93045 Policy Note 2 Botswana Labor Market Signals on Demand for Skills The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development, its affiliated organizations, or those of the Executive Directors of the World Bank or the governments that they represent. Policy Note 2 Botswana Labor Market Signals on Demand for Skills Outputs of the “Skills for Economic Growth and Diversification in Botswana” analytical work: Policy Note 1: “ Raising Botswana’s Human Resource Profile to Facilitate Economic Diversification and Economic Growth” Policy Note 2: “Labor Market Signals on the Demand for Skills” Policy Note 3: “Skills Needs of the Private Sector” Policy Note 4: “Skills Implications of Botswana’s Diamond Beneficiation Strategy” Summary Report Contents Contents v Acknowledgments vii Abbreviations and Acronyms ix Context of the Study 1 1. Introduction 2 2. Overview: Skills Gaps and Mismatches 2 3. Growth and Diversification Strategies: Expected Impact on Skills Demand 3 4. Characteristics of the Labor Force 5 5. Employment and Earnings Patterns 7 6. Employer Demand for Education and Skills 8 7. Recommendations 13 Conclusion 15 References 15 Figures Figure 1. Composition of the Botswana Labor Force, 2005–06 5 Figure 2. Comparison of Employment by Industry 1995–96 and 2005–06 7 Figure 3. Salaried and Non-salaried Employment, 1995–96 and 2005–06 7 Figure 4. Returns to Education in 1993–94 and 2002–03 8  mployer Skill Rankings for Managers, from Figure 5. E “Not Important” to “Crucial” 12  mployer Skill Rankings for Skilled Workers, from Figure 6. E “Not Important” to “Crucial” 12 Acknowledgments The set of four Policy Notes that address skills for economic Ritva Reinikka, Sector Director, HD Africa, provided overall diversification in Botswana were prepared by Tazeen Fasih guidance for the project. (Task Team Leader). This note on “Labor Market Signals on Initial versions of the background papers were presented Demand for Skills” has been co-authored with Margo Hofti- to key education stakeholders in Botswana at a workshop jzer. The background paper was prepared by Happy Sipham- in December 2010. The workshop was co-organized by the be and Nathan Okurut. Ministry of Education and Skills Development (MoESD); Valuable comments on an initial draft of these notes were critical input provided during the workshop helped shape received from Sajitha Bashir, Peter Darvas, Keiko Inoue, the current version of this report. Nathalie Lahire, Maureen Lewis, Peter Materu, and Shwe- The World Bank is grateful for the support provided by tlena Sabarwal. The peer reviewers were Wendy Cunning- MoESD, particularly by PS Mrs. Grace Muzila and DPS ham, Amit Dar, Raja Bentaouet Kattan, Zeinab Partow, Dr. Theo Mooko, at various phases of the preparation of this Harry Patrinos, Jan Rutkowski, and Douglas Zinhua Zeng. report. In addition, the author would like to thank officials Ruth Kagia, Country Director; Constantine Chikosi, Coun- of the MoESD and Botswana Training Authority (BOTA) for try Manager, Botswana; Peter Materu, Sector Manager; and sharing valuable data and information. Abbreviations and Acronyms AfDB African Development Bank BOTA Botswana Training Authority CSO Central Statistics Office, Republic of Botswana EESB Employer and Employee Survey in Botswana (2010) GDP Gross Domestic Product HIES Household Income and Expenditure Survey ICT Information and Communication Technology LFS Labor Force Survey LSE Lower Secondary Education MoESD Ministry of Education and Skills Development, Botswana MoFDP Ministry of Finance and Development Planning OECD Organisation for Economic Co-operation and Development NDP National Development Plan TVET Technical and Vocational Education Training USE Upper Secondary Education All dollar amounts in U.S. dollars unless otherwise indicated. Context of the Study Human development is one of the pillars of Botswana’s Coun- try’s skills base: “Raising Botswana’s Human Resource Profile try Partnership Strategy with the World Bank (2009–13). to Facilitate Economic Diversification and Growth” (note 1), The Country Partnership Strategy is in line with Botswana’s “Labor Market Signals on the Demand for Skills” (note 2), “Vision 2016,” which, in terms of human development, en- “Skills Needs of the Private Sector” (note 3), and “Skills Im- visions the transformation of Botswana to “an educated and plications of Botswana’s Diamond Beneficiation Strategy” informed nation” and to “a prosperous, productive and in- (note 4). The key findings and recommendations of these four novative nation” as two key cornerstones of the strategy. In notes were then integrated into a short Summary Report. line with these objectives, the World Bank with support from The first note assesses the strengths and weaknesses of Bo- the Ministry of Education and Skills Development (MoESD) tswana’s education system (i.e., basic, technical and vocational, embarked on analytical study entitled “Skills for Economic and higher education) and recommends policy interventions Growth and Diversification in Botswana.” The work is in- to strengthen students’ acquisition of relevant knowledge and formed by Botswana’s need to diversify its economy to facil- skills. The second note examines both current labor and skills itate stronger, more sustainable economic and employment demand (based on available labor market data) and expected growth and, concurrently, equip its workforce with a variety skills demand (based on the government’s economic strate- of skill sets that meet employer needs. gies). On the basis of this analysis, it makes recommendations The objective of the exercise is to provide the government on skills development and government programs. The third of Botswana concrete suggestions for policy interventions that note uses the findings of an employer-employee survey con- strengthen the skills base of the workforce and thus facilitate ducted in Botswana in 2010 to identify skill needs and gaps economic growth, diversification, and employment. The rec- from the viewpoint of the private sector. The last note examines ommendations offered by this and the other notes that make the skills demand implications of the government’s diamond up the study, are based on analyses of available data and inter- beneficiation (processing) strategy and suggests actions that national best practices. Four policy notes were developed, each can be undertaken to ensure that the nation’s skills base sup- of which touches on crucial aspects of strengthening the coun- ports, rather than hampers, implementation of the strategy. Labor Market Signals on Demand for Skills | 1 1. Introduction benefit more by increasing the supply of sector-specific skills (e.g., through specific training for tour guides and hospital- Botswana has an official unemployment rate of 17.8%.1 The ity staff) or general skills (e.g., through training of lawyers low labor-intensity of growth is a potential explaining factor and accountants who can be absorbed in any sector of the for this high level of unemployment. If most of the econom- economy)? ic activity is concentrated in highly capital-intensive sectors, This note analyzes the following data and documentation part of the working population is bound to stay unemployed. to identify labor market signals in the Botswana economy: But the persistent unemployment may also be due to a lack of • Government economic growth and diversification strate- skills in the work force, which prevents the development of gies.3 The economic sectors and subsectors that the govern- a strong, labor-intensive non-mining sector able to absorb a ment seeks to expand are examined to understand the skills larger share of the workforce. It is thus essential to analyze the that are expected to become increasingly in demand over role of education and training in the access to employment. the short to medium term. This note finds that the role of education has changed un- der the effect of schooling expansion and persistent unem- • General labor market data. Nationwide data on labor mar- ployment. Access to education increased rapidly over the past ket characteristics (e.g., employment and earnings) and the decades. Data analysis shows that it is an essential determi- demand and supply of labor are examined for the broad sig- nant of the access to jobs and of the income level. However, nals they communicate regarding the demand for various the high level of unemployment resulting from the weight levels of education in particular sectors. The larger share of of capital-intensive economic sectors distorts the returns to this information is derived from two national Labor Force education. An increasing share of unemployed workers has Surveys (LFS) carried out in Botswana in 1995–96 and secondary education, and the monetary returns to secondary 2005–06; two Household Income and Expenditure Surveys education seem to have decreased over the past decade. The (HIES) conducted in 1993–94 and 2002–03; and the Infor- average reservation wage may have increased as a result of mal Labor Force Survey conducted by the Central Statistics better education, which may lead to wait unemployment. Office in 2007. In addition, International Labor Organiza- The quality of secondary and tertiary education appears tion’s Key Indicators for Labor Markets (KILM) are also to be a matter of concern, as well as the lack of vocational utilized. training.2 Although the number of educated workers has • Enterprise and employee surveys. Several recent surveys increased, the set of skills they actually command does not provide in-depth information on how employers perceive always compare favorably to other similar middle-income skills constraints, as well as the roles that different skills countries. The country is lagging behind in terms of on-the- play in the recruitment and remuneration of employees. In job training, which hinders the capacity of firms to generate addition to labor market data—which provides basic infor- the adequate skills in the workforce. mation on educational attainment—these surveys provide Labor market institutions appear to have a limited impact detailed information on the importance of actual skills. The on employment and wage levels, while the importance of ac- surveys analyzed include the World Bank Enterprise Sur- tive labor market programs is growing. Wage setting mecha- veys of 2006 and 2010, together with the employers and nisms have been fully liberalized, labor unions are weak. La- employees’ survey specifically designed by the World Bank bor market programs, initially concentrated on rural areas, are (2010) to inform these notes. increasingly targeting SMEs and training. The Government is putting the emphasis on the creation of skilled workforce, di- Overview: Skills Gaps and 2.  versification of the economy, and strengthening of the private sector. Pursuing this paradigm, the national development Mismatches plan for 2003–08 (NDP9) focused on diversification and la- bor-intensive growth, and the current plan (NDP10) aims at This section provides an overview of important findings on enhancing competitiveness through strengthening human the demand for skills in the Botswana economy. These find- resources and building a knowledge-based economy. The at- ings are briefly outlined here, then discussed in detail in the tainment of skilled manpower is envisioned to be achieved individual sections that follow. through continued investment in education and training, Employers perceive skills gaps and mismatches as the most with increased emphasis on the needs of the private sector. important constraint to doing business This note aims to identify labor market signals that point to demand for specific current and future skills. Specifically, The number of employers citing insufficient skills as their the note seeks to answer the following questions: Does the most important constraint has grown steadily over the past labor market place a higher premium on workers’ literacy five years. Larger firms in particular, identify inadequate skills and numeracy skills, technical skills, or behavioral skills? Is as a constraint, as do medium-sized, and foreign-owned. the labor market more in need of secondary or tertiary educa- Nonretail service firms also cite skills as a constraint. Given tion graduates? Will growing economic sectors (e.g., tourism) that the service sector generated 45.2 percent of gross domes- 1 Botswana Core Welfare Indicators Survey, 2009–10, as reported at 3 This documentation included “Economic Diversification Drive (EDD): http://www.cso.gov.bw/. Accessed December 7, 2012. Medium- to Long-Term Strategy, 2011–2016,” of the Ministry of Trade and 2 See note 1 in this series: “Raising Botswana’s Human Resource Profile to Industry (2011) and the president’s “Botswana Excellence—A Strategy for Facilitate Economic Diversification and Growth”, World Bank, 2013. Economic Diversification and Sustainable Growth” (2008). 2 | Labor Market Signals on Demand for Skills tic product (GDP) in 2008 and is expected to grow, this find- that participated in the 2010 Employer and Employee Survey ing is of particular concern. in Botswana listed a job-specific skill among the top five skills that they considered most important for either managers or A mismatch between available skills, expectations, and skilled workers. However, job-specific skills become more labor demand is evident important for relatively larger firms. There are substantial observed differences between minimum Nevertheless, temporary postsecondary TVET graduates are educational requirements by employers for staff in various in great demand by firms of all sizes occupations and the much lower actual educational attain- ment of those workers. This finding appears to indicate both Workers with this type of education comprise the largest group mismatches between the demand for and supply of skills in of temporary workers in both exporting and non-exporting the labor market and unrealistic employer expectations of firms, comprising half of all workers recruited on temporary workers’ educational attainment. contracts. They are particularly in high demand by large firms, This mismatch also appears borne out by the considerable where they comprise three quarters of temporary hires. Small time that firms require to fill vacancies, despite high unem- and medium firms have a more diverse temporary recruit- ployment. ment pattern that also includes relatively large shares of hires with lower, upper secondary, and general tertiary education. Unemployment is growing among workers with secondary The next largest groups of short-term hires are workers with education, indicating poor educational outcomes and a high tertiary technical and upper secondary education (14 percent reservation wage and 13 percent, respectively).4 Non-exporting firms appear to There has been a clear shift in the educational attainment of have a stronger need for temporary workers with postsecond- the unemployed in Botswana over the past decade, with ed- ary education than do exporting firms. ucated workers becoming unemployed in greater numbers, particularly those who have completed lower and upper sec- Growth and Diversification 3.  ondary education. Whereas unemployment among lower secondary graduates is likely of greater immediate concern, Strategies: Expected Impact on Skills it appears that the unemployment problem may be moving Demand upward on the skills chain. At the same time, unemployment among the uneducated and workers with primary education Diversification Strategies for Economic Growth has fallen. Botswana’s economic diversification and poverty eradication Earnings data highlight decreasing returns to both lower vision is clearly stated in its “Long Term Vision” document, and upper secondary education (LSE and USE, respectively), also known as “Vision 2016” (Presidential Task Group 1997).5 an indication that either the demand for skilled labor demand This document calls for new engines of economic growth to is not keeping up with the growth in supply or that secondary reduce the country’s reliance on diamond mining, and higher graduates do not possess the skills sought by employers. At the levels of productivity, employment of skilled workers, and the same time, the high rate of unemployment among LSE and, fostering technological advantages. increasingly, USE graduates, implies that these two groups Vision 2016 has been translated into, among other docu- may need to adjust their earnings expectations—that is, re- ments, several National Development Plans (NDPs), which duce their reservation wages. outline the government’s main policy guidelines for long-term development. NDP 9 and 10 identify six key hubs to support Demand for workers with tertiary education is high and economic growth and diversification: transport, education, increasing innovation, medical services, agriculture, and the diamond While little information is available on the labor outcomes of industry (box 1). NDP 10 (2008–09–2014–15) elaborates pol- workers with tertiary education, rates of return to tertiary ed- icies to develop these hubs. To date, diversification policies ucation are high and increasing. This may imply a large and have mainly focused on the export-oriented manufacture of growing demand for workers with tertiary education relative textiles, leather, glass, and jewellery, as well as the establish- to supply, or it may represent both excessive employer demand ment of an International Financial Services Center. Other and/or inadequate skills among secondary education graduates. sectors that the government considers of strategic priority as potential engines of growth include tourism, the small and Firms of all sizes value personal characteristics and basic medium enterprise (SME) sector, the cutting and polishing of literacy, numeracy, and communication skills more highly gems and precious stones, printing and publishing, and phar- than job-specific skills maceutical production. The relatively low value that surveyed employers attach to Implications for Future Skills Demand vocational skills compared to personal characteristics and general job skills indicate a low level of both basic and behav- Developing and sustaining the priority sectors supported by ioral skills among the workforce. This finding indicates that the hubs requires skills that are quantitatively and qualita- employers in Botswana highly value behavioral skills, which 4 In Botswana, general certificate is equivalent to completion of upper include job attitudes, communication, team work, and prob- secondary. lem solving. It also implies that these skills are not being ad- 5 All government documents cited in this report are identified by the equately taught at the primary and secondary levels. No firm ministry or agency of the Republic of Botswana that produced them. Labor Market Signals on Demand for Skills | 3 Box 1. Six Hubs to Achieve Diversification The government of Botswana has identified areas of focus for enhanced economic development and growth. Six hubs have been established and are being supported during National Development Plans 9 and 10. These hubs and their respective goals are: Education: to increase the quality and relevance of education at all levels, thereby making Botswana more competitive by attracting leading tertiary institutions, scholars, researchers, and students. Innovation: to create a platform for local and foreign businesses engaged in research and development and knowledge-in- tensive activities (e.g., ICT), establish an incubator for start-up companies, and facilitate networking among businesses. Agriculture: to encourage participation in farming, mentor farmers on agribusiness skills, and endeavor to commercialize the agricultural sector to make the industry more sustainable. Diamond Industry: to establish a diamond trade center for rough and polished diamonds and promote sustainable down- stream diamond processing activities, such as polishing and jewelry making. Medical Services: to identify projects and programs to make Botswana a center of excellence in the provision of healthcare services. Plans include the outsourcing of certain hospitals in an effort to attract specialists and optimize the quality of health facilities. Transport: to reposition the country as a regional hub for rail, road, and air transport, and support a competitive transport and logistics industry in Botswana. Source: AfDB (2009). tively superior to those currently available among Botswana’s workers should ideally have at least a basic level of entrepre- workforce. Based on these sectors and their objectives, it can neurial and ICT skills, with higher levels needed by workers be broadly estimated that demand will increase in particular in technical sectors (e.g., telecommunications) and the profes- for the following skills and occupations/professions:6 sions (e.g., managers). Literacy and numeracy skills. Botswana’s strategy to Technical skills. Based on the needs of the six hubs and diversify mostly into higher-value-added sectors implies the tourism industry, table 1 presents a list of the type of across-the-board improvements in labor productivity. Im- workers and specific technical skills for which demand is proved levels of literacy and numeracy of the work force are expected to increase. Although not an exhaustive list, the fundamental to achieve this goal. Policy Note 1 of this series, table illustrates some of the key skill sets that will be need- “Raising the Human Resource Profile to Facilitate Economic ed to build and sustain a diversified economy. It distin- Diversification and Growth,” shows that the literacy and nu- guishes between three different levels of skills, which are meracy skills of students, and by extension, the working-age broadly assumed to correspond to education and training population, are comparatively weak. This situation prevents levels: “low-level skills” (lower or upper secondary educa- the development of highly skilled (professors, researchers) tion), “mid-level skills” (upper secondary or undergraduate and mid-level (technicians, clerks) workers. It also strongly tertiary education), and “high-level skills” (graduate edu- impacts the ability of the economy to increase productivity cation, i.e., master’s and doctoral degrees). While there is through the use of technology. no clear-cut border between the various levels, the distinc- Behavioral skills. On a basic level, the ability to effectively tions highlight that a diversified economy requires not only communicate and engage in team work is an extremely import- different types of technical skills but also skills of varying ant behavioral skills requirement of modern economies. For degrees of depth among workers. high-level jobs, these requirements also include critical think- It should be noted that table 1 lists only a selection of sec- ing and the ability to work independently. To succeed in a mod- tor-specific occupations and professions limited to the priori- ern economy, workers must be able to identify, absorb, process, ty hubs of the government. Additional sector-specific techni- and react appropriately to the changing environment around cal skills will be required to develop the additional industries them. These skills, identified as “behavioral” skills in this paper, (e.g., printing, publishing, pharmaceutical production) that become an increasingly important condition for lifelong pro- have also been identified as potential sources of growth. The ductivity—essential in all lines of work and on all levels. diversification and modernization of an economy is, more- ICT and entrepreneurial skills. In light of government over, generally accompanied by a large increase in generic priorities and the labor force demands of a modern economy, technical functions, which require skills in business and fa- cility management, administration, logistics, and legal and fi- 6 For in-depth reviews of the evolution of skills demand in a variety of de- nancial services. Likewise, workers with a variety of skills and veloping countries, see, for example, di Gropello (2010 and 2011) and World skills levels will be required to improve, operate, and main- Bank (2012). 4 | Labor Market Signals on Demand for Skills Table 1. Expected Skills of Priority Sectors, by Skill Level Low-level skills Mid-level skills High-level skills Education Teachers (various subjects) Professors (various subjects) Research assistants (various specialties) Teacher educators (various subjects) Teachers (various subjects) Researchers (various specialties) Innovation ICT technicians (i.e., installation Research assistants (various specialties) Researcher (various specialties) and/or maintenance worker) ICT staff, mid-level (e.g., web and content ICT experts (e.g., systems designers, designers) software engineers) Business management experts Business management specialists Business financing experts Business financing specialists Agriculture Agricultural extension workers Agribusiness experts (various specializations) Agribusiness specialists and engineers (various specializations) Business management experts (various specializations) Microfinance experts Diamond Markers, bruters, sawyers, Managers and supervisors Managers and supervisors Industry polishers Equipment maintenance technicians Computer programmers Medical Nurse assistants Nurses Medical specialists (various Services Maintenance assistants Radiology assistants, lab technicians, etc. specialization) Unit managers Hospital and/or business managers Equipment maintenance technicians Equipment maintenance specialists Marketing managers Marketing managers Transport Basic-level construction workers Master-level construction workers (e.g., Construction engineers (e.g., plumbers, (e.g., plumbers, welders, plumbers, welders, carpenters, electricians, etc.) welders, carpenters, electricians, etc.) carpenters, electricians, etc.) Airplane and train mechanics Airport operators, pilots, train operators Airplane and train mechanics Tourism Tour guides, trackers, drivers, Hospitality managers, natural reserve managers Tourism policy and strategy specialists park maintenance staff Tour guides, park maintenance experts Hospitality managers, natural reserve Hospitality staff (kitchen staff, Hospitality staff (cooks, waiters, cashiers managers waiters, housekeepers) receptionists) Reserve and wildlife specialists, tour Travel agents, tour operators guides Source: Authors. tain a broad range of infrastructure, including roads, railway force of 710,600 and a total population of approximately systems, energy, water, and information and communication 1.8 million in 2006, the data implies that a working member of technology (ICT) systems. the labor force sustains, on average, 3.5 other individuals who are not earning an income (CSO 2011a). 4. Characteristics of the Labor Force  omposition of the Botswana Labor Force, Figure 1. C Labor participation, employment, and unemployment 2005–06 As defined in this paper, the labor force in Botswana consists of individuals of working age who are either employed or ac- tively seeking work (“unemployed”).7 It excludes individuals Employed of working age who do not work or are not seeking work; 16% Unemployed for example, because they engage in other activities (such as education) or because they do not expect to find employment Inactive opportunities that meet their demands or expectations (“dis- (discouraged) couraged”). 16% 56% Inactive (other) Figure 1 shows the broad composition of the overall labor force among the employed, unemployed, and inactive (con- sisting of both discouraged workers and individuals who are 12% not part of the labor force for other reasons). Given a labor 7 Unless otherwise indicated, data in this section originates from the La- bor Force Surveys of 2005–06 and 1995–96. The term “employed” refers to all those who are working, formally or informally, for pay (in cash or kind) or who are self-employed for profit or family gain. Source: CSO 2008a. Labor Market Signals on Demand for Skills | 5 Although labor force participation is high in Botswana, Equal shares of primary education graduates are also em- unemployment is also significant. Among individuals 12 years ployed and unemployed. of age and older who are considered part of the working-age population in the country, 68 percent were in the labor force  ducational Attainment of Employed and Table 2. E in 2006. If the working age is narrowed to between 20 and 60 Unemployed Botswana, 1995–96 and 2005–06 years of age, 80 percent of this group was in the labor force in (percentage) 2006—a higher share than in surrounding countries. Among Unemployed Unemployed Employed individuals who are not in the labor force (“inactive”), approx- 1996 2006 2006 imately half are assumed to be discouraged workers.8 In that Never attended 25 14 4 same year, 17.5 percent of the labor force was unemployed, a decrease from 21.5 percent in 1995–96. Primary education 40 26 26 In terms of employment, approximately 82.5 percent of Lower secondary people over 12 years of age who wanted to work were actu- education 26 37 27 ally employed in 2006 (this excludes the discouraged work- Upper secondary ers). Clear gender differences exist: 72 percent of working-age education 9 22 26 men are employed, compared to 65 percent of women. Em- Higher education — — — ployment, and to a slightly lesser extent, unemployment are Source: Labor Force Survey, 1995–96 (1998) and CSO (2008a). fairly evenly split between rural and urban areas. A bit less Note: not available. than half of the employed reside in rural areas, a proportion The data columns do not add up to 100 percent because the table does not include data on the employment and unemployment of individuals who that has remained stable since 1995–96, whereas the majori- were enrolled in education. ty (57 percent) of the unemployed are located in urban areas. However, underemployment is a more serious issue in rural Despite high unemployment rates, Botswana workers— areas. particularly LSE graduates—appear to have a rising res- Unemployment is comparatively higher among women ervation wage (i.e., the wage that induces them to accept (19.7 percent and 15.3 percent for women and men, respec- paying employment), which may be a principal cause of un- tively) and the young, particularly the unskilled young. employment among this group. Better-educated individuals Workers between the ages of 15 and 34 years old make up who are able to find remunerative work but refuse it tend to 72 percent of the unemployed. For the cohort of 20–24-year- have higher expectations of their earnings capacity, as well as olds, unemployment rates are 35 percent. Unskilled youth are a household or public safety net that allows them to remain even worse off: more than 60 percent of unskilled 15–19-year- without personal earnings for a longer period of time while olds were looking for but not finding work in 2006 (Siphambe they queue for jobs.9 By contrast, individuals without educa- and Okurut 2011). tion often cannot afford to reject available job opportunities. Despite high unemployment rates, firms take consider- The government is cognizant of the phenomenon and this has able time to fill vacancies, which may indicate that available been mentioned at high levels including by the Minister of Fi- labor does not possess the skills in demand by employers nance and Development Planning (MoFDP). (World Bank 2010c). The occurrence of high unemployment One can conclude that the rising share of the better-educat- alongside difficulties in filling vacancies may also reflect inef- ed among the unemployed is partly due to the greater supply ficient labor allocation mechanisms, such as employment ser- of these workers (i.e., LSE and USE graduates) relative to job vices and career counseling in the education sector. opportunities and partly to increased unemployment among Educational attainment of the labor force the better educated. This raises a major concern that second- ary education, particularly lower secondary education, may Over the period 1995–96–2005–06, unemployment in- not be providing students the quality and content of skills use- creased by 2 and 4 percentage points among lower and ful for employment. upper secondary education graduates respectively, while broad unemployment among unskilled workers and prima- ry education graduates fell substantially (which can likely be largely attributed to an improved skills level among work- ers). Nevertheless, education clearly increases an individu- al’s employment prospects. Table 2 shows that three times as many individuals who never attended school are unemployed 9 Strong representation of workers with a certain level of education among than employed (14 percent versus 4 percent in 2006). Of note, the employed implies that there are relatively many options for individuals with this education level to work for a remuneration that is acceptable to whereas substantially more lower secondary education (LSE) them. In other words, by working (either formally or informally, as employee graduates are employed than unemployed (37 percent versus or as self-employed) these individuals can earn income (whether monetary 27 percent), the distribution between the two categories is or in kind) that make it worthwhile to work compared to other options much closer to equal among upper secondary education grad- (e.g., leisure, education) available to them. Overrepresentation of workers uates (22 percent unemployed versus 26 percent employed). with a certain level of education among the unemployed implies that there are relatively fewer acceptable options available to these workers. This does not necessarily imply that there are no earnings opportunities at all, but that there 8 Persons indicating that they were “waiting for a reply” were included are relatively few acceptable options. For example, workers with a secondary among the discouraged, rather than the unemployed. This group makes up education or greater make up only 42 percent of the labor force in Egypt, but approximately 12 percent of the discouraged. they account for 80 percent of the unemployed (World Bank 2008). 6 | Labor Market Signals on Demand for Skills 5. Employment and Earnings Patterns that agriculture has become the economic sector of last re- sort for unemployed workers. It would seem that the sector is Employment by sector absorbing excess labor from the industrial and services (both formal and informal) sectors.12 Employment by major economic sector in Botswana in 2006 was as follows: agriculture (30 percent), wholesale and retail Salaried and non-salaried employment trade (14 percent), and public administration (11 percent). In line with the tripling of the number of individuals work- Together, these three sectors employ more than half of the ing on family farms (from 9 to 27 percent) the share of sal- country’s workforce (either formally or informally). Other aried employment in the economy fell by almost 25 percent sectors that provide substantial shares of employment include from 1995–96 to 2005–06. Figure 3 shows that 60 percent of education, manufacturing, and construction. Of these rela- workers in 2005–06 were paid employees, followed by 24 per- tively large sectors, only agriculture and wholesale and retail cent who gained earnings from their own farms and/or lands trade have increased their share of total employment in re- (24 percent). Much smaller shares of workers were self-em- cent years. Real estate, transport, and communication have ployed (with or without employees) and unpaid workers in also increased their shares, but the share of total employment their own households. of all other economic sectors has decreased (figure 2).  alaried and Non-salaried Employment, Figure 3. S  omparison of Employment by Industry Figure 2. C 1995–96 and 2005–06 1995–96 and 2005–06 (percentage) 80 35 1995–96 2005–06 2005–06 1995–96 70 30 60 25 50 20 40 15 30 20 10 10 5 0 0 Paid Self employed Self employed Unpaid Own farm/ employees with without family helper lands Wholesale and Retail Public Administration Education Manufacturing Construction Real Estates Private Households Transport and Comm. Hotels and Restaurants Mining and Quarrying Others Agriculture employees employees Source: Labor Force Survey 1995–96 (1998) and CSO (2008b). The increase in the share of what tend to be low-earning jobs at the expense of more preferable paid jobs supports the Source: Labor Force Survey 1995–96 (1998) and CSO (2008b). Note: Figures includes formal and informal employment. assumption above that subsistence agriculture has become the sector of last resort at a time when growth in better em- Public and private sector employment, formal and informal ployment opportunities has not kept up with the growth of a more educated, and presumably more skilled, workforce. The balance of employment in the country is in the private It should be noted that government income-support programs sector, with the largest share of workers employed in tradi- in agriculture, including the Labor-Based Drought Relief Ini- tional (i.e., subsistence) agriculture. The past two Labor Force tiative and the Labor-Intensive Public Works Program, may Surveys (1995–96 and 2005–06) show a substantial increase be perpetuating employment in subsistence agriculture. These in the share of employment in the formal private sector and programs seek to supplement the incomes of poor rural res- a decrease in both public and informal sector employment.10 idents and create productive or socially useful activities; they The increase in agricultural employment from 9 percent in operate mainly during the off-farm season, but have also been 1995–95 to 27 percent in 2005–06 cannot be clearly attribut- deployed during drought periods (Siphambe and Okurut, ed to a certain policy change. Given that agricultural earnings 2011). have been two to three times less than worker earnings in the Although commendable steps to support more vulnerable second-lowest-paying sector (commerce or community and segments of the population, these government initiatives— personal services) since 1985,11 this difference may indicate particularly the long-running Labor-Based Drought Relief Initiative established in the 1960s—can inadvertently trap in- 10 When parastatal employment in included, the public sector becomes the second largest employer, providing work to a bit less than one quarter dividuals in a low-level equilibrium of low-paying jobs. These of all workers. (Parastatals include a wide range of enterprises/semi-autono- programs need to be revisited in order to direct government re- mous entities owned at least 50% by the Government, either profit making or sources into activities that have greater potential to generate al- non-profit making.) ternative employment and income in the agriculture sector, for 11 The nominal average monthly earnings in agriculture in Botswana is 883 pula, compared to 1,804 pula for community and personal services and the 2008 national monthly earnings average of 3,990. 12 Labor Market Signals on Demand for Skills | 7 instance, by expanding support for the use of more sophisti- tends to pay better than the private sector, a situation that has cated technology in crop production and livestock cultivation. the likely unfortunate impact of increasing the reservation wage of low-skilled Botswana workers, and thus encouraging Earning patterns by education level greater unemployment. Using education as a proxy for skills level, the LFS of 1995–96 and 2005–06 and the HIES of 1993–94 and 2002–03 reveal Employment patterns of expatriate workers that education is the key determinant of being employed In June 2011, approximately 16,000 foreigners were legally in skilled occupations, with higher education a more sig- working in Botswana.14 Some 28 percent of these workers nificant determinant than upper secondary education.13 are employed in elementary occupations.15 The remaining Unsurprisingly, higher levels of education are associated with breakdown of their employment by occupation was: 19 per- higher earnings. cent in professional occupations, followed by 16 percent who The rate of return to tertiary education has more than were employed as craft workers, 16 percent as technicians, doubled from 1993–94 to 2002–03, from 11 to 24 percent, and 12 percent as managers (CSO 2011b). Distribution of while that of upper secondary has plunged from 36 to 8 per- expatriate workers by sector indicates acute skills shortag- cent, and lower secondary, from 26 to 15 percent, implying es in construction, which employed about 30 percent of for- that a downward adjustment process is occurring in which eigners with work permits in 2011, but only 5 percent of the demand is less strong relative to supply for secondary educa- Botswana workforce. Another 30 percent work in agriculture, tion graduates. The high rate of return to tertiary education but it is unclear whether this number implies a shortage of relative to primary and secondary education (9 percent for managerial skills or cheap unskilled labor in the sector (the primary, 15 percent for LSE and 8 percent for USE) in 2003 Central Statistics Office reported in 2011 that few foreign appears to indicate the primary and secondary education workers were employed as skilled agricultural workers). Only are not delivering the skills needed by employers, as well as very small numbers of expatriates worked as clerks or service an imbalance in the demand for and supply of workers with and sales workers (CSO 2011b). secondary education (figure 4). The 2010 enterprise survey discussed in following section (World Bank 2010c) found that the most common positions Figure 4. Returns to Education in 1993–94 and 2002–03 for which expatriates are recruited are engineers, accoun- tants, and managers, for which skilled Botswana would 40 2002–03 1993–94 appear to be in short supply. Two-thirds of foreign workers in 2011 were employed; the other third was self-employed, 35 36 mainly in trade and real estate (about 27 percent of all self-em- 30 ployed foreign workers in each sector), and manufacturing and construction (around 13 percent). 25 26 20 24 Employer Demand for Education 6.  and Skills 15 15 This section fills in some of the information gaps regarding 10 9 11 the demand for skills by analyzing the responses of employ- 7 8 ers to various surveys, including the World Bank Enterprise 5 Surveys of 2006 and 2010 and the skills-focused Employer 0 and Employee Survey in Botswana (EESB) conducted in 2010 Primary Lower Upper Tertiary Secondary Secondary by the World Bank in collaboration with MoESD explicitly Source: CSO (1995 and 2004). for this report.16 The findings of these sources show that most employers highly value the type of general skills described in box 2 below which are in very short supply in the country. While the data in figure 4 should be interpreted with cau- tion, the figure supports the need to improve the quality of Skills seen as growing constraint to doing business education, particularly at the primary level, but also at the secondary level. It is difficult to determine whether the high The share of Botswana firms identifying insufficient skills and increasing returns to higher education imply that the la- as the key constraint to doing business has increased from bor market would benefit from a rise in the supply of labor 10 percent in 2006 to 18 percent in 2010 (World Bank 2006 with this level of education, or whether improving the quality and relevance of secondary education would deliver workers 14 The largest shares of this group were nationals of Zimbabwe (39 per- with the skills in demand on the labor market. cent), China (22 percent), and South Africa (11 percent) (CSO 2011b). Finally, there is a substantial wage compression in the 15 That is, laborers in mining, construction, manufacturing, and transport. 16 The ESSB sought to obtain additional information on the changing na- public sector. For lower-skilled workers, the public sector ture of the demand for skills, the extent to which younger recruits comply with this demand, and the role of training in skills development. The survey 13 This finding resulted from applying Heckman 2-Stage Models with sam- was carried out August and September 2010 in the two main urban centers ple selection on LFS data from 1995–96 and 2005–06 to estimate the determi- of Botswana: Gaborone and Francistown. The random sample consisted of nants of the demand for skilled labor. formal small, medium, and large enterprises and their employees. 8 | Labor Market Signals on Demand for Skills Box 2. Higher-Order Skills for the World of Work in the 21st Century It is now recognized that beyond formal qualifications, what is needed to function effectively in twenty-first-century econ- omies is the ability to use knowledge and other personal and social skills to complete tasks and solve problems as they arise. This broad group of abilities is generally called “skills” or “generic skills” because they are not specific to a job and are transferrable across employers. While there is no international consensus on key generic skills, most experts would agree that they include both basic and higher-order skills. Basic skills include reading, writing, computation, and the ability to use technology. Higher-order skills can be cognitive (e.g., learning to learn, problem solving, and creative thinking) or behav- ioral (e.g., communication, negotiation, and teamwork). The Organization for Economic Co-operation and Development (OECD) list of key “competences” includes, in addition, the ability to act autonomously—that is, to perform and conduct one’s own life plans—a skill that is particularly important in the modern world, where stable lifelong employment is less common. Source: Adapted from Sondergaard and Murthi (2012). and 2010). This result differs substantially from those of other as size, economic sector, export status (exporting or non- countries in Sub-Saharan Africa, where access to electricity exporting), and type of ownership (domestic or partly for- and finance are generally ranked the most important con- eign-owned) differ in their valuation of skills as a constraint. straints. On average, only 3 percent of firms in Sub-Saha- Surprisingly, skills are perceived as a strong impediment ran Africa consider skills a key constraint to doing business. in particular by non-retail service firms (23 percent). As Similarly, firms in upper-middle-income countries are more could be expected, medium and large firms, together with for- likely to perceive tax rates, access to finance, and informal eign-owned firms, also found them a key constraint (22 per- sector practices as key constraints, not workforce skills. (On cent, 38 percent, and 24 percent, respectively). However, so average, only 10 percent of firms in upper middle-income did non-exporting firms (18 percent). countries identify skills as their main impediment.)17 These findings correspond with the assumption that non- Table 4 shows how firms with different characteristics, such retail service providers, larger firms, and foreign-owned firms have a relatively skill-intensive demand for labor and therefore 17 World Bank (2007). find it harder to adequately staff their enterprises. Neverthe- Comparison of Skills Constraints Identified by Firms in 2006 and 2010 Table 4.  (percentage) 2006 2010 Firms ranking skills Ranking of skills among Firms ranking skills Ranking of skills among as key constraint other constraints as key constraint other constraints Botswana overall 10 4 18 1 By sector: — Manufacturing n.a.* n.a.* 16.2 2 Retail 8.2 5 13.1 2 Other services 11 3 23 1 By firm size: Small (5–19) 5 8 11.3 4 Medium (20–99) 20.5 1 22.4 1 Large (100+) 22 1 38 1 By exporting type: Exporting** 24.8 1 11.9 4 Non-exporting 9.5 3 18.2 1 By ownership: Domestic 6.3 5 12.9 4 Foreign*** 14.4 2 23.6 1 Source: World Bank 2006 and 2010. Notes: n.a. – not applicable. * The 2006 data does not aggregate figures for manufacturing firms. ** Direct exports are over 10 percent of sales. *** Foreign ownership is greater than 10 percent. Labor Market Signals on Demand for Skills | 9 less, non-exporting firms appear to have more problems a surprising finding and may represent both unrealistic em- finding appropriate skills in potential employees than do ployer expectations and inadequate skill levels of workers exporting firms, even though one would expect the opposite. with lower levels of education. Although the large discrepan- With the notable exception of exporting firms, the majority cy between minimally required and actual educational attain- of firms considered skills a more important constraint in 2010 ment suggests a mismatch between the demand and supply than in 2006. Exporting firms were among the few types of of skills, actual educational levels may better correspond to employers that identified access to finance, licensing and per- job requirements. mits, and access to land as substantially more important con- straints (ranked by 35, 21, and 18 percent of exporting firms, Employers value personal characteristics and basic job skills respectively) than insufficient skills. over job-specific skills Based on employer ratings of the most important skill require- Mismatch between employer expectations and actual ments for leaders (i.e., managers and professionals) and skilled worker educational attainment workers (e.g., production, administrative, sales, technical, and With the exception of elementary occupations, an often sub- crafts workers), it is clear that firms esteem personal char- stantial majority of employers seek tertiary education in their acteristics and basic skills more highly than job-specific or employees. At the same time, the actual attainment of workers technical skills—even for leaders (World Bank 2010c). in all occupational categories is consistently and substantially The EESB survey grouped skills requirements into three cat- lower than the minimum educational requirement identified egories: personal characteristics, core skills, and job-specific by employers (table 5). The demand for tertiary education is skills. Personal characteristics were defined as innate traits, Table 5. Minimum Required and Actual Levels of Worker Educational Attainment, by Occupation Education level Minimum required* Actual average** Tertiary technical (39%) General certificate (24%) Managers Tertiary general (36%) Junior certificate (23%) Post-secondary TVET (21%) Tertiary general (54%) Tertiary technical (38%) Professionals Tertiary technical (43%) General certificate (33%) Post-secondary TVET (28%) Tertiary general (39%) Post-secondary TVET (40%) Technicians Tertiary technical (25%) General certificate (34%) Post-secondary TVET (22%) Tertiary technical (29%) General certificate (31%) Clerks Tertiary general (26%) Junior certificate (30%) Post-secondary TVET (26%) Tertiary technical (43%) General certificate (26%) Service and sales workers Post-secondary TVET (26%) Junior certificate (24%) Tertiary general (26%) Primary education (22%) Skilled agriculture, fishery, and forestry Tertiary technical (67%) Post-secondary TVET (56%) workers Tertiary general (33%) Tertiary technical (33%) Tertiary general (35%) Completed primary (37%) Craft workers Tertiary technical (48%) Junior certificate (32%) Not completed primary (30%) Tertiary general (35%) Primary education (37%) Plant and machine assemblers and operators Tertiary technical (48%) Junior certificate (32%) Not completed primary (30%) General certificate (43%) Not completed primary (24%) Elementary occupations Junior certificate (37%) Primary education (24%) Primary education (21%) Junior certificate (20%) Source: World Bank (2010c). Notes: General certificate means General Certificate of Completion of upper secondary education. Junior Certificate means a certificate of completion of lower secondary education. * Lists educational levels that 20 percent or more employers indicated as the minimum for an occupation. ** Lists educational levels that 20 percent or more employees have actually attained. 10 | Labor Market Signals on Demand for Skills Educational Attainment of Permanent Workforce, by Firm Size and Export Status Table 6.  (percent of total employees) Size of firm Export status Total Small Medium Large Exporting Non-exporting Number of firms 415 78 18 125 386 511 Did not complete primary school 1.1 1.8 3.8 2.9 2.6 2.7 Completed primary school 4.7 9.0 7.2 8.1 6.7 7.0 Junior certificate 26.0 23.5 22.1 20.9 24.2 23.4 General certificate 36.6 28.9 26.7 31.8 28.9 29.6 Postsecondary TVET 16.1 15.6 24.7 14.6 22.5 20.5 Tertiary technical education 7.3 12.7 7.3 9.8 8.1 8.5 Tertiary general education 6.9 6.3 7.0 10.9 5.5 6.8 Postgraduate education 1.2 2.2 1.2 1.0 1.5 1.4 All categories 100.0 100.0 100.0 100.0 100.0 100.0 Source: World Bank (2010c). such as honesty, commitment, hard work, and punctuality. though workers with secondary education also made up about Core skills were defined as aptitudes required for employment half of the workforce. Medium-size firms, on the other hand, that can be learned over time, either at school or elsewhere. employed a relatively large share of tertiary technical educa- This category included such skills as basic literacy, numera- tion graduates (13 percent). Assuming that tertiary technical cy, communication, problem solving, and team work. The last education graduates have somewhat similar but better skills category, job-specific skills, was defined as theoretical knowl- than postsecondary TVET graduates, this may indicate that edge, educational attainment, and specific job experience re- medium-size firms are more technically advanced than both lated to particular occupations. smaller and larger firms in Botswana. Of note, exporting firms Although the majority of employers rated 80 percent of employed a larger share of workers with general tertiary edu- the 30 skills identified in the survey as “very important” for cation, while non-exporting firms employed a larger share of leaders, they named honesty, commitment and hard work, postsecondary TVET graduates (table 6). reliability and punctuality, communication, and team Postsecondary TVET graduates are in great demand by working skills as the five most valued skills for both leaders firms of all sizes and comprise the largest group of tempo- and skilled workers (figures 5 and 6). Job-related skills were rary workers in both exporting and non-exporting firms. generally valued for leaders, but to a lesser extent. Their practi- Of all the workers that are recruited on temporary contracts, cal knowledge of a job was, for example, ranked only 16 out of half fall into this category. The next largest groups of short- 30. Skills that were not considered “very important” or “cru- term hires are workers with tertiary technical education and cial” by a majority of employers were mostly job-specific skills general (secondary) certificates (14 percent and 13 percent, related to educational credentials and the possession of ad- respectively). Firm size does however, appear to determine the vanced vocational competencies. relative importance of postsecondary TVET graduates. They A majority of employers considered fewer skills to be “very are particularly in high demand by large firms, where they important” or “crucial” for skilled workers (10 skills for skilled comprise three-quarters of temporary hires. Small and medi- workers, compared to 24 for leaders). In addition to the top um firms have a more diverse temporary recruitment pattern five skills cited above, employers valued the desire to learn, that also includes relatively large shares of hires with lower, adaptability, and customer care skills in skilled workers. As upper secondary, and general tertiary education. with leaders, job-specific skills were considered relatively less Non-exporting firms appear to have a stronger need for important than personal characteristics and core skills. temporary workers with postsecondary education than do exporting firms (51 percent compared to 39 percent), which Educational attainment of workers varies by firm size and displays a temporary recruitment pattern similar to that of export status small and medium-size firms. It is unclear why non-export- Of the firms that participated in the survey, smaller enterpris- ing firms rely more heavily on both permanent and temporary es tended to have a permanent labor force of workers with postsecondary TVET workers than do exporting firms, which upper and lower secondary education, with 37 percent of all may be a worthwhile future topic of analysis. One possibility is workers having general certificates, and 26 percent, junior cer- that these differences result from the fact that non-exporting tificates. Medium and large firms had a relatively larger share of firms engage in different economic sectors that use different workers with postsecondary TVET education (25 percent), al- production processes. Labor Market Signals on Demand for Skills | 11 Employer Skill Rankings for Managers, from “Not Important” to “Crucial” Figure 5.  Honesty Commitment and hard work Reliability and punctuality Communication skills Team working skills Customer care skills Responsibility reliability and trustworthiness Problem solving skills Ability to work independently Planning and organizing skills Motivation and commitment Desire to learn and adaptability Literacy skills (reading and writing) MANAGERS Numerical skills Self management and entrepreneurship Practical knowledge of the job Use of ICT Previous work experience in the same eld Minimum required level of education General experience in a work place Personal appearance Theoretical knowledge of the job General vocational job-speci c skills Other physical: attributes (eg. tness, health) Advance vocational job-speci cs skills Domestic post-secondary education Core skills Grades and transcripts Job related skills Previous work experience in di erent eld Foreign language Personal characteristic Foreign post secondary education 0.00 50.00 100.00 Source: World Bank, 2010c. Employer Skill Rankings for Skilled Workers, from “Not Important” to “Crucial” Figure 6.  Commitment and hard work Reliability and punctuality Honesty Desire to learn and adaptability Customer care skills Responsibility reliability and trustworthiness Ability to work independently Motivation and commitment Team working skills Communication skills Literacy skills (reading and writing) Problem solving skills SKILL WORKERS Practical knowledge of the job Personal appearance Planning and organizing skills Minimum required level of education Numerical skills Other physical: attributes (eg. tness, health) Previous work experience in the same eld Self management and entrepreneurship Use of ICT Theoretical knowledge of the job General experience in a work place Domestic post-secondary education General vocational job-speci c skills Advance vocational job-speci cs skills Core skills Grades and transcripts Job related skills Previous work experience in di erent eld Foreign post secondary education Personal characteristic Foreign language 0.00 50.00 100.00 Source: World Bank, 2010c. 12 | Labor Market Signals on Demand for Skills Educational Attainment of Temporary Workforce, by Firm Size and Export Status Table 7.  (percent of total employees) Size of firm Export firm Total Small Medium Large Exporting Non-exporting Number of firms 415 78 18 125 386 511 Did not complete primary school 0.0 3.4 0.0 0.0 1.3 1.2 Completed primary school 7.8 7.5 7.5 0.0 8.1 7.6 Junior certificate 13.0 17.1 1.5 14.3 8.6 9.0 General certificate 23.4 20.5 4.0 21.4 12.7 13.3 Post-secondary TVET 31.2 26.7 75.4 39.3 51.3 50.5 Tertiary technical education 23.4 14.4 9.0 25.0 12.7 13.5 Tertiary general education 1.3 10.3 2.5 0.0 5.3 5.0 All categories 100.0 100.0 100.0 100.0 100.0 100.0 Source: World Bank (2010c). Larger firms need the most time to fill vacancies, regardless Short-term recommendations: of the educational attainment requirement • Focus and prioritize the quality of inputs supplied to remote Larger firms report needing more time to fill vacancies for any and rural schools to ensure equitable distribution of basic type of occupational level than do small and medium firms. education resources and outcomes. For example, large firms that participated in the survey need- • Urgently complete the Botswana National Qualification ed, on average, 10 weeks to hire a skilled worker and more Framework and introduce the process of articulation within than 8 weeks to hire a manager. Small and medium-sized the education system. firms needed, on average, 5 and 8 weeks, respectively, for the same tasks. Similar or larger differences apply to the time tak- • Introduce pre-entry courses in STEM college programs to en to hire services and sales workers, clerks, craft workers, and improve the quality of learning at higher levels of education. plant and machine operators. While this finding may indicate • Hire expert trainers in the fields of TVET specialization that that large firms are more skill-intensive and therefore have a are in demand and ensure that technical training curricula harder time recruiting new staff, other factors may be at play. respond to the needs of employers. For example, larger firms may have to comply with more for- mal and time-consuming recruitment procedures than do Medium-term recommendations: smaller-size firms. These firms are also more likely to be able to operate for a longer period of time without filling an open • Adopt a monitoring, evaluation, and research system. position. • Define mechanisms for using the training levy so that these funds cater to the specific needs of employers. 7. Recommendations • Develop a system of monitoring and evaluation for the BTEP apprenticeship program that uses continual feedback Botswana needs to improve the quality and relevance, as well mechanisms. as the skills outcomes, of primary and secondary education. • Attract international talent at the university level—both fac- The country boasts high investments in education, yet fac- ulty and students—through the use of incentives. es significant challenges of educational quality compared to countries with similar levels of GDP per capita. In order Long-term recommendations: to improve educational quality, several major initiatives are needed: (i) the quality of basic education needs to be im- • Establish an educational research institute under MoESD. proved; (ii) the capacity of TVET training staff must be bol- • Redesign the GLS program so that it targets higher-level stered; and (iii) collaboration between universities, industry, STEM skills at the postgraduate level. and other research centers must increasingly be developed so that tertiary education is aligned with the needs of the labor • Develop select University centers in the country as center of market and the nation. In terms of timeline, there are short- excellence in science and technology teaching. term, medium-term, and long-term recommendations for improving education quality. These recommendations are In addition to improving the quality of primary and second- summarized below (for a more detailed discussion, see Policy ary schooling in the country, there are several specific recom- Note 1): mendations to address skills gaps and labor market mismatch- Labor Market Signals on Demand for Skills | 13 es that are constraining economic diversification and growth hubs: education and innovation. The initiation of such a pro- in Botswana. These specific recommendations are only briefly gram would, however, require substantial support from the discussed here because they are addressed in detail by “Ed- government in terms of resources, marketing, and support. ucation for Skills and Competitiveness” (Policy Note 1) and The internship program created by the government could “Skills for the Private Sector” (Policy Note 3). be an additional excellent vehicle for introducing innovative on-the-job business and managerial learning, but only if it is Ensure the incorporation of ICT and entrepreneurial skills expanded into the private sector. in the workforce. Replace Labor-Intensive Income Support Programs in Rural Workers in most sectors would benefit from at least minimal Areas with Infrastructure Investments and Programs that competencies in ICT and entrepreneurship. The acquisition Create Higher-Productivity Employment of these skills can be embedded in the curricula and teaching methods for all levels of education. For those already in the Employment support and public works programs appear to workforce, the government can create a more enabling en- support income generation in rural areas creating a low-tech- vironment to promote access to in-service training on these nology trap. Agricultural production remains based on tra- topics. ditional, subsistence-oriented systems, with limited commer- International experiences can provide some specific exam- cial activities for either crops or livestock. Only 45 percent of ples of ICT programs that are relevant to Botswana, such as: farmers have access to roads, 17 percent to electricity, 22 per- cent to telecommunication, 64 percent to water for livestock, • Developing firm-level management and business skills in 66 percent to water for domestic use, 39 percent to grain stor- the ICT sector by providing management skills training; age, 52 percent to markets and 54 percent to sanitation. New policies are needed to address the low technical level • Developing a critical mass of globally benchmarked and of agriculture and the lack of infrastructure in rural areas. certified software developers by establishing a globally vali- Given that roughly half of employment in Botswana is in dated mechanism and implementing a sustainable training rural areas, it is also urgent to promote higher-productivi- and certification program; and ty employment in those areas or risk increased migration to • Adopting demand based financing of skills and technology urban areas. Specifically, the development of agro-industrial in priority sectors, including ICTs, by supporting ICT firms enterprises and supply chains are needed to drive the growth to upgrade workforce skills. of associated subsectors, such as food processing, transport, and manufacturing. In line with the goals of National De- The World Bank has supported innovative ideas on devel- velopment Plan 10, income support programs in agriculture oping the ICT and ICT Enabled Services (ITES) and Indus- should be phased out as soon as possible and government tries through its New Economy Skills for Africa Program. resources invested instead in the following productivity-en- This program aims to build globally benchmarked skills for hancing programs: the knowledge economy in select countries in the region, in- cluding the examples listed above from Nigeria, Kenya, and • Arable Agriculture Development Program: seeks to develop Ghana. This approach can also support Botswana, in particu- horticultural production, irrigation schemes, the use of waste lar in the aspirations of the Innovation Hub which is trying to water for production, and rain-fed cereal and legume pro- establish ICT incubators. For instance the innovation hub has duction, as well as help farmers improve their productivity. built a Microsoft innovation center in the Science and Tech- • Livestock Development Program: designed to improve the nology Park in Gaborone with a focus on providing training to quality and quantity of beef and dairy cattle, small-stock, start-up companies and students. Above listed examples can poultry and pigs. be further explored by the Hub. • Agricultural Business Development Program: aims to elab- Invest in programs that develop managerial and leadership orate strategies to facilitate the growth of agricultural indus- skills for the export sector tries, as well as monitor and evaluate the sector’s economic performance. In addition to broader policies that encourage exports, man- agerial and leadership skills are needed in the sector, par- • Agricultural Research and Technology Development Pro- ticularly as it grows. The education sector can develop such gram: seeks to develop appropriate technologies to mitigate skills through business and university partnerships, such as production constraints in agriculture, particularly the nega- the successful model of the Olin College Engineering in the tive impacts of harsh environmental conditions. USA, where engineering education is coupled with business • Enhanced Service Delivery Program: designed to support teaching and work experience in the real world. Engineering arable and livestock production by providing agricultural students of this college must establish an operational busi- research staff access to information technology infrastruc- ness in order to graduate. The universities in Botswana could ture, thus enabling outstations to respond more efficiently adopt this kind of model, which would support two priority to demand in the field. 14 | Labor Market Signals on Demand for Skills Conclusion To return to the questions raised at the outset of this Policy groups argues for improved skills acquisition at upper sec- Note, it is clear that the labor market in Botswana places a ondary level. Finally, the future economy of Botswana will premium on general skills, including basic literacy, numer- require workers with both strong general and sector-specific acy, and behavioral skills such as communication and team skills. At this juncture, it appears more efficient to rely on the work. 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