivering training is to increase access to new talent pools, but also to brand themselves as the industry’s leaders in the area of knowledge development. Training graduates who have not been employed directly and/or immediately by the company that provided training still hold industry-wide relevant skills that can be “sold” to other companies or utilized for self-employment.

The case study “Developing the market for non-formal education provision in Bosnia & Herzegovina,” which was published by MarketMakers in April 2022, documented the successes and challenges of the company academy model. Out of 10 companies supported within the pilot, only one discontinued training delivery. Others launched one or more cycles beyond the pilot and are planning to maintain programs at their current or adapted frequency (e.g., some companies reduced the number of cycles per year). To date, 809 unemployed youth and students have been trained by academies within the pilot intervention. Out of this group, 220 found a job immediately after completing a course. However, as stated in the case study, the number of hires is “assumed to be highly under-reported due to the absence of functional alumni tracking activities among piloting phase partners.”

Over 375 young people who were already employed took courses provided by company academies, thus upskilling or reskilling them for higher positions. From a cost-benefit perspective, one recorded transition from non-employment to employment cost the project EUR 1,650. But the average cost is assumed to be even lower. When considering the aforementioned methodological challenge to capture the full impact, the cost should constantly diminish over time. Finally, recent research conducted by an independent market research agency shows that the model has spread; it is believed that seven newly established company academies have been inspired or influenced by the pilot scheme.

The company academy model has some notable challenges. First, since training delivery is not the primary business of most IT and BPO companies, there is always a risk that companies will deprioritize education activities if they become temporarily preoccupied with core service delivery. Second, research commissioned by MarketMakers has shown that young people are cautious about non-formal education; they prioritize formal education and certified programs over those that are more experimental and do not lead to formally recognized diplomas. Third, the replication of the model brings a risk of a market flooded by low-quality courses, thus deteriorating trust in company-delivered education.

Nevertheless, some of these anticipated challenges are now being addressed by the project through investments in awareness-raising activities aimed at the demand side (young people and parents) and knowledge-building endeavors aimed at the supply side (companies). As for quality concerns, these should be resolved naturally in the marketplace: for company academies to survive growing competition, the professionalization of the courses and increase of the quality and labor market outcomes will be a must.

Cost-effective e-learning

Company academies are not accessible to all interested young people for two reasons: (a) a limited number of places in onsite and live online courses, and (b) fees for participation, which usually vary from between half of the average net salary in Bosnia and Herzegovina (short-term courses) to six average net salaries (structured long-term education). Available options for deferred payment, payment upon employment or affordable loans do not provide a solution for everyone. Furthermore, the company academy market in countries such as Bosnia and Herzegovina is not big or diverse enough to offer relevant courses for all existing and emerging professions.

During the COVID-19 pandemic, some training providers put their education programs on hold – especially those who did not have the infrastructure or procedures in place to quickly shift to online delivery. This time of financial uncertainty also left many young people reluctant to invest in self-education. These factors led MarketMakers to start experimenting with low-cost modalities of online learning.

The project allocated approximately EUR 9,000 to six partners to provide courses for the Udemy platform. Udemy was chosen over other e-learning platforms because of its lower costs, the variety of courses offered on the platform, the more practical nature of content compared to some other platforms that are dominated by academic-type courses, and the possibility to easily gift a course to a third party. Course vouchers have now been integrated into partners’ regular activities of providing career information, mentorship and retraining. During the period August 2020 - April 2021, 792 people took Udemy courses from MarketMakers’ partners.

Another case study published by MarketMakers in February 2022, called “Testing the effectiveness of using low-cost e-learning courses to reduce youth unemployment in Bosnia & Herzegovina,” provides an initial assessment of the effectiveness of the scheme for 200 project participants. Thirty percent of unemployed course takers found employment afterwards and stated that participation in the course was instrumental in their change of employment status. When both costs of a course and costs of administering the scheme are taken into consideration, it can be estimated that a well-targeted measure (covering only unemployed young people) would cost EUR 40.5 per transition to employment. Furthermore, 82% of the unemployed persons and students who have been gifted with a course reported that they are motivated to invest further in self-education, thus indicating an overall positive experience of participating in e-learning.

However, the promising preliminary results of this low-cost e-learning project should be taken with caution. Program participants already had a solid educational foundation (many had completed or were currently seeking higher education), and the methodological approach to assessment had some deficiencies (e.g., there was no control group, no questions to assess the employability of participants prior to the course gifting) that could potentially distort findings. MarketMakers is in the process of repeating the trial on a larger scale, with better-targeted course gifting and a more rigorous measurement approach.

Don’t be afraid to experiment

Skills and knowledge building is a centerpiece of development in a world of rapid techno-economic transformations. Development projects should seek to fill gaps in the learning ecosystem created by a lack of policy response and market-led initiatives. But instead of copying solutions from developed countries or strictly following old tactics, development practitioners should be open to experimentation and innovations that can improve, expand and diversify learning opportunities for people in an accessible, affordable and effective manner.

These initiatives can be at the forefront of the learning experience by utilizing new technologies, promoting a customizable and flexible approach to upskilling and reskilling, and mobilizing the knowledge and resources of the private sector. MarketMakers has invested in piloting and mainstreaming the company academy model, which was almost non-existent 10 years ago when the project started. Similarly, the project is looking for new learning pathways by exploring how cost-effective global solutions for e-learning can be utilized to support reskilling and upskilling of unemployed young people or those who want to move from lower-end jobs and industries to higher-end professions. In both cases, the results turned out to be promising.

This article appeared in the Summer 2022 issue of Helvetas Mosaic. Subscribe to never miss an issue.

Did you learn something new about this topic? Share it and keep the conversation going →