How About Reaping a Rich Demographic Dividend! Prioritizing Education and Skills Development in the South Asia Region

The South Asia region or the Indian Sub-Continent that forms the South Asian Association for Regional Cooperation (SAARC) bloc is at the forefront of the new world economic order today – thanks to its robust growth rates. Over the last 20 years, the region has remained among the fastest growing in the world, witnessing an average economic growth rate of 6 percent a year, 2016 being no different. The area has remained resilient to the growing economic and financial turbulence in the world– be it the global trade patterns or the jittery international markets– which coupled with monetary policy asymmetry, caused the global growth to collapse; on the contrary, South Asia has portrayed an impressive growth story all this while. Bolstered by India’s robust growth performance, South Asia remains the fastest growing region in the world today. That is not all. The forecasts are also positive. According to World Bank’s Fading Tailwinds (Report – 2016), economic growth in the region is expected to gradually accelerate from 7.1 percent in 2016 to 7.3 percent in 2017.

There is some more good news to cheer. The South Asian countries have improved when it comes to human development. Among the developing regions worldwide, United Nations Development Programme (UNDP) has reported that the South Asian region has made the fastest human development progress with an average annual growth rate in HDI values of 1.4 percent compared to the world average of 0.7 percent in the last 25 years.

The question, then, arises that with such an impressive growth record and progressing human development, why is SAARC still mired in myriad socio-economic challenges – be it inequality, poverty, gender-based discrimination, unemployment, food security, social exclusion, etc. According to UNDP’s Asia-Pacific Human Development Report (2016) human development losses from inequality stood at 28.7 percent in South Asia as against 22.8 percent for the world, the highest being in access to education and longevity in the region. Also, the Gender Inequality Index (GII) in which South Asia has unfortunately scored higher than the global average (19.3 percent), indicates widespread discrimination in the region. 17.9 percent of South Asia’s population still lives in near multidimensional poverty, which as per the Multidimensional Poverty Index (MPI), is the highest globally. Moreover, the region still accounts for two-thirds of the world’s underweight children and leads other regions in the share of low-birth-weight children – a sign of malnourished livelihoods.

While there are no quick answers and immediate solutions, one can certainly ascertain ways and means to mitigate and eventually eradicate such problems in the long run. Perhaps, it is time to actively unlock the growing potential of human capital in SAARC to reap a sizeable demographic dividend which could, in turn, drive the overall development process of the region.

Potential Size of Demographic Dividend

South Asia has witnessed rapid demographic changes over the last few decades – a transition which signifies the scope of reaping the rich demographic dividend. The region is already home to one-fourth of the world’s total population, proudly owning three among the world’s ten most populous countries – India, Bangladesh, and Pakistan. In years to come, it is expected that nearly three-fourths of the increase in Asia-Pacific’s population will occur in South Asia, where the total population is projected to rise by 600 million by 2050.

Besides a rising population, SAARC countries are experiencing an age structure transition –a phenomenon by which high mortality and fertility rates are replaced by low ones. For instance, the region has seen a commendable fall in Infant Mortality Rate (IMR) from about 160 per 1000 live births in the 1960s to around 43 in 2014. A related indicator of declining mortality is rising life expectancy. The life expectancy at birth has also improved from less than 46 years in the 1950s to over 65 years by 2010 and a little over 68 years by the year 2014. In fact, since the early 1950s, life expectancy in South Asia has increased by a stunning 30 years, faster than most of the regions of the world. It has been reported by UNDP that life expectancy at birth is expected to climb to 77 years by 2050 globally, with significant increases in the developing regions such as that of South Asia.

Figure 1: Changes in Life Expectancy

(2010–2015 to 2040–2050) in South Asia vis-a-vis the World

Source: Based on UNDESA 2015a. (Extracted from UNDP’s Asia Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’)

In response, the region’s Total Fertility Rate (TFR) has declined sharply from nearly six births per woman to 2.6 births in the corresponding periods. In comparison with the other developing and developed countries of the world, most of the South Asian countries have reached the average fertility rates, with fertility being just above the replacement level.

Figure 2: Fertility rates of the South Asian Countries vis-à-vis Other Asia-Pacific Countries

Source: Based on UNDESA 2015a. (Extracted from UNDP’s Asia Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’)

The crude death rate per 1000 people has also fallen rapidly from 22 in the 1960s to 7 in 2014 in the SAARC bloc. In fact, the region has depicted the steepest drop-off in crude death rates in comparison to many other parts of the Asia-Pacific.

Figure 3: Crude Death Rate of South Asia vis-à-vis Other Asia Pacific Regions

Source: Based on UNDESA 2015a. (Extracted from UNDP’s Asia Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’)

Declines in IMR and child mortality rate are in fact the first stage of the demographic transition. As a result the inverse dependencies are rising. The proportion of the dependants in the total population is reducing, and that of the working-age population is increasing. Figures speak more than words. The ratio of dependents to the working-age population in the region has experienced a steep fall from 77 per 100 working-age population in 1960 to 55 in 2015.

The regional countries are particularly categorized under three stages of demographic change – those in advanced stages of demographic transition, those closer to reaching a peak in their working-age population. These countries are those that are endowed with the higher potential to reap a demographic dividend, and lastly, those countries with still very young population. For instance, Sri Lanka, which was the earliest among all the SAARC countries to experience a demographic transition following a rapid decline in fertility rates in the 1960s, is expected to reach its peak of working-age people soon after 2030. On the contrary, India, Bangladesh, Bhutan, the Maldives, and Nepal fall in the second category of demographic change as they are nearing their peak between 2015 and 2055. Nevertheless these countries are expected to see considerable growth in the size of their working-age population until the year 2030.Afghanistan and Pakistan are relatively young countries, and they are projected to witness significant growth in working-age population beyond 2050.

Table 1: Changes in the Sizes of Working-Age Population of South Asian Countries

between 2015–2030 and 2030–2050

Demographic Stages and Countries	2015–2030 (% change)	2030–2050 (% change)
Countries in advanced stages of demographic transition
Sri Lanka	2	(11)*
Countries with a short window until reaching peak working-age populations
Bhutan	20	0
Bangladesh	23	5
India	20	11
Maldives	25	6
Nepal	28	12
Countries with still young population
Afghanistan	58	41
Pakistan	37	32

Source: Based on UNDESA 2015a.(Extracted from UNDP’s Asia-Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’)

Considering the medium-fertility scenario, it has been estimated by the United Nations that the ratio of working-age to non-working-age population would reach its peak for most South Asian countries in 2040. Experts have also predicted South Asia’s working-age population to rise in years to come. For instance, researchers like David E. Bloom, David Canning and Larry Rosenberg in their research paper, Demographic change and Economic Growth in South Asia (2011),  have projected for the region to add an average of 18 million people to its working age each year in the near future resulting in a high inverse dependency ratio that would peak at 2.2:1 in 2040. UNDP in its report Shaping the Future: How Changing Demographics Can Power Human Development (2016)  has said that South Asia would have more working-age people than any other sub-region in Asia-Pacific with the largest surge by 2055 to a projected 1.6 billion, dominated by India. According to the multilateral institution, over 280 million more people will be eligible to enter the job market in India by 2050.

Figure 4: Share of Working-Age Population in South Asia vis-à-vis Other Regions

Source: Based on UNDESA 2015a. (Extracted from UNDP’s Asia Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’)

Figure 5: Working-Age Population (in numbers) in South Asia vis-à-vis Other Regions

Source: Based on UNDESA 2015a. (Extracted from UNDP’s Asia Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’)

This implies well for the economic growth of the region only if SAARC bloc can realize a demographic dividend out of it. Likewise, a report from the World Bank (2012) observes that the South Asian countries would add nearly 1 to 1.2 million new entrants to the labor force every month for the next two decades and will contribute about 40 percent of the total new entrants to the global working-age population. An improvement in the size of the labor force can certainly impel economic growth if the population of working age is productively employed.

The Ground Reality: An Unfinished Business

The demographic transition in SAARC, leading to rising inverse dependency in all its Member States, bears the seeds of  a rich demographic dividend. Literature about linkages between demographic transition and economic growth categorically highlights that the sheer process of transformation does not by itself imply development or growth. It has to be supplemented by appropriate policies, good governance and a conducive environment which maximizes the chances of realizing a dividend and its economic benefits to the society.  Researchers have also emphasized the need for the efficient functioning of government institutions, implementation of pro-labor laws and legislative practices, stable macroeconomic environment, liberalized trade policies and adequate investments in education and training of workforce as some of the factors that may bring about or increase the size of the demographic dividend.

Moreover, different reports have pointed out to the risks in growing inverse dependency ratios mismatching with the demanded skills in the job market. According to UNDP’s Human Development Report (2016), a large working-age population, if not appropriately employed, might lead to socio-economic instability. Moreover, it would also involve an increase in dependency burdens as the share of elderly population or unemployed youth increases, which in turn would cause a drag on economic output and growth. World Bank in its 2012 report – More and Better Jobs in South Asia has underlined that in the absence of a suitable regulatory framework which governs the generation of demographic dividend and its usage, productivity will grow slowly or remain stagnant and the profit will go mostly un-cashed in South Asia. Therefore, its realization not only requires reforms in the education system but also requires a supportive policy framework to govern the financial sector of South Asian countries which channelizes savings efficiently and ensures an investor-friendly business environment for making high-priority investments. Without such a policy reform, the demographic dividend cannot be harnessed to productive ends.

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Progress Report

Measures taken by the SAARC Member States to ensure continuous human development in their respective nations cannot be understated. The Heads of SAARC Member States have reaffirmed time and again of their fundamental goal to accelerate the process of economic and social development through the optimum utilization of human and material resources to promote the welfare and prosperity of people as well as to improve their quality of life. A Technical Committee on Human Resource Development has also been formed in SAARC to deal with matters of education and skills development besides others. The SAARC Secretariat has reported that a SAARC Fellowship and Scholarship Scheme is in operation. Besides this, a SAARC Consortium of Open and Distance Learning (SACODiL) has been created to standardize curricula, mutual recognition of courses, and the system of transfer of credits. SAARC Teachers Forum has been established as well.

There have also been two meetings till the date of the SAARC Ministers of Education/Higher Education deliberating matters concerning the cooperation between SAARC and UNESCO in the field of higher education, the nature of higher education policies and strategies to be formulated, and a Plan of Action on Higher Education.

The New Delhi Declaration on Education endorsed at the latest meeting held in 2014, laid out the priority areas of action on the local front underlining the need to ensure equitable and inclusive access at primary, secondary, and tertiary levels of education. It also emphasized the scope of cooperation to implement the action areas, and SAARC Ministers of Education/Higher Education decided to report the annual progress of their respective countries towards the achievement of post-2015 SAARC education development goals/targets.

It is also pertinent to note the nature of programs, strategies, and plans already being undertaken by the SAARC Member States on this front. This include:

the National Skills Development and Market Linkages Program in Afghanistan under the Ministry of Labor, Social Affairs, Martyrs and Disabled, Third National Education Strategic Plan (NESP) for the period 2015-2020;

facilitation of Technical and Vocational Education and Training (TVET) and skills development programs (with the help of Skilling Pakistan initiative) through National Vocational and Technical Training Commission under the Government of Pakistan;

the creation of a Skills Vision of Bangladesh (2016) on TVET following the National Skills Development Policy 2011 which is being implemented by the National Skills Development Council (NSDC), Bangladesh;

provision of formal Technical and Vocational Education and Training (TVET) through Bhutan Vocational Qualification Framework (BQF), also the Skills Training Program (STP) under the Ministry of Labour and Human Resources – Bhutan;

establishment of inclusive and equitable approach towards TVET of persons in Nepal (under the aegis of its TVET Policy 2012) by extending such training in consonance with the demands of the national and international employment market;

the approval of  Tertiary and Vocational Education Policy 2016 in Sri Lanka by the Tertiary and Vocational Education Commission of the  Ministry of Skills Development and Vocational Training, which is expected to ensure delivery of training in the context of TVE institutions having annual targets based on national needs and taking measures to improve the employability of trainees and mitigate dropout rates;

The successful launch of the ‘Skill India’ initiative last year in India which aims to train over 40 crore people of the country in different skills by the year 2022. To accomplish this objective, flagship projects, new government institutions, and agencies have been introduced in India.

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While the SAARC bloc has taken initiatives to ensure human resource development,  it has  yet not capitalized the growing potential of its youth ; skill mismatches are rampant, and good quality education remains a challenge; as a result of which, the region has not been able to realize sufficient demographic dividend, and wherever it has, that has largely remained un-cashed. During the period 1970 to 1990, the first dividend was mostly negative in the South Asia region in comparison to many developing and developed Asia-Pacific regions. From 1990 to 2010, while the first and the second dividend began to rise in many of the South Asian countries, the growth in the second dividend has still been comparatively the lowest.

Table 2: Estimated Size of the Demographic Dividend through Its Impact on Economic Growth (in %)

Regions	1970–1990			1990–2010
	First Dividend	Second Dividend	Combined	First Dividend	Second Dividend	Combined
Developed Asia-Pacific	0.64	0.87	1.51	0.2	1.09	1.29
Developing Asia-Pacific	0.11	0.39	0.5	0.59	0.69	1.29
East Asia, developing	0.38	0.18	0.56	0.78	0.76	1.53
South-East Asia, developing	0.31	0.12	0.43	0.57	0.82	1.39
South Asia, developing	-0.17	0.36	0.18	0.71	0.46	1.17

Source: Based on a growth model derived in Mason, A. (2015) ‘Demographic Dividends in Asia-Pacific.’ Technical background paper for Asia-Pacific Human Development Report 2016. UNDP, New York

This implies that the resources made available by the first dividend have not been appropriately leveraged and the regional countries have not invested enough in education and health to realize sufficient second dividend. According to the Inequality-Adjusted Human Development Index (IHDI), the average human development loss due to inequality is considerably high in South Asia (at 28.7 percent) as against the global average of 22.8 percent. In fact, according to UNDP’s 2016 Report on Human Development, losses due to inequality regarding education and longevity are the highest in the region.

One of the factors limiting South Asia’s ability to realize a sizable demographic dividend is the low female labor force participation rate. While East Asia and the Pacific have one of the highest rates of women workforce in the world, the gender gap is quite wide for South Asia. In Afghanistan for instance, the female labor force participation rate is only 16 percent compared to 79 percent for men. According to the World Bank (2012), barring Nepal and to a lesser extent Bhutan, the female employment rate (ratio of women’s employment to the female working-age population) in South Asia is among the lowest in the developing world.

Figure 6:Labour Force Participation Rates in South Asia vis-a-vis Asia Pacific Regions

Source: Based on World Bank 2015a. (Extracted from UNDP’s Asia Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’)

Moreover, the South Asian region has been experiencing  skills gaps, education inadequacies and training shortages in the South Asian job market. While the region can be complimented for job creation over the last decade or so, as a result of which open unemployment has largely remained low, a lot of attention still needs to be given on the quality of jobs created in SAARC. Poor improvements in the wage structure and working poverty levels in the region reinforce the need for significant improvements on this front.

For instance, in the background of the fact that agriculture sector continues to remain the largest employer among the three broad sectors – agriculture, industry, and services in most of South Asia – UNDP has reported that a substantial proportion of the workforce is engaged in low-skilled jobs in the region and therefore earning low wages. 24 percent of the working population in South Asia makes less than $1.25 per day. Nearly 61 percent earns less than $2 a day, which implies that the instances of working poverty are quite prevalent in the region. In countries like Afghanistan, Bangladesh, Nepal, and Pakistan, over 80 percent of the working people earn less than $4 daily. While the size of middle class earning between $4 and $13 a day is rising in India, Bhutan, Maldives, and Sri Lanka, it is still small in other parts of the region.

Figure 7: Comparison of Wages and Poverty Traps in South Asia vis-à-vis Other Regions

Source: Based on ILO 2015a. (Extracted from UNDP’s Asia Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’)

Skills imbalances in the job market have also been reported in employer surveys. World Bank Group conducted Enterprise Surveys of the South Asian countries have revealed ‘inadequately educated labor force’ among the top-ten business environment obstacles faced by employers based in these countries. The results from Bangladesh and Pakistan, for instance, are appended in the charts below (Figure 8).

Figure 8: Results of Enterprise Surveys conducted by the World Bank:

Business Environment Obstacles Faced by Employers in South Asian Countries

Bangladesh – 2013: 1442 firms surveyed

Pakistan – 2013: 1247 firms surveyed

Source: World Bank Group (online) – Enterprise Surveys

Therefore, the education challenge facing the South Asian countries is extensive. It includes improving nutrition levels and related factors in early years of childhood, increasing attainment from primary to secondary and tertiary levels, ensuring equal opportunity for all groups, and equipping graduates with the skills necessary to succeed in employment.

Moreover, the instances of vulnerable employment are also growing in the South Asia region. According to the UNDP Human Development Report, nearly three in five workers (i.e. around 1.1 billion) were in vulnerable employment in 2012 in the developing countries of Asia-Pacific with the highest proportion prevailing in South Asia at 76 percent.

Table 3: Vulnerable Employment Rates in South Asia vis-à-vis the World

Regions	Male	Female	Both
World	47	49	48
Developed Economies and European Union	11	9	10
East Asia	47	43	51
South East Asia and the Pacific	60	57	64
South Asia	76	75	81
Middle East	25	24	33

Based on ILO 2015a. (Extracted from UNDP’s Asia Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’)

One of the reasons for such high vulnerability levels in SAARC is due to the existence of a large informal economy. It has been reported that workers in the informal sector are employed without any appropriate paperwork and social security, and are highly prone to exploitation regarding lower wages, unsafe working conditions, job insecurities, etc. Therefore, a major challenge remains to target and reach out to those who are most deprived of a formal work set up.

Similarly, a restricted concentration of economic activities in particular areas could have significant implications for job creation and resilience to shocks. For instance, the hydropower industry accounts for over half of GDP of the country and majority proportion of its exports in some countries of South Asia. While this certainly leads to job creation in construction and engineering, it could restrict diversification in the job market, and it might not be able to absorb growing numbers of local youth. Similarly, countries which have large concentration only in few types of business, such as fisheries and tourism in the Maldives or textiles and readymade garments manufacturing in Bangladesh, could be vulnerable to external shocks eventually if the specialities are restricted to select sectors only.

All these and related factors have constrained the realization of a sizeable demographic dividend which could be productively harnessed in the development of physical infrastructure in SAARC. Therefore, the need of the hour is to prioritize concerted reforms in the spheres of education and skills development of the working-age population in the regional countries.

In this context, India has already taken proactive steps towards promoting skills development of its youth, following the launch of flagship projects – such as National Skill Development Mission, National Policy for Skill Development and Entrepreneurship 2015, Pradhan Mantri Kaushal VikasYojana (PMKVY) scheme, and the Skill Loan scheme, by the Hon’ble Prime Minister of India last year. The ambitious aim of the ‘Skill India’ drive is to train over 40 crore people in different skills by the year 2022 – which is in the process of being accomplished by coordinated actions and engaged efforts of the government, institutions, and agencies – such as the Ministry of Skills Development and Entrepreneurship which is the nodal ministry set up for this purpose, National Skills Development Agency (NSDA), National Skill Development Corporation (NSDC), national chambers of commerce, academia, NGOs, etc. Besides other initiatives, the Ministry of Skills Development and Entrepreneurship intends to establish Pradhan Mantri Kaushal Kendra. According to the progress reports published by NSDA, over 7.6 million persons were trained in 2014–15 and over 2.8 million have been taught during the first half of the financial year 2015–16, thanks to the growing skills development initiatives in the country.

Some Suggestions: Shaping the Future

The age structure transition in South Asia has created a ‘window of opportunity’ for realizing potential demographic dividend. The window of opportunity is characterized by improved health, longevity, and smaller families. Economists have explicitly underlined three ways to reap such profits, namely by (i) making the available labor force productively employed to raise Gross Domestic Product (GDP); (ii) directing accumulated wealth and savings of households into productive investments on account of decline in fertility ratios, and (iii) generating high-quality human capital by more public spending on education and health. Taking a clue from such theoretical learnings, it is imperative for the South Asian region to develop adequate measures to enhance investments in the labor force by diverting resources from increasing quantity to improving the quality of human capital, more precisely termed as the ‘quantity–quality trade-offs.’

The first step towards realizing potential demographic dividend is to ensure that the economic growth in the region can create more and skill oriented jobs. For instance, considering the agrarian setup of the South Asian economies, agriculture sector still absorbs nearly half of the labor force in the region. Therefore, it is imperative to reach out to the bottom of the pyramid workforce and initiate skills development initiatives at the grass-roots level. Such an exercise can be done, on the one hand, by encouraging the farmers to participate in self-employment activities and projects-based learning; and on the other hand, by facilitating vocational education and skills development of school children in rural areas through distance learning program with the best use of Information and Communication Technology (ICT). Useful lessons could be studied from some of the skills development initiatives on similar lines followed in Southeast Asian countries such as Thailand (through the Agriculture Education for Life Program) and Cambodia (such as Giving Online Access to Learning – GOAL).

At the same time, synergies among the government, industry, and the academia may be encouraged. The curricula and content of TVET programs should be devised by the hard skills in the market – possibly by being connected with maximum employers, especially in the labor-intensive sectors of each country. Such an exercise could be quite useful for the high-growth areas in industry (such as manufacturing, construction, mining and quarrying, electricity, gas and water supply, etc.) and services (such as real estate, wholesale and retail trade, business and financial services, transport and storage, hotel and tourism, etc.) wherein the employers, as per their demand for skills, can coordinate with the skills development centers or the vocational educational institutions to come up with competency driven curricula, facilitate practical on-the-job training for a period of time, and promote outcome driven experiences for the youth.

Furthermore, the youth could be appropriately motivated to participate (ensuring gender equal participation) and complete such programs mandatorily for a particular period.  Scholarships, monthly stipend, and certificates to strengthen academic credentials are some of the ways in which participation in such programs could be encouraged. Performance evaluation could also be undertaken once the program is completed so the progress of the student could be examined and accordingly rewarded. Therefore, occupational groups should think along such lines to develop their skills development programs in the form of experiential learning courses (ELC) which involves a mix of classroom and practical learning for mutually benefitting outcomes. This would, in a very useful way, contribute towards employment generation of women in particular in the high-growth sectors. According to UNDP’s Asia-Pacific HDR Report (2016), the participation of more women in paid jobs and entrepreneurship would increase the demographic dividend.

Similarly, some valuable lessons come from advanced countries such as Germany, the United Kingdom, etc., where education/training has improved the quality of youth employment mainly. Such models could serve as useful benchmarks to design and modernize the training programs in the South Asian region. For instance, Germany has introduced a ‘Skills Initiative’ to bring together German businesses and local education/training providers, with the aim of developing training programs best suited to companies’ needs. There is substantial involvement of employers in education which brings in training on skills highly attuned to the labor market. The idea is to identify and spread best practices in sustainable workforce development within Germany and across the globe. Similarly, United Kingdom’s Commission for Employment and Skills has undertaken some proactive policies and initiatives to promote entrepreneurial skills training of its workforce. Moreover, Sector Skill Councils in the UK operate under the aegis of a government license and are responsible for developing the industry-led qualifications that form the Qualifications and Credit Framework in England and the Scottish Credit and Qualifications Framework.

Simultaneously, the SAARC Member States could explore the possibility of engaging with the developed countries bilaterally for the purpose of technology transfer in the field. For instance, India has signed Memorandums of Understanding (MoUs) with nodal Government Ministries/key institutional bodies of the UK, Germany, Australia, etc. to adapt their best practices in skills development – skills training, training of the trainers, designing of models, and development of centers of excellence – and implementing the same in the country.

It may also be noted that National Qualifications Framework (NQFs) are an indispensable part of the skills development process and may be encouraged on an ongoing scale in the South Asian countries. Such frameworks coincide with the implementation of competence-based qualifications. The role of industry is expected to be equally strong as the role of government in designing such structures as consideration is not only on the policy priorities but also on deciding the structure within which the qualifications would fit. The development of NQFs must be seen as complementary to improving the existing institutional capability in the countries rather than as a substitute. The development of Regional Qualification Frameworks (RQFs) or Transnational Qualification Frameworks(TQFs) could also be explored in the long run in SAARC. While the former is a driving force for regional integration and quality assurance, the latter helps in developing global competitiveness in priority sectors with the countries outside the local sphere.

Considering the growing instances of informal sector employment, working poverty, and outward migration in search of high-paying job opportunities in the region, the countries should direct efforts as well as policies towards creating an enabling environment for the domestic workforce to grow and thrive in their respective countries of origin and also prevent the brain drain. Besides, ensuring healthy work conditions and protection of workers’ rights and privileges, the SAARC Member States may also consider diversifying their economies through the cultivation of new domestic businesses which involve local skills. For instance, the regional countries could explore the possibility of leveraging local skills through deepening global value chains. Such coordinated networks do not necessitate the need to produce finished goods to promote foreign trade value and volumes. Instead, production of intermediate goods or semi-finished goods or parts is encouraged in some countries for assembly into complete products in others.  In this regard, leveraging local expertise based on domestic labor market skills and available technology could further deepen production networks regionally within SAARC and with the global world.

How about the financial support to back such initiatives? The  social spending on education and health may be smartly managed, and strategic investments in such sectors should be encouraged, for instance, reallocating funds from one stream of projects to another depending upon the requirement and stage of development. In the mid-1960s, the Government of the Republic of Korea invested funds, which were released on account of falling school enrolment rate due to the country’s declining birth rate, and to improve the quality of education at higher levels and equip the growing working-age population with marketable skills. Generating funds through the usual process of taxation and allocating them on fostering skills development in the country is also a common practice in some countries. The governments usually require the employers to invest in training and development via a statutory levy, such as a percentage of the wage bill, to implement its skills development strategies. This money is used in part to fund many education and training initiatives.

However, it may be noted that the responsibility of maintaining a reliable funding network that promotes and facilitates skills development initiatives in the SAARC Member States does not only rest with the respective governments or with the enterprises. Private households also need to be equally engaged in the whole process. Mobilizing their savings is a useful means to achieve sizeable demographic dividend, and the families should be encouraged to use financial services for maximizing their contributions in this respect. Achieving greater public savings may call for increasing tax revenues and attain a reasonable tax-GDP ratio. Presently, the rate is low for some countries in South Asia compared to those in East Asia. For instance, in 2014 it was just 9 percent in the case of Bangladesh as against the Republic of Korea’s 15 percent. Therefore, there is a need for right policy instruments and a favorable environment for investment. A national strategy for financial literacy, as in India for instance, could be a useful guide to support the extension and use of financial services.

At the same time, appropriate monitoring mechanisms should be considered to measure the progress on the skills development front in SAARC. While steps at the regional level are underway, the SAARC countries may also explore the possibility of participating in international test assessments, such as the OECD Teaching and Learning International Survey (TALIS), which regularly assess and research teacher effectiveness on a number of parameters in OECD countries; Trends in International Mathematics and Science Study (TIMSS),a series of international assessments of the mathematics and science knowledge of students globally; the Programme for International Student Assessment (PISA), which is a triennial international survey that aims to evaluate education systems worldwide by testing the skills and knowledge of 15-year-old students, etc. India has been a participant in PISA and TIMSS. Other countries in South Asia should also be equally encouraged to participate in similar international assessment mechanisms.

Lastly, the ongoing regional connectivity initiatives in SAARC, such as the South Asian Sub-regional Economic Cooperation Programme, Motor Vehicle Movement Agreement, etc. can enhance trade in local agricultural products, processed food, and manufactured goods. They can also expand the growth and employment in shipping and service industries. Moreover, development of economic corridors would fuel the growth of new enterprises, local markets, livelihoods and job opportunities in less-connected areas, especially the border areas, thereby reducing economic disparities linked to geographical location.

Conclusion

The South Asian region’s ability to reap its full economic growth potential in years to come would heavily depend on its ability to dramatically upscale the skills of youth to maximize demographic dividend which could be channelized into productive investments. This requires an efficient policy framework backed by appropriate vision, strategies, and incentives in four broad areas: creating more jobs, improving their quality, protecting worker’s rights as well as improving the working conditions, and putting savings into play.

Figure 9: Policy Guide towards Realizing a Demographic Dividend

Source : UNDP’s Asia Pacific Human Development Report (2016), ‘Shaping the Future: How Changing Demographics Can Power Human Development’

All these require bold commitments and partnerships across businesses, governments, and institutions in SAARC.  Imagine then a time when SAARC is at par with other advanced regions – a region whose skills development models are success stories, much talked about; being taken as a benchmark to be replicated; being discussed and deliberated during ministerial delegations, policy dialogues, regional summits, industry roundtables, academic seminars, and such high-powered meets. I decidedly want that to happen, and I believe it will be a reality very soon.

Disclaimer:

The figures reported in the article has been taken from authentic sources. Footnotes/endnotes are available upon request from the author of the article.