Public Policy Innovation for Human Capital Development The Asian Productivity Organization (APO) is an intergovernmental organization committed to improving productivity in the Asia- Pacific region. Established in 1961, the APO contributes to the sustainable socioeconomic development of the region through policy advisory services, acting as a think tank, and undertaking smart initiatives in the industry, agriculture, service, and public sectors. The APO is shaping the future of the region by assisting member economies in formulating national strategies for enhanced productivity and through a range of institutional capacity- building efforts, including research and centers of excellence in member countries. APO members Bangladesh, Cambodia, Republic of China, Fiji, Hong Kong, India, Indonesia, Islamic Republic of Iran, Japan, Republic of Korea, Lao PDR, Malaysia, Mongolia, Nepal, Pakistan, Philippines, Singapore, Sri Lanka, Thailand, Turkey, and Vietnam. PUBLIC POLICY INNOVATION FOR HUMAN CAPITAL DEVELOPMENT DECEMBER 2020 | ASIAN PRODUCTIVITY ORGANIZATION Public Policy Innovation for Human Capital Development Prof. Yuto Kitamura and Dr. Will Brehm served as the volume editors. First edition published in Japan by the Asian Productivity Organization 1-24-1 Hongo, Bunkyo-ku Tokyo 113-0033, Japan www.apo-tokyo.org © 2020 Asian Productivity Organization The views expressed in this publication do not necessarily reflect the official views of the Asian Productivity Organization (APO) or any APO member. All rights reserved. None of the contents of this publication may be used, reproduced, stored, or transferred in any form or by any means for commercial purposes without prior written permission from the APO. Designed by BM Nxt CONTENTS FOREWORD VII INTRODUCTION 1 What this Report Covers 2 The Changing Context of Work and Employment 3 Education System’s Organization 4 Ways Forward 5 References 5 REPUBLIC OF CHINA 7 Introduction 7 Background 8 Methodology 10 Findings 10 Organizational Structures 11 Executive Yuan 11 Ministry of Education 12 Ministry of Science and Technology 12 Ministry of the Interior 12 Ministry of Labor 13 Ministry of Economic Affairs 13 National Development Council 13 Non-governmental Institutions 14 Public Policies, Plans, and Programs 15 STEM 15 TVET 16 Entrepreneurship 16 Human Capital Development in General 17 Emerging Needs and Skills 18 Discussion 19 Key Challenges 19 Local Responses 21 Conclusion 22 References 23 INDIA 29 Introduction 29 Socioeconomic Profile of India 29 Role of Private Sector in India 37 Role of Public Sector in India 38 List of State-owned Enterprises 38 Industrial Policies in India 41 Context of Human Resource Development 43 National Skills Qualification Framework 43 Skillset Availability in India 43 Role of Industry Sector in Distribution of Income and Wealth 43 Role of Government in Changing Economy 47 Industrial Safety and Security in India 48 Role of Civil Society in Economic Development 49 Role of Government in Economic Development 49 Higher Education and Research and Development 49 Universities and Research Institutes 49 Student Enrollments across Subsectors 50 Strengthening Higher-education Faculty 53 Allocation for Higher Education in India 53 Cost of Higher Education in Universities 53 Employment of University Graduates in India 54 Higher-education Policies Related to STEM: Skillsets for Future 54 Industry–university Interface in Higher Education 56 Technical and Vocational Education and Training (TVET) 56 TVET System in India 56 Student Enrollments in TVETs across Subsectors 60 Higher and Technical Education 60 Expenditure on Higher Education in TVET by Government 64 Fees and Scholarships 64 TVET Employment Patterns 65 Industry Involvement in TVET 65 Summary and Conclusions 65 Comprehensive Vision and Strategy for India 68 References 69 INDONESIA 71 Introduction 71 Context 72 Education System 73 Educational Issues 74 Higher Education and Research Development 77 Technical and Vocational Education and Training 79 Conclusion 81 References 82 MALAYSIA 84 Introduction 84 Background 84 Methodology 88 Findings: Organizational Structure for Human Capital Development 90 Systems and Mechanisms for Human Capital Development 90 The Approach for Human Capital Development 92 Tools and Methodologies for Human Capital Development 92 Economic Landscape and Labor Market 93 Wages and Productivity 97 Findings: Public Policy, Plans, and Programs 98 IV | PUBLIC POLICY INNOVATION FOR HUMAN CAPITAL DEVELOPMENT National Development Policies and Plans 98 Development of Human Capital Policies and Plans 101 STEM and TVET Policies, Plans, and Strategies 101 Discussion 105 Labor Market Efficiency 105 Meeting Supply and Demand 106 Supply Quality 109 Supply and Demand, Job Creation, and Unemployment 112 Governance and Delivery of Human Capital Development Plan 114 Conclusion 117 References 118 PHILIPPINES 123 Introduction 123 Background 124 Population and Demographics 124 Philippine Economy 125 Labor Market Overview 126 Philippine Education System 126 Methodology 127 Findings 128 Educational Investment 128 STEM Education 132 Technical and Livelihood Training and Education (TVET) 135 Discussion 139 Philippines and Industry 4.0 139 Access 140 Quality 141 Governance 141 Conclusion and Policy Implications 142 References 143 SRI LANKA 145 Introduction 145 Background 146 The Economy 146 Education System 146 Methodology 147 Findings 149 Present Education System 149 Education Financing 150 Competition in Higher Education 152 Mainstreaming Vocational Education 153 Labor Market Outcomes 156 STEM and Future Plans of Education 156 Discussion 158 Conclusion 159 References 159 PUBLIC POLICY INNOVATION FOR HUMAN CAPITAL DEVELOPMENT | V LIST OF TABLES 163 LIST OF FIGURES 164 LIST OF CONTRIBUTORS 166 VI | PUBLIC POLICY INNOVATION FOR HUMAN CAPITAL DEVELOPMENT FOREWORD echnological advances today are changing the ways people work in addition Tto the nature of work itself. Work adjustments in the previous Industrial Revolution were mostly associated with improvements leading to efficiency gains as well as job creation. However, the current fast-changing disruptive technologies could negatively affect employment opportunities if skill upgrading is not provided to support the evolving demands of the labor market. This could create market failure in the form of technology-driven unemployment, which would require appropriate policy interventions. Public policy is at the front line in preventing such market failures. It should preempt and avoid future failure and include strategies to mitigate negative impacts on society. Such mitigation efforts require the concerted efforts of all actors in addition to policymakers. In the case of managing the impact of technological disruption, policy interventions in the form of a national reskilling strategy ensuring that workers have opportunities to broaden or deepen existing skill sets to match demand in the emerging labor market are critical. Strategies must also be dynamic to adjust easily to changing labor and training needs. While governments may play the main coordinating and regulatory role, policy must also harness the potential of education and training providers, employers, and unions in the supply of skills. Education and training are central in ensuring all workers to have the basic literacy, numeracy, and generic or foundational technical know-how. This report examines public policies on human capital development, with special focus on higher education and technical and vocational education and training (TVET) of selected APO member countries. It assesses current public policies on education and human capital at a time of rapid transformation of global industries and offers a basis for rethinking policies on human capital development in line with the changing external environment. Innovative approaches to public investment in human capital development using the science, technology, engineering, and mathematics (STEM) framework are described, and finally recommendations are proposed for future skill management and workforce development in response to technology-driven changes and ongoing structural adjustments. This compilation contributes to a greater understanding of how public policy on education and employment is oriented in a select group of Asian economies currently. That understanding will be critical for redesigning human capital development policies to cope with rapid global transformations while sustaining productivity growth. Dr. AKP Mochtan Secretary-General PUBLIC POLICY INNOVATION FOR HUMAN CAPITAL DEVELOPMENT | VII VIII | PUBLIC POLICY INNOVATION FOR HUMAN CAPITAL DEVELOPMENT INTRODUCTION Prof. Yuto Kitamura and Dr. Will Brehm Disruptive changes to business models will have a profound impact on the employment landscape over the coming years. Many of the major drivers of transformation currently affecting global industries are expected to impact employment, ranging from significant job creation to job displacement, and from heightened labor productivity to widening skill gaps. The changes will be unequally felt both across and within countries, mainly along intersectional lines of race, class, and gender. There have been a number of global challenges, which the human society needs to overcome. One of the most significant and important challenges is climate change. This is because climate change is perhaps the largest disruption facing the global economy. The World Bank estimates that by 2030, climate change could force an additional 100 million people into poverty;