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Sector-based approaches can make RI more competitive

In the face of rapid competition in a globalized world, countries make every effort to increase their competitiveness

Hariati Sinaga (The Jakarta Post)
Kassel, Germany
Thu, September 18, 2008

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Sector-based approaches can make RI more competitive

In the face of rapid competition in a globalized world, countries make every effort to increase their competitiveness. Besides working to improve their investment climate, countries also have become more concerned with the issue of labor quality. The move toward high-tech-based economies needs a corresponding rapid development of skills.

Among several approaches for skills development, sector-based approaches have recently become widely publicized. These approaches focus on sectoral development, particularly the development of skills required within sectors. Many countries have adopted these approaches given employers' increasing demand for skills and the rising concerns of demand-led provisions for vocational education and training.

The governments acknowledge that providing training mechanisms because the central planning body does not meet the real needs of employers. Sector-based approaches are, therefore, intended to overcome this challenge.

A vital feature of these approaches is the existence of an organization promoting skills development in a specific economic sector and ensuring that skills development measures (such as training) in that sector meet both the needs of employers and the government's objectives. The Sector Skills Council in the United Kingdom, Sector Council in Canada and Kenniscentra ("Knowledge Centre") in the Netherlands are examples of this.

There is no single model -- in other words, approaches differ across different countries -- however, as Prof. David Ashton (2006) argues, the fundamental key is putting employers at the center of the system with the support of employees. Ashton has also put forward six elements of effective sector-based approaches.

First, the approaches should enable employers to play a key role in identifying skills and designing competencies required. This puts emphasis on the salient involvement of employers within a skills development system.

Second, sector-based approaches should secure the consent of employees. This refers to the need of a function to provide transferable skills and enable individual employees to gain recognition for their wider skills in the labor market. Therefore, the involvement of unions, professional organizations and employee representatives is also important.

Third, sector-based approaches should maximize the use of financial incentives.

Fourth, sector-based approaches should use government funding to ensure skills development bodies are aware of longer-term government objectives. Skill councils should not only meet the demands of employers.

Fifth, sector-based approaches should ensure that at least some of the funds for public training provisions are directed through employer-led sector skills councils.

Sixth, sector-based approaches should acknowledge and manage tensions between the central or federal government and its nations or regions. In some countries, for example the UK, sector skills councils are federal in approach, whereas education and training delivery and the qualifications system associated with them are determined by national authorities. This shows that there are potential conflicts related to different political priorities, systems of funding, national targets and qualification frameworks, which need to be managed.

In the case of Indonesia's skills development, particularly for female workers, sector-based approaches seem to be an answer since the approaches enable the government to target sectors in which women are concentrated. However, how likely the government is to adopt these measures remains unknown.

Are sectors dominated by women perceived by the government as important to improve in the context of skills development?

Indonesian women are concentrated in manufacturing industries, particularly garment and textiles, and domestic work. The majority of manufacturing industries, especially garment and textiles, are funded by vertical foreign direct investment (driven by multinational firms' objective to locate the labor-intensive production in countries where capital is most affordable).

However, improving women workers' skills through sector-based approaches may also lead to an increase in female workers' productivity. Productivity has a positive correlation with wages. The more productive someone is, the more he/she earns. This would, therefore, lead to an increase in labor costs for the company and, in turn, would likely impede multinational companies from locating their vertical foreign direct investments in Indonesia.

In the case of female domestic workers, especially those who work abroad, cheap but loyal characteristics are observed to be more attractive. It is contended that among other migrant domestic workers, Indonesian women are more desirable since they are cheaper and more willing to be exploited (Indonesian women workers themselves understand exploitation to mean working hard).

This indicates that women are sources of competitive advantage, given their label as cheap labor and, thus, maintaining them as low-productive labor seems to be more beneficial. Consequently, adverse risks are expected if female workers' skills in these sectors are improved. It would not be surprising if the government was not so interested in choosing these sectors to be improved through sector-based approaches.

Furthermore, the garment and textiles and domestic worker industries are claimed to be sectors and jobs which do not require a high level of skills. This corresponds with a gendered perspective of female workers' productivity. It is argued that female workers have lower productivity than male workers.

Hence, women are concentrated in low-skills industries, indicating that a high level of skills advancement is not necessary. Women are perceived less deserving of training. Therefore, they are less skilled and less likely to get the support required to make a transition into other jobs.

Consequently, greater opportunities for skills development will most likely be offered to men. This is evident when we look at industries dominated by men, say, automotive industries which need high levels of productivity and, therefore, need rapid skills development.

Implementing sector-based approaches requires a government's decisive role to choose which sector should be improved. I have argued that given a gendered perspective of female workers' productivity as well as a gendered labor market, there will be less interest in targeting sectors dominated by women for skills development using sector-based approaches.

The government's duty, therefore, is to show that this argument is implausible. In this regard, it points to the necessity of engendering government policies for skills development, particularly using sector-based approaches.

This would, in turn, partly reflect the Indonesian government's commitment to not using a 'low-road' strategy -- a strategy whereby a country uses cheap laborers and keeps them in an unproductive sphere -- to enhance the country's competitiveness.

The writer is a post-graduate student at the University of Kassel, Germany. She can be reached at har2naghita@yahoo.com

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