By W.A. Wijewardena –

Dr. W.A. Wijewardena

Sri Lanka’s Human Skills Gap: Dangerously looming over the country’s future growth prospects

Unrewarding educational attainments

There are some macro numbers relating to Sri Lanka’s educational attainments and human development which should surely please everyone. The country’s literacy ratio at 92 out of 100 on average is on par with any developed country. There is a wide-spread school system with a school in every 6.5 square kilometres of land. The schools are so well staffed that a teacher has to look after on average only 18 students, an attainment about which a school administrator even in a developed country will certainly feel envious of. While 90 per cent of children at age 5 gets admitted to primary education, some 80 per cent of those in the school going age has got a state run school. The teaching is so effective that about 61 per cent of those who sit for the GCE Advanced Level Examination pass the examination becoming eligible to enter a university. Of them, about 16 per cent is annually admitted to a state university where education is free for undergraduates in all streams. Vindicating the quality of the workers, Sri Lanka has successfully beaten up the unemployment problem pushing it below 5 per cent of the labour force, a state close to what is known as the natural rate of unemployment or no-unemployment. Thus, according to these macro numbers, Sri Lanka has a well developed skills pool and there is no doubt about its ability to make an effective contribution to the country’s continued economic prosperity.

SID Conference: Sri Lanka has a serious skills-mismatch

But this was not the picture that emerged at a conference organised by the Sri Lanka chapter of the international think tank on global development issues, Society for International Development or SID, last week. The conference, attended by a selected group of invitees, was addressed by two prominent economists before it converted itself to a forum of open discussion. The two economists who addressed the conference were Dr Nisha Arunathilake, an expert on labour studies attached to the Institute of Policy Studies or IPS, and Dr Suren Batagoda, economist turned bureaucrat, presently functioning as the number two at the General Treasury.

Nisha Arunathilake: Sri Lanka’s higher education is biased toward arts graduates 

Arunathilake in her presentation drew the attention of the audience to several key issues faced by Sri Lanka, in comparison to other nations in the region, in the development of its human resources and equipping it with required skills to take the country forward. This forward march involves, as pronounced by Sri Lanka’s authorities, migrating from the present lower middle income country to a higher middle income country in the next few years or so and then to a rich country within a single generation as has been achieved by South Korea and Singapore in the recent past. Thus, Sri Lanka’s skills requirements of tomorrow are not the skills it had yesterday or it claims to have today. There has not been a proper identification of these requirements and directing resources to meet these ends. According to Arunathilake, the school education in Sri Lanka is heavily oriented toward the study of arts subjects. The science stream is a totally neglected area without lab facilities and qualified teachers. As a result, the university education too is oriented to producing a disproportionately higher number of arts graduates. So, Sri Lanka’s much praised education system does not produce an adequate number of scientists and engineers. This is totally in contrast to the achievements of Singapore which turns out engineers and scientists in several multiples of arts graduates. Thus, Sri Lanka produces graduates, but the skills base of those graduates is not what the Sri Lanka’s economy demands. As a result, according to Arunathilake, there is a serious mismatch of available and required skills in Sri Lanka. Without correcting this mismatch, it is unlikely that Sri Lanka could attain its ambitious development goals.

Suren Batagoda: State education is already overstretched

Batagoda, in his presentation, highlighted the inadequacy of the system to provide inclusive education to all. Every year, slightly more than 300,000 babies are born in Sri Lanka and the state education system has to accommodate them for primary education by overstretching its available resources. However, within the school system, many get dropped out before they sit the GCE Ordinary Level Examination. Of those who sit the examination, only about a half continues to proceed further. Of them, though about a two third gets qualified to enter a university, only about 20,000 students are admitted to universities for tertiary education. This is roughly about 6 per cent of the children born in any given year. Thus, the university system has to be expanded but that initiative is constrained by a lack of funds. The alternative is to use the resources available with the private sector to expand the country’s higher education system. According to Batagoda, these are critical issues presently faced by Sri Lanka in its initiative to improve the skills base of people.

Upananda Vidanapathirana: Skills and growth should go together

Dr Upananda Vidanapathirana, President of the SID’s Sri Lanka Chapter and Chairman of the Conference, opined that producing more scientists and engineers is a must but it has to be done in a growing phase of an economy to absorb them in productive employment. Hence, economic growth and the production of exclusive skills should go hand in hand together. Economic growth demands more exclusive skills and more exclusive skills will contribute to further economic growth. What he meant was that the educational system should be flexible enough to identify these developments and make available the needed skills to the economy. What he meant was that skills should be developed neither before growth takes place nor after it has happened but at the right time. If skills are developed before growth, without being fruitfully employed, such skills will leave the shores of the country; on the other hand, if they are not available at the time growth takes place, then, growth will be impeded.

Growth requires quality workers

What these learned economists presented in their speeches boils down to a simple economic truth. That is, continued sustainable economic growth requires quality workers and quality workers are produced by a country’s educational system. Arunathilake specifically referred to the emergence of the knowledge based economies throughout the globe and the need for gaining readiness to be a part of that system. Batagoda confessed that the country’s annual research and development outlay standing at less than 0.1 per cent of GDP is not sufficient to produce that knowledge base. Hence, knowledge is the power today and much more has to be done to acquire that power. Without that power, all other powers – military, political, majority-rule or religious – become fruitless as far as the economic prosperity is concerned.

Technological advancements are the key to growth 

But, how does knowledge come about? It comes from learning. Learning is imparted by all types of education – formal, non-formal and informal. Learning facilitates research and research brings about inventions. Inventions lead to technological advancements and technological advancements lead to economic growth. In the case of advanced countries today, it has been found that between one-third and a half of economic growth they have attained have been due to the technological advancements they had had in the past. So, a country should foster technological advancements if it is desirous of having a high economic growth. Any economic growth not accompanied with technological advancements, as is the case of growth of Sri Lanka today, is short – lived and unsustainable. Thus, a country is required to enhance its investments in both education and research and development. Education will produce knowledge workers and research and development will foster technological advancements.

Alison Wolf: Education doesn’t matter if entrepreneurship isn’t there

But the availability of knowledge workers and technology is necessary for economic development but not sufficient to attain that objective. For education and technology to do that job, there should be a different set of ground conditions available in an economy. This has been lucidly explained by Alison Wolf, Professor of Education at the Institute of Education of the University of London, in a book she published in 2002 under the title “Does Education Matter?”. The subtitle of the book, “Myths about Education and Economic Growth” explains her thesis well. According to Wolf, the countries which have spent a great deal of money on education have got mixed results: Some have got higher growth, some no growth at all and some, negative growth. Thus, there is no clear relationship between educational attainments and economic growth. What is necessary is that a country should invest in correct type of education, build correct type of attitudes amongst its student population and have correct type of policies to translate that knowledge into commercially viable businesses. Finally, it is entrepreneurship that matters and to promote entrepreneurship, a country should have ground conditions that are helpful for promoting entrepreneurial spirits among its citizens. These ground conditions, though Wolf has not mentioned, are the protection of property rights, maintenance of law and order and adoption of market friendly policies by the government. The World Development Report 2013 just released has branded this quality of the government as a ‘proactive developmental state’ and has identified it as a prime driver of economic growth of a country.

Joseph Schumpeter: Inventors and innovators should join hands 

Before Wolf, these ideas were more formally presented by the Austrian economist, Joseph Schumpeter some seven decades ago. In his 1942 book titled “Capitalism, Socialism and Democracy”, Schumpeter identified three factors relating to education and entrepreneurship that lead to a continuous growth in capitalist economies: Invention, Innovation and Diffusion. Invention is the creation of a new product, new idea or a new process which comes from education, learning and research. These inventions standing along will not lead to capitalist growth. They should be put into practice or viable commercial ventures by entrepreneurs through a process known as innovation. Thus, without innovation, inventions are simply fruitless. An example from recent times for the combination of inventions and innovation comes from the Apple products. According to Walter Isaacson, biographer of Steve Jobs, it was Steve Wozniak who invented the Mac computer. Had it not been used commercially by Steve Jobs, the innovator, that invention would have simply remained an abstract invention. Therefore, a scientist who has made an invention becomes useful only if his invention is carried forward by an entrepreneur by establishing a commercially viable enterprise, a process known as ‘innovation’. But will the scientist and entrepreneur get together to benefit from each other. No if they do not join hands and Schumpeter called this coming together as ‘diffusion’. So, for an economy to continue to thrive, according to Schumpeter, there should be three acts that have come together. Inventions created by scientists, innovations created by entrepreneurs and diffusion by combining the scientists and the entrepreneurs.

A proactive developmental role for the government

These three processes are independent of each other and an economy should have appropriate ground conditions for them to come together. Education should develop scientists and they should have funds and facilities to conduct research. That research will bring about inventions that lead to technological advancements. Then, there should be entrepreneurs who are willing to take risks by adopting the new inventions made by scientists. Entrepreneurs should be supported by funds and protection so that they could put the inventions into commercial practices. Then, there should be mechanisms for both parties to come together and make available the products they produce to the ultimate users. The government has an important proactive developmental role in creating these mechanisms. It should ensure property rights by observing the rule of law and maintaining law and order. It should also facilitate the quick and fair enforcement of contractual arrangements without taking sides. Inventions come from free thinking and therefore, the government should promote and guarantee the freedom of thought and the freedom of expression. The 20th century British economist John Maynard Keynes succinctly presented this requirement when he said that “The political problem of mankind is to combine three things: Economic Efficiency, Social Justice and Individual Liberty.” These three requirements are interconnected and they feed on each other. Thus, if one is absent, the other two too will quickly disappear. Recognising their importance, the World Development Report 2013 has highlighted the need for permitting people to express their opinions by giving voice to people and creating opportunities for public discussion. This is because inventions and innovations are changes and changes cannot be brought about without questioning the prevailing order. The suppression of people’s right to question what they see as incorrect will surely create a nation of slaves and not a nation of thinkers.

Fill the skills gap or perish

Sri Lanka should therefore make hard choices today. It should enhance its investments in correct type of education to produce free thinkers and foster inventions through them. Then it should promote entrepreneurship so that the inventions made by free thinkers will be carried forward in the form of commercially viable enterprises. This is facilitating innovation. Then, there should be ground conditions conducive for both inventors and innovators to join hands to put the inventions into practical use by producing goods and services needed by people. It is only through this process by which Sri Lanka could fill its skills gap – the gap between the skills available and the skills needed. Until this gap is filled, Sri Lanka’s ability to foster continuous high economic growth is greatly impeded.

*W.A Wijewardena could be reached at waw1949@gmail.com