ADB to Help Lao PDR Improve Vocational Training, Address Skill Shortages

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is helping the Lao People’s Democratic Republic (PDR) improve the quality and relevance of its technical and vocational training to address skill shortages in key areas of the economy.

ADB is providing a $23 million grant from its concessional Asian Development Fund for the Strengthening Technical and Vocational Education and Training Project. It targets improvements in quality, access, governance and private sector involvement in the vocational training sector, and complements earlier ADB-assisted projects in basic and post-secondary education.

The Lao PDR’s economy has been booming in recent years, supported by the buoyant mining and hydropower sectors, with gross domestic product growth estimated by ADB to reach 7.5% this year, and to average 7.8% from 2011 to 2015. However, technical and vocational institutions are not producing the skilled graduates needed to meet labor needs in key sectors.

Market assessments show enrolment for courses in high demand areas such as construction are declining, and only a small proportion of private firms are recruiting workers directly from technical and vocational institutions.

The ADB project aims to improve the relevance of vocational education courses and programs, strengthen teachers’ practical skills, update training equipment, enhance access for women, and strengthen the private sector’s role in vocational education strategy development and delivery. Along with curriculum and teacher training improvements, the project will focus on developing certificate and diploma courses for students in four areas where labor shortages have been identified - construction and building, mechanical and machinery maintenance and repair, furniture making, and basic business.

“Absorbing the growing numbers of school graduates and providing skills that are relevant to the needs of a fast-growing economy represent challenges for the country’s long-term development. This initiative will help develop a more highly skilled and diverse workforce,” said Norman LaRocque, Senior Education Specialist in ADB’s Southeast Asia Department.

The project will have a strong focus on improving access to vocational training for girls and ethnic groups. A training assistance voucher program for students at public and private vocational institutions will be provided, with at least 25% of vouchers allocated to women and 20% to members of ethnic groups. Dormitories at public technical and vocational training institutions will be refurbished with 50% of places reserved for women. A six-month salary supplement will be paid to employers who hire women supported under the voucher program to encourage post-study labor market integration.

Two programs with private firms and training institutions will be set up to improve the responsiveness of technical and vocational courses to labor market needs, including specialist skills training for both teachers and students in sectors such as mining, which require expensive equipment.

“About 20,000 students are expected to be trained through the project, and based on conservative estimates the improvement in skills could result in monthly wage increases for individuals of around KN 200,000 ($24.20) – a significant amount given that unskilled construction workers may earn around KN 400,000 – KN 900,000 ($48.40 - $108.90) per month in the Lao PDR,” said Mr. LaRocque.

The Government of the Lao PDR will provide additional financial support of $1.8 million for a total investment cost of $24.8 million. The Ministry of Education is the executing agency for the project, which is expected to be completed by September 2015.