1. STEP Skills Measurement
Sri Lanka
April 28, 2013
The World Bank
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2. Outline
 Rationale
 Phases and Activities of the Study
 Country Context
 Key Findings
 Lessons
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3.  No prior engagement in the skills sector, focusing on
vocational & technical education
 But the Bank is active in both general and higher education sub-
sectors
 GoSL’s vision is to become a competitive middle
income country (MIC), as described in its ten-year
development framework – Mahinda Chintana
 GoSL is concerned about the quality and relevance of
education & training systems, identified skills
development as one of the priority areas in its
development framework
 GoSL requested the Bank’s technical assistance in the
area of the skills sector
Rationale |
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4.  The Bank responded to GoSL’s request with a
proposed programmatic skills study in FY10, before
the launch of the STEP Surveys
Objective of the Study
 to provide analytical inputs about critical policy issues on the
demand and supply of skills;
 to engage the GoSL and key stakeholders in an informed dialogue
on policy directions and options for development of the GoSL’s
skills development strategy to achieve the government’s vision of
a competitive MIC;
Rationale (cont.)|
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5. • Phase 1 Studies (FY11)
– Education, training and labor market outcomes
• Status and trends in skills development
• Training and Labor market outcomes
• Phase 2 Studies and Activities (FY12-13)
– Demand for skilled labor
• HH Skills Measurement Survey (as part of STEP)
• Employer Skills Survey (as part of STEP)
– Skill Supply
• Review of the costs and financing of TVET (including
governance and management)
• Private TVET and public private partnership
• SABER Workforce Development Study
– South-South Knowledge Exchange Program
• Phase 3 (FY13)
– Final Report
Phases and Activities of the Study|
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6. • Sri Lanka’s economy has grown rapidly over the
past decade achieving 8% growth in 2011
• “Mahinda Chintana” envisages increasing per
capita GNP from $2,000 in 2005 to $4,000 by
2016 through equity-led growth
• Sri Lanka is the most educated country in the
SAR region
– Compulsory and free education up to grade 9
– 98% enrollment of 5-14 year olds
– 86 % completion of junior secondary
• Skills is one of the main priorities in MC
Country Context|
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7. Key Findings: Employer Survey (1) |
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0 10 20 30 40 50 60
Finding workers with previous experience
High employee turnover
TVET of workers
Labor availability
Pay taxes and EPF/ETF, etc contributions
Total salary cost
Employment protection legislation
General education of workers
Minimum wage rate
What labor factors are the most problematic for firms’ operations? %
The studies (ES, STEP) identify lack of skills as one of the
most important constraints for firms’ growth and
development

8. Key Findings: Employer Survey (2) |
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0 20 40 60 80 100
Managers
Professionals
Technicians
Clerks
Service
Sales
Crafts
Plant/machine operators
Elementary occupations
Other
Applicants did not like working
conditions
Applicants expected too high
wages
Applicants lacked skills
No or few applicants
Skills constraints of recently hired worker, % of firms
Firms that identify skills as a severe constraint report substantially lower
output

9. Key Findings: Employer Survey (3) |
There are substantial mismatches between
education and skills supply and demand
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Percent of population by education and percent of employers identifying
education levels for highly skilled and low skilled workers

10. Key Findings: Employer Survey (4) |
• What matters the most to retain an employee?
1. Job specific skills and literacy
2. Numeracy, English and team work
3. Other soft-skills
• Substantial share of employers are not satisfied
with types and levels produced by
– General education – more than 60 percent
– TVET system – almost 50 percent
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11. Key Findings: Employer Survey (5) |
• Firms use different strategies to cope with skills
shortages:
– Hiring - even though many firms are in contact
with educational sector providers, many firms (70
percent) use informal channels
– Training – 40 (60) percent of the firms provide
firm-based training for high (low) skilled workers
– Contracting out - 5 (11) percent of firms use this
strategy for high (low) skilled workers
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12. Key Findings: Household Survey |
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Share of population with cognitive skills by education level, 15-64 year olds
0
10
20
30
40
50
60
70
80
90
100
reading
writing
numeracy
reading
writing
numeracy
reading
writing
numeracy
reading
writing
numeracy
reading
writing
numeracy
reading
writing
numeracy
reading
writing
numeracy
reading
writing
numeracy
no education below primary primary (grade
5)
lower
secondary
(grade 9)
passed GCE-O passed GCE-A bachelor master+
low
medium
high

13. Key Findings: Household Survey |
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Change in technical skills by education
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
computer
mechanic
English
physical
-10%
-5%
0%
5%
10%
15%
openness
presentation
team work
Change in soft skills by education
• Technical skills are shaped both by general education (upper
secondary and above) and TVET.
• Except for openness personality traits seem not to be formed in the
education system

14. Key Findings: Skills and Labor Market Outcomes |
Employment
• Writing, numeracy, teamwor
k, and long-term
perseverance are associated
with lower likelihood of
being unemployed
• Technology, computer and
presentation skills are
associated with lower
probability of being
underemployed
Self-employment (informal
economy participation)
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-24%
-22%
-11%
-3%
-2%
17%
10%
7%
-30% -20% -10% 0% 10% 20%
interpersonal
team work
mechanic
decision making
perseverance
English
computer
technology
Change in probability of being self-
employed by skill

15. Key Findings: Skills and Labor Market Outcomes |
Earnings
• returns to higher education (A-levels, bachelor’s
degree, and above) and to TVET have been rising but
neither formal nor informal apprenticeship improves
wages;
• self-reported reading, writing and numeracy do not have
additional returns once education is controlled for;
• use of computers and other technology, English skills, and
mechanic skills are associated with higher wages;
• Socio-emotional skills (extraversion, openness, emotional
stability, agreeableness) are valued in the labor market;
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16. Key Findings: Household Survey |
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• Employment:
– Only numeracy and perseverance are significant
• Wages:
– Cognitive: not significant
– Non-cognitive:
extraversion, openness, agreeableness, perseverance, deci
sion making
– Technical: technology, mechanic and machinery use skills
– TVET graduates have higher wages than individuals
without TVET
– No returns to apprenticeship
Skills and Labor Market Outcomes

17. Key Findings of An Overview of the Skills Supply
System (1)
• Sector Performance
– Poor quality of teaching and learning – largely as a
result of outdated curricula, acute shortages of trained
staff (especially with industrial experience); changing
technology also presents a further challenge, since
many staff are not up date with new knowledge and
technology; and TVET institutions lack modern
equipment and technology
• Cost and Finance
– Inadequate public funding, but also inefficiencies in the
use of available resources
– Lack of incentives for income generation/cost recovery
– Resources are not linked to performance
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18. Key Findings of An Overview of the Skills Supply
System (2)
• Private provision
– Private provision is still limited.
– Inadequate registration and accreditation, largely due to the lack of staff.
• SABER – Workforce Development
– Strong commitment to skills development – considered as a national
priority, aligned with the country’s economic development plan;
– Significant progress in the development of NVQ, but it needs to be reviewed
on a regular basis to make the system more flexible and improve training;
– Partial progress has been made in the involvement of employers, who are
involved at the national level, but more needs to be made to establish a
fully-demand driven skills development system.
– Inadequate national coordination of TVET activities at the national level;
– Inadequate institutional autonomy
– Lack of labor market and sector performance information
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19. Key Findings/Strategic Priorities
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Sri Lanka is facing a major skills constraint as it moves from a
factor-driven economy to an efficiency-driven economy. The
Government identified skills development as a priority area to
provide “skills for all”.
Tentative strategic priorities include:
• The quality and relevance of TVET programs needs to be
improved so that they become both more attractive for youths and
more relevant for employers.
• A demand-driven should be developed, employers playing a
central role.
• The provision of TVET should be further diversified, by
increasing the role of the private sector; and
• The TVET system needs to be adequately resourced, and funds
allocated must be used efficiently and linked to performance.

20. Key Findings of the Study (cont.) |
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• Flexible and accountable governance mechanisms are
needed at all TVET levels, with their components
coordinated not only with each other but also with all
system stakeholders.
• The skills needs of the informal sector should be
addressed with specifically targeted mechanisms.
• The skills needs of companies relying on enterprise-
based training need to be specifically addressed.
• The monitoring and evaluation system, including labor
market information system, needs be strengthened.

21. Lessons |
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• Finalizing questionnaire takes a lot of time!
• Establishment of the study team (e.g., survey consultant, local survey
firm, research analyst) takes time
• Obtaining sampling frame from the Department Census and Statistics
(DCS) is very difficult especially for the employer survey
– Last firm Census is 10 years old
– The sampling framework was requested in July 2012, obtained in mid-October
2012
• Implementation – required the review and approval of several
Ministries and Agencies (e.g. Ministry of Youth Affairs and Skills
Development, Ministry of Public Administration).
• Survey results are very useful to provide a diagnostic analysis of skills
demand and analysis, but a detailed analysis of economic sectors
(e.g., manufacturing, tourism, service) and sub-education sectors
(e.g., primary, secondary, TVET, higher education) require larger
sample sizes, increasing the cost of the surveys.
• Ownership of the Government is essential!

22. Thank you
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