88895 DIREC TIONS IN DE VELOPMENT Human Development Skilling Up Vietnam Preparing the Workforce for a Modern Market Economy Christian Bodewig and Reena Badiani-Magnusson, with Kevin Macdonald, David Newhouse, and Jan Rutkowski Skilling Up Vietnam Direc tions in De velopment Human Development Skilling Up Vietnam Preparing the Workforce for a Modern Market Economy Christian Bodewig and Reena Badiani-Magnusson, with Kevin Macdonald, David Newhouse, and Jan Rutkowski © 2014 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 17 16 15 14 This work is a product of the staff of The World Bank with external contributions. The findings, interpreta- tions, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 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All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. ISBN (paper): 978-1-4648-0231-7 ISBN (electronic): 978-1-4648-0232-4 DOI: 10.1596/978-1-4648-0231-7 Cover photo: Vietnam Escuela Nueva (VNEN) pilot class in Lang Sen Primary School, Kim Lien Commune, Nam Dan District, Nghe An Province. © Christian Bodewig. Used with permission. Further permission required for reuse. Cover design: Debra Naylor, Naylor Design Library of Congress Cataloging-in-Publication Data Bodewig, Christian. Skilling up Vietnam : preparing the workforce for a modern market economy / Christian Bodewig and Reena Badiani-Magnusson ; with Kevin Macdonald, David Newhouse, and Jan Rutkowski. pages cm. — (Directions in development) Includes bibliographical references. ISBN 978-1-4648-0231-7 (alk. paper) — ISBN 978-1-4648-0232-4 (ebk) 1. Employees—Training of—Vietnam. 2. Vocational qualifications—Vietnam. 3. Vietnam—Economic policy—1975–  I. Title. HF5549.5.T7B577 2014 331.11'409597—dc232014019254 Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Contents Foreword xi Acknowledgments xiii About the Authors xv Executive Summary xvii Abbreviations xxi Overview 1 Skills and Development in Vietnam 2 Skills in Demand Today and for the Next 10 Years 6 Preparing the Workforce for a Modern Market Economy 9 Summary and Conclusion 22 References 24 Chapter 1 Vietnam’s Economic Transformation and the Role of Education 27 Trends in Vietnam’s Labor Market since Dôi Mó’i 28 ? The Role of Education in Vietnam’s Labor Market 34 Looking Ahead: Skill Needs for an Industrializing Vietnam 39 Summary and Conclusion 45 Notes 47 References 47 Chapter 2 Skills for Current and Future Jobs 49 Shifting the Dialogue: From Education to Skills 50 What Do We Mean by Skills? 57 What Skills Are in Demand and Used in the Urban Labor Market? 63 Summary and Conclusion 71 Annex 2A: In Depth 72 Notes 84 References 85 Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   v   vi Contents Chapter 3 Skills Formation and the Importance of the Early Years 89 What Do We Know about the Formation of Cognitive, Social and Behavioral, and Technical Skills? 90 Step 1: School Readiness through Early Childhood Development 97 Summary and Conclusion 104 Note 104 References 105 Chapter 4 Cognitive and Behavioral Foundation Skills in the General Education System 109 General Education in Vietnam at a Glance 110 Step 2: Building Cognitive and Behavioral Foundation Skills in General Education 115 Summary and Conclusion 128 Annex 4A: In Depth 129 Notes 135 References 136 Chapter 5 Technical Skills to Promote Employability 139 Technical Skills Development in Vietnam at a Glance 140 Step 3: Building Technical Skills through a Better-Connected System 144 Summary and Conclusion 162 Annex 5A: In Depth 163 Note 165 References 165 Boxes 1.1 What Are the Barriers to Labor Mobility in Vietnam? 39 1.2 Vietnam’s Occupational Changes through the Lens of Skills 43 2.1 Skills Toward Employment and Productivity (STEP) Household and Employer Surveys 52 2.2 Defining Skill Gaps and Occupational Skill Shortages 53 3.1 Why Are the Early Years So Fundamental for Building Skills? 94 4.1 Vietnam Escuela Nueva 122 5.1 Prospective Students in Rural Areas: Limited Objective Career Guidance Information 150 5.2 The University of Danang and Industry Partnership to Improve Graduate Employability 156 5.3 Promoting Adult Continuous Education and Training 158 Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Contents vii Figures O.1 Vietnam’s Shift of Employment Away from Agriculture, 1993–2010 2 O.2 Literacy Proficiency of Vietnamese Adults Compared with Peers in OECD Countries 4 O.3 Frequency of Problem Solving by Wageworkers, by Occupation 5 O.4 The Three Dimensions of Skills Measured in the STEP Survey 6 O.5 Employers’ View of Importance of Job-Related Skills for Blue- and White-Collar Workers 8 O.6 The Process of Skill Formation: A Simplified Model 9 O.7 Three Steps in Skills Development 10 O.8 Adult Stimulation and Stunting among Children from Poorer and Wealthier Backgrounds 11 O.9 Share of 19- to 21-Year-Olds in Postsecondary Education, by Type of Education Received, 1998–2010 17 O.10 Disconnects in Skills Development and Their Causes 18 O.11 Staff Qualifications in Higher Education Institutions 22 1.1 Real GDP Growth in Vietnam and Its Neighbors, 1995–2010 28 1.2 Growth of Labor Productivity in Vietnam Compared with Peers, 1990–2010 30 1.3 Decomposition of GDP Growth in Contributions from Capital, Labor, and TFP, 1990–2010 31 1.4 Share of Vietnam’s Workforce in Agricultural and Nonagricultural Wage Employment, 1993–2010 31 1.5 Share of Workers in Urban and Rural Areas, 2007–10 32 1.6 Employment Shares in Nonagricultural Occupations of Workers Aged 15–64 Years, 2010 33 1.7 Employment Patterns in Vietnam and Its Neighbors, 2008 34 1.8 Educational Attainment of Population by Age Cohort 35 1.9 Highest Level of Educational Attainment by Occupation, 2010 36 1.10 Estimated Education Earnings Premium among Wageworkers, 1993–2008 37 1.11 Estimated Returns to Education among Wageworkers Relative to Lower Secondary Education, 2007 and 2010 37 1.12 Change in Share of Employment by Education Group and Urban/Rural, 2007–10 38 B1.1.1 Employment Protection Legislation in Vietnam Compared with Other Countries, 2008–10 40 B1.1.2 Labor Market Issues Affecting Businesses’ Operations and Growth 41 1.13 Percentage Employed in Agriculture and Professional and Technical Occupations in Vietnam and Comparator Countries 42 1.14 Trends in the Nature of Tasks in Vietnam’s Urban Labor Market, 1998–2010 43 Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 viii Contents 1.15 Percentage Return to Different Task Combinations, Controlling for Education and Demographics 45 1.16 Growth of Employment in Technical and Professional Occupations among Different Age Cohorts 46 2.1 Educational Achievement of the Population Aged 20–24 Years, 2004–10 51 B2.2.1 Problems Businesses Encountered When Trying to Hire 54 2.2 Reported Obstacles to Business Activity 55 2.3 Percentage of Employers Claiming that Job Applicants Lacked Skills Required for the Job 56 2.4 Percentage of Individuals Reporting that the Lack of Literacy or Computer Skills Has Prevented Obtaining a Job or Advancement 56 2.5 Skills Measured in the STEP Survey 57 2.6 Percentage of Individuals, by Literacy Assessment Score 58 2.7 PIAAC and STEP Literacy Proficiency Scores 59 2.8 Literacy Competency Levels 59 2.9 Literacy Proficiency of Vietnamese Adults 60 2.10 Difference between Literacy Proficiency of Older and Younger Adults 61 2.11 Use of Numeracy Skills 62 2.12 Importance of Job-Related Skills versus Social and Behavioral Skills or Personal Characteristics 64 2.13 Importance of Job-Related Skills among White- and Blue-Collar Workers 65 2.14 Percentage of Wageworkers in Different Occupations Who Report Having to Problem Solve at Work, by Frequency 66 2.15 Percentage of Wageworkers in Different Occupations Who Report Having to Learn New Things, by Frequency 67 2.16 Importance of Social and Behavioral Skills for White- and Blue-Collar Workers 68 2.17 Returns to Social and Behavioral Skills, by Occupation Type 69 2.18 Percentage of Wageworkers Who Report Having to Interact with Others, Present Ideas to Others, or Supervise Others at Work 70 2.19 Returns to Social and Behavioral Skills for Wage Employment and Self-Employment 71 2A.1 Self-Reported Reading Length and Fraction of Correct Responses in Literacy Assessment 76 2A.2 Gender Differences in Social and Behavioral Skills and Openness to Experience, after Accounting for Education and Age 78 2A.3 Gender Gaps in Enrollment in Secondary Education and Choice of Fields of Study 79 2A.4 Cognitive Skills: Hanoi versus Ho Chi Minh City 80 2A.5 Social and Behavioral Skills: Hanoi versus Ho Chi Minh City 81 Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Contents ix 2A.6 Technical Skills: Hanoi versus Ho Chi Minh City 82 2A.7 Index of Openness to Experience and Conscientiousness, by Education Level and Age 83 3.1 The Process of Skill Formation 90 3.2 Changes in Cognitive Skills as Children Age 93 3.3 Step 1 in Skills Development: Promoting School Readiness to Help Children Learn in School 98 3.4 Percentage of 5-Year-Olds in the Lowest Decile of Each School Readiness Domain 99 3.5 Percentage of Children under 5 with Low Height for Age 100 3.6 Preschool Enrollment Rates across Regions in Vietnam, 2011–12 103 4.1 Step 2 in Skills Development: Developing the Cognitive and Behavioral Skills Foundation 110 4.2 Net Enrollment Rates and Enrollment by Wealth Quintile 111 4.3 Mean 2012 PISA Mathematics Scores, Selected Cities and Countries 112 4.4 PISA Mean Mathematics Scores, by Subscale, 2012 113 4.5 Math and Language Test Scores of Children of Different Backgrounds 113 4.6 Gross and Net Secondary Enrollment Rates in Vietnam and Neighboring Countries 116 4.7 Private Spending on Secondary Education, 2010 117 4.8 Changes in the Number of Teachers and Students in Primary Schools, 2005–10 119 4.9 Primary Teachers’ Professional Training and Correlation of Student Test Scores and Their Teachers’ Ratings 124 4A.1 Ratio of Lower Secondary Teachers’ Salary to GDP per Capita, 2008 134 5.1 Step 3 in Skills Development: Building Technical Skills for Employment 140 5.2 Percentage of 19- to 21-Year-Olds in Postsecondary Education, 1998–2010 141 5.3 Higher Education Gross Enrollment Rates 142 5.4 Percentage of University Graduates Employed within Six Months of Graduation 143 5.5 Percentage of Internal and External Training, by Size of Business 144 5.6 Percentage of Employees Receiving Training, by Education and Employment Type 145 5.7 Disconnects in Skills Development and Their Causes 146 5.8 Percentage of University Graduates, by Field of Study and Returns to Field of Study 147 5.9 How Workers Find Jobs 151 5.10 New Vocational Training Programs and Their Funding, 2012 155 5.11 Staff Qualifications in Higher Education Institutions 159 Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 x Contents 5.12 Private Spending on College Education, by Income Group, 2010 161 5.13 Percentage of Higher Education Students Receiving Fee Exemptions, by Income Quintiles, 2006–10 162 5A.1 Functions of the Vietnam Tourism Certification Board 164 Tables O.1 A Three-Step Agenda for Skills Development in Vietnam 23 B1.2.1 Tasks and Types of Occupations Conducted in Different Skill Brackets 44 2.1 Social and Behavioral Skills: The Big Five Personality and Motivational Traits 63 3.1 Feeding Practices for Young Children 100 3.2 Activities to Promote Learning and School Readiness in the Past Three Days 101 4A.1 PISA Assessments of Vietnamese 15-Year-Olds and Their Peers in OECD and Other Economies, 2012 129 4A.2 Korean Education Development Focus, Policy Goals, Major Concerns, and Resources, 1948 to Present 132 5.1 Ranking of Information Sources Used to Make Study Decisions among Students in Urban and Rural Areas 149 5.2 Focus of Employer-Education Provider Linkages 152 5.3 The Republic of Korea: Example of National Competency Standards for One Occupation 157 Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Foreword Vietnam finds itself in a critical moment in its economic and social development process. After a period of remarkable economic growth and poverty reduction over the past two decades, Vietnam has recently joined the ranks of middle- income countries. This achievement has triggered a debate among policy makers and the public at large on what it will take to continue the country’s success story over the next decade and beyond. Featured prominently in this debate are educa- tion and the skills of the workforce. Like across much of East Asia, there is wide consensus among Vietnamese society that good education is necessary for ­ personal and national advancement. Vietnam’s “Socio-Economic Development Strategy” for 2011–20 identifies developing a highly skilled workforce as one of its breakthrough areas. Skilling Up Vietnam is a contribution to the ongoing national policy debate on how to strengthen skills development in middle- income Vietnam to keep up with changing demands as the economy modernizes, industrializes, and diversifies. In preparing its workforce for a modern market economy, Vietnam can build on strong foundations. Significant efforts to expand educational attainment over the last two decades have equipped a large share of Vietnam’s adult population, especially among younger cohorts, with good basic literacy and numeracy skills. These skills have enabled ever more workers to find employment in the nonagri- cultural sector, which in turn has been an important driver of the country’s rapid development and poverty reduction. But as Vietnam’s economy continues to modernize, it will increasingly produce jobs that involve fewer manual and rou- tine tasks and more skill-intensive, nonmanual, and nonroutine tasks. This book presents evidence on the evolving skill needs of the business sector in the dynamic ­ urban Vietnam today. The analysis presented in this book reveals that Vietnamese businesses care about three dimensions of skills: technical, cognitive, and behavioral. When recruiting, employers look first for technical skills such as in engineering. But employers are also looking for cognitive skills and behavioral skills. They want workers who can think critically, solve problems, work well in teams, and present their work in a convincing manner to clients and colleagues. Such skills are pre- dominantly developed early in life, suggesting that an appropriate skills develop- ment strategy needs to aim at interventions along the life cycle, from early childhood through formal schooling age into adulthood. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   xi   xii Foreword In line with the country’s strategic vision, the Communist Party of Vietnam has recently approved a resolution on fundamental and comprehensive educa- tion and training reform. The resolution lays out many reform directions put forward in this book. They include expanding early childhood education and enrollments in full-day schooling, preventing early school leaving after primary and lower secondary education, and modernizing the curriculum and teaching methods to help Vietnamese students to become more effective problem solvers, critical thinkers, communicators, and team workers. As the details of the reform get elaborated and implementation takes shape, the book can serve as a reference to guide action. Skilling Up Vietnam is written for a wide audience of stakeholders in Vietnam, ranging from students and parents to business leaders and government officials. The message is that developing a skilled workforce ready for a modern market economy is not just the business of the government. It is everyone’s business. But the book is also aimed at a readership beyond Vietnam. It is of interest to anyone studying policies to promote human capital formation with the aim of accelerating economic growth and social development. The analysis presented in this book draws on empirical data collected as part of the World Bank’s Skills Toward Employment and Productivity (STEP) skills measurement program. Launched in 2011, this program is building a rich new knowledge base on employers’ skills needs and skills profiles of workforces across many countries around the world and on what it takes to prepare workforces for productive employment in fast-changing economies. This book’s analysis of the case of Vietnam will provide a significant contribution to the understanding of skills development in emerging economies. Victoria Kwakwa Country Director for Vietnam The World Bank Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Acknowledgments This book was written by a World Bank team led by Christian Bodewig and Reena Badiani-Magnusson. David Newhouse, Christian Bodewig, and Reena Badiani-Magnusson wrote chapter 1. Reena Badiani-Magnusson, Jan Rutkowski, and Kevin Macdonald wrote chapter 2. Reena Badiani-Magnusson and Christian Bodewig wrote chapter 3, with inputs from Kevin Macdonald. Christian Bodewig wrote chapters 4 and 5, with inputs from Kevin Macdonald. Shang Gao and Kai Partale (tourism sector specialist at the European Union–funded Environmentally and Socially Responsible Tourism Capacity Development Programme) prepared the “In Depth” sections on the Republic of Korea and on occupational standards in the tourism sector, respectively. Vo Kieu Dung pre- pared the box on the University of Danang and its partnerships with industry. Nguyen Tam Giang collaborated with Hoang Xuan Thanh and a team from Ageless Consulting on a joint Oxfam and ActionAid Vietnam study, funded by the U.K. Department for International Development (DFID), which yielded evidence on the factors influencing education choice. Emanuela di Gropello and Mai Thi Thanh were core team members at the concept stage and helped shape the analytical agenda for the report. Dung Doan and Bhagyashree Katare pro- vided analytical support for chapter 1. Nguyen Minh Nguyet and Anna Coronado provided administrative support to the team. Carolyn Goldinger edited the report. The book was first published in Vietnam in November 2013 as the World Bank’s Vietnam Development Report 2014. This version of the book is updated to reflect new literacy assessment data and data on Vietnam’s performance in the 2012 Programme for International Student Assessment (PISA). It was prepared under the guidance of Victoria Kwakwa, country director for Vietnam, and Luis Benveniste, education sector manager for East Asia and Pacific. The preparation benefited from excellent comments from peer reviewers Ariel Fiszbein, Mamta Murthi (at concept stage), and Omar Arias (at completion stage) as well as from James Anderson, Michael Crawford, Gabriel Demombynes, Vo Kieu Dung, Deepak Mishra, Lars Sondergaard, Xiaoqing Yu, and many ­ others. The team acknowledges extensive comments and advice received throughout preparation from Caine Rolleston from the Young Lives research team at Oxford University. The team thanks participants in numerous consultation meetings with Vietnamese citizens, employers, policy makers, education practitioners, and development Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   xiii   xiv Acknowledgments partners, both online in coordination with the VietnamNet online newspaper and face-to-face, for their advice and views that shaped the hypotheses and the mes- sages in this book. This book would not have been possible without data from the World Bank’s Skills Toward Employment and Productivity (STEP) skills measurement project, which collects information on workforce skills in multiple countries across the world, including in a first round in Vietnam, Yunnan Province of China, the Lao People’s Democratic Republic, Sri Lanka, and Bolivia in 2011–12. The Vietnam surveys were managed by Maria Laura Sanchez Puerta and Alexandria Valerio from the World Bank’s Human Development Network under the oversight of Ariel Fiszbein, then the network’s chief economist. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 About the Authors Christian Bodewig is a sector leader for human development in the World Bank’s Europe and Central Asia regional department, where he coordinates the Bank’s program in education, health, and social protection and labor in Central Europe and the Baltics. He has led analytical and operational programs in education, skills, labor markets, and social protection in Vietnam and Central and Southeastern Europe. Mr. Bodewig is also a coauthor of the World Bank study Skills, Not Just Diplomas: Managing Education for Results in Eastern Europe and Central Asia. He holds degrees in economics and political economy from University College London and the London School of Economics. Reena Badiani-Magnusson is an economist in the World Bank’s East Asia and Pacific Human Development Unit. She has worked on social protection design and delivery, poverty and inequality, labor markets, and impact evaluations in India, the Republic of Congo, the Republic of the Union of Myanmar, Thailand, and Vietnam. Prior to joining the World Bank, she consulted or worked for the International Crops Research Institute for the Semi-Arid Tropics, the Organisation for Economic Co-operation and Development, Arthur Andersen, and Statesman’s Yearbook. Ms. Badiani-Magnusson holds a PhD in economics from Yale University. Kevin Macdonald specializes in economic analysis of education sector invest- ment and policy reform. During the past six years, he has worked with the World Bank, UNICEF, the United Nations Development Programme, and gov- ernments and research institutes in more than 20 countries, primarily in East Asia and the Pacific, West Africa, Eastern Europe, and the Middle East. His expertise includes program and policy evaluation, cost-benefit analysis, and capacity building. Mr. Macdonald holds a master’s degree in economics from the University of British Columbia in Vancouver, Canada. David Newhouse is a senior economist in the South Asia Economic Policy and Poverty group of the World Bank and works primarily on issues related poverty in Pakistan and Sri Lanka. He has previously been a labor econo- to ­ mist in the Social Protection Anchor where he co-led efforts to monitor markets in developing countries and analyze the policy response to the labor ­ 2008 financial crisis. He coauthored three background papers to the 2013 Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   xv   xvi About the Authors World Development Report on jobs and led analytical tasks on jobs and youth employment in Indonesia and Papua New Guinea. Mr. Newhouse holds a PhD in economics from Cornell University. Jan Rutkowski is a lead economist in the World Bank’s Europe and Central Asia Human Development Unit. His work focuses on labor market outcomes and poverty, the determinants of job creation, the impact of regulations on labor market performance, the demand for skills, and the role of labor market information in addressing a skills mismatch and reducing structural unemploy- ment. He has written numerous papers, contributed to books, and coauthored the regional World Bank flagship report Enhancing Job Opportunities: Eastern Europe and the Former Soviet Union. Prior to joining the World Bank in 1994, Mr. Rutkowski was a section chief at the Research Center for Economics and Statistics in Poland. He has a PhD in economics from Warsaw University. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Executive Summary Education has played an important role in making Vietnam a development success story over the last 20 years. In the 1990s and early 2000s Vietnam expe- ­ rienced rapid economic growth. The accelerated growth was driven predomi- nantly by productivity increases that came in the wake of a rapid shift of employment from low-productivity agriculture to higher-productivity nonfarm jobs. Vietnam’s economy began to industrialize and modernize. Poverty fell dra- matically. And education played an enabling role. Vietnam’s committed effort to promote access to primary education for all and to ensure its quality through centrally set minimum quality standards has contributed to the country’s reputa- tion for having a young, well-educated workforce. Results from the 2012 Programme for International Student Assessment (PISA) and new evidence from an adult skills survey presented in this book show that literacy and numeracy among Vietnam’s youth and young urban adult workforce are strong and exceed those of even some wealthier countries. Despite its clear progress, Vietnam is facing new challenges. The pace of ­ economic growth and the reallocation of jobs away from agriculture have slowed in recent years. Rather than productivity improvements, capital investments have become the main source of economic growth, but this model is not sustainable for ensuring continued rapid economic growth. The size of its workforce is still expanding, but its youth population is shrinking, which means that Vietnam can- not continue to rely on the size of its workforce for continued success. Instead, it needs to focus on making its workforce more productive and on alleviating skills barriers to labor mobility. Skilled Workforce Needed for Vietnam’s Economic Modernization Equipping its workforce with the right skills will be an important part of Vietnam’s effort to accelerate economic growth and further its economic mod- ernization in the coming decade and beyond. Judging by the experience of its more advanced neighbors, Vietnam’s economic modernization will involve a shift in labor demand from today’s predominantly manual and elementary jobs toward more skill-intensive nonmanual jobs, from jobs that largely involve Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   xvii   xviii Executive Summary routine tasks to those with nonroutine tasks, from old jobs to “new” jobs. And new jobs will require new skills. These new jobs can already be found in today’s labor market, but Vietnam’s employers struggle to find the right workers for them. Despite the impressive literacy and numeracy achievements among Vietnamese workers, many Vietnamese firms report a shortage of workers with adequate skills as a signifi- cant obstacle to their activity. A majority of employers surveyed for this book said that hiring new workers is difficult either because of the inadequate skills of job applicants (a skills gap), or because of a scarcity of workers in some occupa- tions (a skills shortage). Unlike many countries around the world today, Vietnam does not suffer from low labor demand; its employers are seeking workers, but they cannot find the workers that match their skill needs. Wanted: Cognitive, Social and Behavioral, and Technical Skills What skills are in demand in Vietnam’s nonagricultural labor market today? Employers identify technical skills as the most important skills they are looking for when hiring both white- and blue-collar workers. Such technical skills may be the practical ability of an electrician to do the job. But employers are also looking for cognitive skills and social and behavioral skills. For example, next to technical skills, working well in teams and being able to solve problems are considered important behavioral and cognitive skills for blue-collar workers. When ­ employers hire white-collar workers, they expect that the employees can think critically, solve problems, and present their work in a convincing manner to ­clients and colleagues. In short, Vietnam’s new jobs require that workers have good foundational skills, such as good reading and mathematics ability. But to be successful in the future, workers also need more advanced skills that will help them respond to changes in workplace demands. As the remarkable performance of its 15-year-old students in PISA 2012 testifies, Vietnam’s education system has a strong track record in producing good foundational skills. But employers’ views suggest that it faces greater challenges in producing the advanced skills that will be in greater demand in coming years. Three Steps for a Holistic Skills Strategy This book summarizes emerging evidence on the formation of cognitive, social and behavioral, and technical skills. Cognitive skills formation is the most inten- sive in the first years of life and continues through adolescence. Social and behavioral skills are also first formed in childhood and continue to evolve throughout adult life. Stronger cognitive and behavioral skills will help workers to continuously update their technical skills during their working lives. The need to focus on skills will gain importance as Vietnam’s population ages, as produc- tion in Vietnam becomes more technically sophisticated, and as workers need to catch up with technological changes occurring during their longer working lives. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Executive Summary xix What does this mean for Vietnam’s education and training system? This book proposes a three-step holistic skills strategy that looks at today’s workforce as much as the future workforce. Step 1: Promoting School Readiness through Early Childhood Development Vietnam can do more to promote school readiness through early childhood development interventions. Efforts at expanding access to preschool education for 3- to 5-year-olds are showing success, but more attention is needed for chil- dren from birth to age 3, in particular on tackling malnutrition. Almost a quarter of the children below the age of 5 are stunted. In Vietnam and around the world, stunting has been found to have a strong negative effect on cognitive skills devel- opment. Some stunted children remain behind for the rest of their lives. Vietnam cannot afford that. Step 2: Building Cognitive and Social and Behavioral Foundation Skills in General Education Vietnam can further strengthen students’ cognitive and social and behavioral foundation skills by promoting more schooling and better schooling in primary and secondary education. Doing so entails expanding enrollments in full-day schooling and preventing early school leaving after primary and lower secondary education as well as renovating the curriculum and teaching methods to help Vietnamese students to become more effective problem solvers, critical thinkers, better communicators, and team workers. Work on a new curriculum is already under way, and Vietnam has adapted a promising model from Colombia called Escuela Nueva, which features more group learning and problem solving than the memorization and copying often seen in Vietnamese primary school classrooms today. A pilot under way in 1,500 schools across Vietnam is already showing suc- cesses and holds lessons for broader reforms. Step 3: Building Technical Skills through a More Connected System Vietnam can build better and more technical skills among its graduates and labor market entrants. Technical skills shortages and gaps are not the concern; rather, they are indicators of a dynamic economy that creates new, more skill- intensive jobs. The concern is whether the education and training system is equally dynamic in adjusting quickly to ensure that the supply of technical skills can keep up with the constant and accelerating evolution of the demand for technical skills. Ensuring that Vietnamese graduates come with the right technical skills requires that businesses, universities, and vocational schools, and current and prospective students become better connected. Better coordination and part- ­ nerships can help improve the information about what skills employers need and are likely to need in the future. Better information on graduates’ job place- ments can help future students to choose the best schools, universities, and programs. Occupational competency standards and certification systems can improve the information about the skills that workers possess. More autonomy Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 xx Executive Summary in decision making, coupled with accountability for the employability of their graduates (the right incentives) and better-skilled staff and equipment (enhanced capacity), will help universities and vocational schools respond effectively to the information on employer needs. Scholarship programs can provide more students, including the disadvantaged, with opportunities. The government can be a help in creating a more dynamic and b ­ etter-connected skills development system. Rather than planning and managing the education and training system centrally and top-down, the government should help to overcome the disconnects through empowering students, universities, and schools and businesses to make good decisions—by facilitating the flow of infor- mation, by providing the right incentives to schools and universities to be respon- sive to information, and by carefully investing in raising their capacity. The Need to Act Vietnam’s continued transformation toward a successful industrial, middle- income economy is not automatic or guaranteed. Structural reforms and sound macroeconomic policies will matter in ensuring continued fast change, but so will the quality of Vietnam’s workforce. Changes in education and training can take a generation to result in a workforce equipped with the right skills. To ensure that worker skills do not become a bottleneck, Vietnam must act now to modernize skills development. Preparing the workforce for an industrial economy, however, is not just the government’s job. It requires a change in behavior by all actors in skills development—employers, schools and universities, and students and their ­ parents. Businesses and universities need to build close partnerships. Parents ­ need to become more involved in their children’s schooling. Students need to experience the world of work before their graduation. In rural areas, all parties need to ensure that children from disadvantaged backgrounds have the oppor- tunity to meet their full potential. The role of government is to facilitate this change in behavior by helping to ensure a better information flow among all the actors; to address capacity constraints, including financing capacity; and to set the right incentives by freeing up universities to partner more effectively with businesses. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Abbreviations ADB Asian Development Bank ALL Adult Literacy and Life Skills Survey ASEAN Association of Southeast Asian Nations CDA Cognitive Development Assessment CECODES Centre for Community Support and Development Studies CIEM Central Institute for Economic Management DFA District Fundamental School Quality Level Audit DFID U.K. Department for International Development EDI Early Development Instrument EPL employment protection legislation FDI foreign direct investment FSQL Fundamental School Quality Level GDETA General Department of Testing and Accreditation GDP gross domestic product GPE Global Partnership for Education HCMC Ho Chi Minh City IALS International Adult Literacy Survey ISCED International Standard Classification of Education IT information technology IYCF infant and young child feeding LMC lower-middle-income country LSE lower secondary education MCST Ministry of Culture, Sports, and Tourism of Vietnam MDGs Millennium Development Goals MIC middle-income country MOET Ministry of Education and Training of Vietnam MOLISA Ministry of Labor, Invalids, and Social Affairs of Vietnam NCS National Competency Standard NGO nongovernmental organization Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   xxi   xxii Abbreviations OECD Organisation for Economic Co-operation and Development PIAAC Programme for the International Assessment of Adult Competencies PISA Programme for International Student Assessment PPVT Peabody Picture Vocabulary Test SABER Systems Approach for Better Education Results SAR special administrative region SEQAP School Education Quality Assurance Program SMEs small and medium enterprises SOE state-owned enterprise STEP Skills Toward Employment and Productivity TE tertiary education TFP total factor productivity TVET technical and vocational education and training UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific, and Cultural Organization UNICEF United Nations Children’s Fund USE upper secondary education VFF-CRT Centre for Research and Training of the Viet Nam Fatherland Front VHLSS Vietnam Household Living Standards Survey VLSS Vietnam Living Standards Survey VNEN Vietnam Escuela Nueva VTCB Vietnam Tourism Certification Board VTOS Vietnam Tourism Occupational Skills Standards WHO World Health Organization Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview Vietnam is a country undergoing multiple transitions. The transition from central planning to a market economy, started in 1986 with the d ¯ôi mó’i (renovation) ? reforms, is much advanced but not yet complete. The same is true for the transi- tion from an agricultural economy to a modern, industrialized economy. In advancing along these parallel transitions, Vietnam has been counting on one of its biggest assets—its abundant young workforce. But Vietnam is also going through a demographic transition toward an aging society. While the size of its workforce is still expanding, Vietnam’s youth population is shrinking. This means that Vietnam cannot continue to rely on the size of its workforce to advance these transitions; instead, it needs to focus on making its workforce more productive. A skilled workforce is central to the success of Vietnam’s economic and social transitions, and, fortunately, there is a long-standing consensus across Vietnamese society on the importance of education. The focus on education is evident in the considerable public and private investments in education and growing levels of educational attainment. There is also, however, an equal consensus that Vietnam still needs to do more to develop the “skills” or “quality” of its workforce—one of the three breakthrough goals of the country’s 10-year (2011–20) socioeconomic development strategy. Today, a growing public debate among students, parents, employers, educators, and policy makers is under way on what skills are required in the modern market economy, how to ensure that these skills are developed in future graduates, and how each of the stakeholders can participate in improving the skills of the workforce. This book seeks to contribute to the public debate on the topic of skills and to inform Vietnam’s strategic skills development. Using new survey instruments developed by the World Bank as part of the Skills Toward Employment and Productivity (STEP) project, the book analyzes the demand for skills by Vietnamese employers in the greater Hanoi and Ho Chi Minh City (HCMC) regions, Vietnam’s economic growth poles, and assesses the skills profile of the working-age population in urban Vietnam. Based on this analysis, it examines how and when different types of skills are formed and what these data mean for reforming the education and training systems. It proposes a set of policy ­ Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   1   2 Overview recommendations along three steps of a holistic skills strategy: first, promoting school readiness through early childhood development; second, building the cogni- tive and social and behavioral (also called noncognitive) foundation skills in general education; and, third, building technical skills through a more connected system. Skills and Development in Vietnam Looking Back: Vietnam’s Shift Away from Agriculture and the Role of Education Vietnam’s economy has undergone fundamental structural changes over the last 25 years with a shift of employment from the agricultural sector to wage employment in manufacturing, construction, and services. Since the launch of the d¯ôi mó’i reforms in the late 1980s Vietnam has experienced rapid economic ? growth, which catapulted it to middle-income status in 2010 and contributed to a fast decline in poverty (World Bank 2012c). This economic miracle was initially associated with substantial labor productivity increases—GDP (gross domestic product) per employed person more than doubled between 1990 and 2010— that came in the wake of improved agricultural efficiency and a rapid shift of employment out of low-productivity agriculture into higher-productivity non- farm jobs (figure O.1). Education has been important in supporting and promoting structural change, and Vietnam’s population has become increasingly well educated. The fraction of the population with less than primary school has plummeted over time, and those born in the period following the d ¯ôi mó’i reforms have attained ? higher levels of education than any other generation in the country’s history. Figure O.1 Vietnam’s Shift of Employment Away from Agriculture, 1993–2010 70 60 50 40 Percent 30 20 10 0 01 08 09 10 93 98 99 00 02 03 94 04 05 06 95 96 07 97 20 20 20 20 19 19 19 20 20 20 19 20 20 20 19 19 20 19 Agricultural employment Nonagricultural wage employment Source: World Bank staff estimates using VHLSS 2010. Note: VHLSS = Vietnam Household Living Standards Survey. The 2010 VHLSS used a new sample frame based on the 2009 census. This captures migration between 1999 and 2009 from rural to peri-urban areas, where fewer workers work in agriculture. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 3 Vietnam’s committed efforts to promote access to primary education for all have allowed increasing shares of the population to take advantage of greater economic opportunities. The rise in educational attainment has, however, been uneven across Vietnam. While more and more young people complete primary education, important inequities in access and attainment remain at secondary levels, affecting in particular children from ethnic minority families or those residing in remote areas. A needed expansion in secondary education will come through greater enrollment of the less well-off. Education has provided most Vietnamese workers with the key basic skills needed to succeed in the workforce: the ability to read and write at an adequate level. In addition to expanding access, government efforts to centrally set mini- mum quality standards have contributed to achieving good basic education outcomes. New evidence from the STEP surveys shows that literacy and numer- acy among Vietnam’s students and young adult workforce are widespread and more so than in other countries. It shows that, although older Vietnamese work- ers trail their peers in OECD (Organisation for Economic Co-operation and Development) countries in literacy, young Vietnamese outperform their peers in many wealthier OECD countries (figure O.2). This evidence is consistent with Vietnam’s results from the 2012 Programme for International Student Assessment (PISA), in which 15-year-old Vietnamese students performed strongly in math- ematics, reading, and science and did better than the OECD average (OECD 2013b). The message, therefore, is: although inequities remain, Vietnam’s basic education system today appears to be doing a fine job at imparting key basic skills for the majority of its students. Increasingly well educated, young Vietnamese workers today have stronger basic skills than previous generations. Looking Ahead: Modern Jobs and Changing Skill Needs The pace of economic growth and the reallocation of jobs away from agriculture have slowed in recent years. This slowdown has come in the wake of macroeco- nomic instability, structural problems in the enterprise sector, and weaknesses in the banking sector. It has affected the labor market, with evidence of a bifurca- tion that is associated with educational attainment. While well-educated workers are taking advantage of expanding opportunities in the private sector, especially in urban areas, less-educated workers, and particularly those in rural areas, are having difficulties. Less-educated workers and youth from rural areas have a harder time transitioning into the expanding private sector and are often left in the agricultural sector or in informal employment. Economic growth has not just decelerated; its composition has also changed compared to the early years of d ¯ôi mó’i. Productivity growth was the main driver ? of GDP growth in the early years of Vietnam’s transition, but more recently capital investments have become the main source of economic growth (World Bank 2012b). This model is not sustainable for ensuring continued strong eco- nomic growth. Vietnam has every potential to continue its success story and achieve fast growth and convergence in living standards with richer nations in the coming decade and more. But to do so, it will need to promote labor Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 4 Overview Figure O.2 Literacy Proficiency of Vietnamese Adults Compared with Peers in OECD Countries a. Literacy proficiency of 16- to 24-year-olds 310 PIAAC and STEP literacy scores 300 290 280 270 260 250 240 es ly n No a ay ite nce En s n d nd ria d lia Ge ge y De m p. k u an ar d pa ai Ko an an Ita Re at na pr rw ra st na a la Sp nm Un ra rm er nl gl Ja St st u Po Cy et a, Ca F A Av Fi Au d Vi re n ba Ur b. Literacy proficiency and GDP per capita 305 300 295 PIAAC and STEP literacy scores 290 PIAAC participating countries 285 280 275 Urban Vietnam 270 265 260 255 0 10,000 20,000 30,000 40,000 50,000 GDP per capita (2005 international $) Sources: Vietnam estimates from World Bank staff analysis using STEP household survey data. Literacy scores from other countries were measured as part of the PIAAC, and the unadjusted scores are taken from table A2.2a in OECD 2013a. GDP per capita are based on 2005 purchasing power parity and were obtained from the World Development Indicators 2012. Note: GDP = gross domestic product; OECD = Organisation for Economic Co-operation and Development; PIAAC = Programme for the International Assessment of Adult Competencies; STEP = Skills Toward Employment and Productivity. ­roductivity growth and foster a continued shift of employment into the p ­nonagricultural sector. Equipping its workers with the right skills will be an important part of Vietnam’s effort to accelerate economic growth and further advance its economic transition. Judging by the experience of its more advanced neighbor, the Republic Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 5 of Korea, Vietnam can expect a shift in labor demand from today’s predominantly manual and elementary jobs toward more skill-intensive nonmanual jobs, from jobs that largely involve routine tasks to those with nonroutine tasks, from tradi- tional jobs to modern jobs. And these modern jobs will require new skills. Modern skill-intensive jobs are becoming more prominent in Vietnam’s labor market and carry high returns. Most nonfarm jobs in Vietnam today are in blue- collar occupations (craftsmen, machine operators, and manual workers) and in the service and sales sector. Better-educated professionals and technicians make up less than a quarter of the nonagricultural workforce. Young graduates are increasingly entering professional and technical occupations, and they report that they need a number of attributes for their jobs: they have to solve problems, learn new things frequently, present ideas or persuade clients at work or interact with noncolleagues (figure O.3). Evidence presented in this book suggests that the nature of tasks performed by Vietnamese workers has been changing from pre- dominantly manual and routine tasks, where workers are asked to perform the same function on a regular basis, toward more analytical, interactive, and non- manual tasks where the type of tasks changes regularly. Workers performing these tasks are also better remunerated than their peers in traditional jobs. A major problem is that Vietnam’s employers are struggling to find the right workers for these modern jobs. The employers report that the lack of workers Figure O.3  Frequency of Problem Solving by Wageworkers, by Occupation 100 90 80 70 60 Percent 50 40 30 20 10 0 s ls ns ke s en s rs er or le r at e na ke cia ke er hin m w d sa rs ag io or s ts or ni or an op ac s lw af an es w ch M M Cr of ua al Te ice ic Pr an er rv M Se Cl Less than once a month At least once a month At least once a week Every day Source: World Bank staff estimates using STEP employer survey data. Note: STEP = Skills Toward Employment and Productivity. The figure shows responses to the following question: “Some tasks are pretty easy and can be done right away or after getting a little help from others. Other tasks require more thinking to figure out how they should be done. As part of this work as [occupation], how often do you have to undertake tasks that require at least 30 minutes of thinking (examples: mechanic figuring out a car problem, budgeting for a business, teacher making a lesson plan, restaurant owner creating a new menu/dish for restaurant, dressmaker designing a new dress).” Respondents were asked to indicate how often they conducted a task of this form. The sample includes only wage employees (n = 1,313). Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 6 Overview with adequate skills is a significant obstacle to their activity. STEP evidence sug- gests that worker skills and availability are more serious concerns for employers than labor market regulations and taxes. A majority of employers said that hiring new workers is a challenge either because of inadequate skills of job applicants (a skills gap), or because of a scarcity of workers in some occupations (an occu- pational skills shortage). The skills gap is particularly acute among applicants for jobs in technical, professional, and managerial occupations—jobs that are more likely to ask workers to conduct analytical, nonmanual, and nonroutine tasks. In contrast, a skills shortage, or a shortage in applicants in particular types of jobs, is common among more elementary occupations. Skills in Demand Today and for the Next 10 Years Defining Skills A worker’s skill set consists of different domains of skills: cognitive, social and behavioral, and technical. These domains cover technical skills that are relevant to particular occupations as well as cognitive abilities and the various personality traits that are crucial for success in the labor market. Cognitive skills include the use of logical, intuitive, and creative thinking and problem solving using acquired knowledge. They include literacy and numerical ability and extend to the ability to understand complex ideas, learn from experience, and analyze problems using logical processes. Social and behavioral skills capture personality traits that are linked to labor market success: openness to new experiences, conscientiousness, extraversion, agreeability, and emotional stability. Technical skills range from having the manual dexterity to use complex tools and instruments to ­ occupation-specific knowledge and skills in areas such as engineering or medicine ­ (figure O.4). Figure O.4 The Three Dimensions of Skills Measured in the STEP Survey Cognitive Social and behavioral Technical Involving manual dexterity and Involving the use of logical, Soft skills, social skills, the use of methods, materials, intuitive, and creative thinking life skills, and personality traits tools, and instruments Raw problem-solving ability Openness to experience, Technical skills developed versus knowledge to solve conscientiousness, extraversion, through vocational schooling problems agreeability, emotional stability or acquired on the job Verbal ability, numeracy, problem Self-regulation, perseverance, Skills related to a specific solving, memory (working and decision making, interpersonal occupation (e.g., engineer, long-term), and mental speed skills economist, IT specialist, etc.) Source: Pierre, Sanchez Puerta, and Valerio, forthcoming. Note: IT = information technology; STEP = Skills Toward Employment and Productivity. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 7 Vietnamese employers are looking for a mix of high-quality cognitive, social and behavioral, and technical skills. Employers in greater Hanoi and HCMC surveyed for this book identified technical skills as the most important skills they are looking for when hiring both white- and blue-collar workers. Such technical skills may be the practical ability of an electrician to do the job. Like employers in more advanced middle- and high-income economies, however, Vietnam’s employers report that they are also looking for employees with strong cognitive skills and social and behavioral skills. For example, next to technical skills, teamwork and problem-solving skills are considered important behavioral and cognitive skills for blue-collar workers. When they hire white- collar workers, employers expect that these workers are critical thinkers, can solve problems, and communicate well. Basic cognitive skills such as literacy and numeracy feature less prominently. That does not mean that they are not important—but it may mean they are simply taken for granted. In short, Vietnam’s employers require that workers are not only good readers, but also good problem solvers (figure O.5). How Cognitive, Social and Behavioral, and Technical Skills Are Formed The skill profile of the Vietnamese workforce reflects investments made through- out their lifetimes. The foundations of cognitive and social and behavioral skills are formed early and are the platform upon which later skills are built. A skills strategy must take into account all of the points at which skills are formed and be built up from the early investments made during early childhood to on-the- job training in the labor market. Figure O.6 provides a simplified summary of emerging evidence on the differ- ent points in childhood and early adulthood during which cognitive, social and behavioral, and technical skills may be formed. Four features of skill formation are worth noting for the development of a skills strategy. 1. The most sensitive periods for building a skill vary across technical, cognitive, and social and behavioral skills. These periods are indicated in dark shading in figure O.6; periods during which the skills are less sensitive to investment are ­ indicated in light shading, and periods during which sensitivity is most ­ limited are indicated in white. Research shows the critical importance of good early stimulation and early childhood development to be able to make the most of one’s abilities. Children who fall behind early have a hard time catching up to their peers. Social and behavioral skills are beginning to be formed in the early years and continue to evolve throughout adult life. 2. Skill formation benefits from previous investments and is cumulative. A child who has learned to read fluently by second grade will be able to absorb more in third grade than a child who cannot yet read fluently. This implies that earlier investments are likely to have a greater long-term impact on skills because it is easier and less costly to build these skills at the moments when children are most receptive to learning. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 8 Overview Figure O.5 Employers’ View of Importance of Job-Related Skills for Blue- and White-Collar Workers Job-specific technical skills Leadership Problem solving Creative and critical thinking Communication Ability to work independently Teamwork Numeracy Foreign language Literacy Time management 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Index of the importance of skills (0–4) Blue-collar workers White-collar workers Source: World Bank staff estimates using STEP employer survey data. Note: STEP = Skills Toward Employment and Productivity. White-collar workers include the following: managers, professionals, technicians, and associated professionals. Blue-collar workers are classified as the following: clerical support; service; sales; skilled agriculture, craft, and related trades; plant and machine operators; and elementary occupations. This figure is based on the 328 and 329 businesses that reported having at least one worker in the white- and blue-collar category and were willing to respond about the skills used and needed by that worker in his or her work. The differences between blue- and white-collar occupations are all statistically significant with the exception of technical skills and communication skills. 3. Social and behavioral skills are valuable early in a child’s life because they support, and benefit from, cognitive skills development. Children who display more open- ness to new experiences are more likely to be imaginative and creative and to apply themselves at school. 4. Technical skills—often acquired last, through technical and vocational education and training (TVET), higher education, and on-the-job learning—will benefit from the stronger cognitive and behavioral skills acquired earlier in the education sys- tem. The skills learned in formal education will help workers to continuously update their technical skills during their working lives. This ability will rise in Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 9 Figure O.6  The Process of Skill Formation: A Simplified Model Primary Secondary Post- Lifelong 0 to 3 3 to 5 school school secondary learning Social and behavioral skills Technical skills Cognitive skills Source: Authors’ illustration based on international evidence from a range of disciplines studying the development of abilities, including psychology, economics, and neuroscience. Note: An overview of this literature can be found in Shonkoff and Phillips 2000; Almlund et al. 2011; Cunha, Heckman, and Schennach 2010; and Cunha and Heckman 2007. importance as Vietnam’s population ages, as production in Vietnam becomes more technically sophisticated, and as workers need to catch up with techno- logical progress during their longer working lives. Skills development starts at birth and continues through early childhood edu- cation and general primary and secondary education all the way to vocational and tertiary education and on-the-job training. Vietnam’s skills development strategy should, therefore, take a holistic approach and look at how to better equip indi- viduals with relevant skills and knowledge along an individual’s life cycle. This book examines cognitive and behavioral skills acquisition in early childhood and general education and technical skill acquisition in vocational and tertiary educa- tion and on-the-job training. Preparing the Workforce for a Modern Market Economy Vietnam’s general education system has undergone a remarkable transformation since d¯ôi mó’i and is now entering a new phase. Enrollments have expanded dra- ? matically at every level, and Vietnam’s population has become increasingly well educated over the last decades. An initial successful focus on expanding primary education access and completion, as called for under the Millennium Development Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 10 Overview Goals (MDGs), has made way to an increased emphasis on expanding pre-­ primary, secondary, and tertiary education enrollments and raising the quality of provision. This is expected to help address three key challenges. First, pre- primary education to promote school readiness provides the best chance to overcome remaining inequalities in education. Second, enhanced enrollments at the secondary level and improvements in teaching methods and quality should help enhance the cognitive and behavioral foundation skills of graduates. Third, overcoming disconnects among employers, universities and vocational training providers, and (prospective) students can help ensure that graduates come equipped with better technical skills. A holistic skills development strategy for Vietnam, therefore, should entail three steps (figure O.7). Step 1: Promoting School Readiness through Early Childhood Development Early childhood development and education for children below the age of 6 is the most important entry point for building their cognitive and behavioral skills and making them ready for school. The right nutrition and stimulation before the age of 3 through effective parenting and quality preschool between ages 3 and 6 contribute to children’s school readiness. The concept of “school readiness” or “readiness to learn at school” represents whether a child entering primary school is able to succeed at school. School readiness is generally considered to be the product of a young child’s cognitive, physical, and socioemotional development from an early age onward (Naudeau et al. 2011). Figure O.7 Three Steps in Skills Development Technical and behavioral skills Cognitive and behavioral skills foundations deepening Primary Secondary Post- Lifelong 0 to 3 3 to 5 school school secondary learning 3. Employability • Better information 2. Cognitive and • Right incentives behavioral foundations • Enhanced capacity • More full-day schooling and 1. School readiness expanded enrollments • Quality preschool • Curriculum, teaching methods, • Good parenting and assessment • Good feeding practices • Greater role for parents • Early stimulation • Child health Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 11 Vietnamese children from poor backgrounds are at a disadvantage in their readiness for school. In 2012 the Ministry of Education and Training (MOET) assessed school readiness among 5-year-old children in public preschools, using a survey that adapted the Early Development Instrument (EDI) to measure the development of children across five domains: physical health and well-being, social knowledge and competence, emotional health/maturity, language and cognitive development, and general knowledge and communication skills. The ­ survey showed that children from poor households were significantly behind nonpoor children across these domains of school readiness (MOET 2012). Malnutrition is a key driver of school “un-readiness.” Almost a quarter of Vietnamese children below the age of 5 are stunted (GSO and UNICEF 2011; see figure O.8, panel a). Apart from poverty, child malnutrition can be explained by inadequate infant and young child feeding practices, including low rates of breastfeeding. In Vietnam and around the world, stunting has been found to have strong negative effects on cognitive skills development (Le Thuc Duc 2009). Deficits in school readiness will persist throughout life. Much of the ­inequality in learning outcomes between different types of young Vietnamese observed in primary education and beyond is already established before the age of formal schooling. The government of Vietnam has placed increased focus on e ­ nhancing school readiness, a policy that is well motivated and addresses a key area of deficit. Vietnam’s efforts at expanding access to preschool education for 3- to 5-year-olds are showing success, but more attention is needed for children aged 0–3, in particular on tackling malnutrition. Children from poorer households often lack stimulation, which limits their development potential from an early age. The brain development of young chil- dren is highly sensitive to stimulation and interaction. The more parents and caregivers interact with a young child, by talking, singing, or reading, the better are the conditions for brain development. Evidence shows that in Vietnam, Figure O.8  Adult Stimulation and Stunting among Children from Poorer and Wealthier Backgrounds a. Percentage of children under age 5 with b. Percentage of children aged 35 to 59 low height for age months receiving regular adult stimulation 45 100 40 90 35 80 30 70 60 Percent 25 Percent 50 20 40 15 30 10 20 5 10 0 0 National Q1 Q2 Q3 Q4 Q5 All Poorest Wealthiest (poorest) (wealthiest) quintile quintile Wealth index Source: GSO and UNICEF 2011. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 12 Overview young children from the poorest households receive less stimulation from their parents than children from the wealthiest families (figure O.8, panel b). This finding implies that during these early years, in which children’s brains are the most sensitive to interactions and learning, children from poor households are not receiving the investments that they need and are already falling behind children from wealthier households. ­ The support for the development of children aged 0–3 remains weak in Vietnam. Considerable international and Vietnamese evidence presented in this report shows that targeted interventions can reduce stunting and mitigate its effect on a child’s cognitive development. Despite high rates of stunting among children under the age of 5 and strong evidence of low and declining use of breastfeeding, the key policy interventions needed to curb the effects of malnu- trition are not yet adequately prioritized in government policy. These interven- tions include a focus on child nutrition, particularly infant and young child feeding. There is significant scope for more systematic promotion of breastfeed- ing and child stimulation through family-based interventions in hospitals after birth, in local health stations, in communities, and through communication cam- paigns. These programs can be complemented by social safety nets to enable poor parents to make better choices for their children. In contrast, the promotion of preschool for children aged 3–6 is currently the government’s main policy lever to enhance school readiness. As a result of recent reforms, Vietnam’s early childhood education system has many strengths, including a sound policy framework, child-focused curriculum, and rapidly expanding provision in the wake of the program to universalize full-day pre- school for 5-year-old children (Program 239). Policies to promote access and quality at the national level, however, have not yet been fully translated into actual provision in the provinces, creating wide variations in quality and access that affect disadvantaged children. While promoting access remains a priority, particularly in underserved regions, the government’s focus is now increasingly shifting toward translating its modern and child-centered curriculum into quality provision across all classrooms through upgrading the competence of the current teaching workforce. Step 2: Building Cognitive and Social and Behavioral Foundation Skills in General Education The next step for Vietnam’s general education system is to balance good basic literacy and numeracy skills with higher-order cognitive skills such as problem solving and critical thinking. Vietnam’s general education system is successful in providing graduates with good basic cognitive skills. Reforms should care- fully build on the system’s strengths. Shifting the emphasis in general education toward making sure that more children also learn and acquire the higher-order cognitive and behavioral skills demanded in Vietnam’s labor market does not mean that the system needs wholesale reform. Instead, it needs careful adjust- ments, building on its strong features. Building stronger cognitive and behav- ioral skills will require (a) more schooling for all, with full-day instruction and Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 13 expansion of access to secondary education; (b) better schooling for all, with a curriculum and teaching and assessment methods that foster the development of cognitive and behavioral skills in students; and (c) greater involvement of parents and communities in schooling. More Schooling for All Enhancing cognitive skills among Vietnam’s next generation will require that they spend more time in school. First, enrollments in secondary education in Vietnam remain below potential. Enrollments are particularly low among children from less wealthy backgrounds. Education careers need to be extended through increas- ing progression rates from primary to lower secondary, from lower secondary to upper secondary, and then to postsecondary education. Accomplishing this goal will require easing the financial barriers to education affecting less well-off stu- dents through fee waivers and direct cash support. Second, tuition time in pri- mary education with between 23 and 25 instruction periods over a school year of 36 weeks remains low compared to other countries. Better-off parents tend to make up for this by paying for their children to attend extra classes—regular, core academic lessons typically by their own teachers after school hours. Extra classes are not only a Vietnamese phenomenon; they are also encountered across several countries in East Asia. But they are prominent in Vietnam: in 2010 parents of 33 percent of primary students and 49 percent of lower secondary students reported some expenditure on coaching sessions for academic subjects. Extra classes are problematic in multiple ways. First, if they focus on the same academic knowledge on a narrow part of the formal half-day curriculum (coach- ing sessions for compulsory subjects) as opposed to a wider curriculum and activities that help build behavioral skills, such as arts or sports, they risk consum- ing precious time that could be allocated for alternative activities. Second, extra classes are often informal and not regulated. They place teachers in an undue position of power in relation to parents. Parents are under pressure to pay for their children’s participation in the extra classes if they want to avoid the risk that the teacher might otherwise not let the child pass the exam. There is evi- dence that many parents are asked to make unofficial payments to schools and teachers (World Bank 2012a; CECODES, VFF-CRT, and UNDP 2013). Receiving payments for extra classes may also undermine teachers’ motivation to perform well during the formal hours of instruction. Third, richer households are able to spend much larger amounts on extra classes, and extra classes are mainly an urban phenomenon. There is, therefore, a risk that extra classes may deepen inequalities in learning. Expanding formal full-day schooling can provide the space for a more varied curriculum and mix of instruction and may well be the best strategy to limit extra classes. MOET has attempted to regulate the provision of informal extra classes, but without much apparent effect. An alternative to regulating extra classes is to expand formal full-day schooling to reduce the time available for teachers to offer private tuition and help make up for their revenue loss related to forgone extra classes. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 14 Overview More schooling carries additional costs that need to be covered by the govern- ment or parents or both. Vietnam has adopted the policy of “socialization,” which involves levying user charges from those who can pay, while using budget resources to subsidize access for those who cannot (usually the registered poor). This choice is appropriate so long as it is not creating new access barriers because of user charges, but getting the balance right between those who can pay and those who cannot is tricky. Well-off parents who currently finance extra classes for their children could be asked to provide formal cofinancing to schools for full-day schooling as opposed to informal payments to teachers who provide extra classes. But there is also considerable potential to get more out of existing public expenditure because of Vietnam’s demographic transition: According to Vietnamese census data, the size of the population cohort below the age of 15 declined by 17 percent between 1999 and 2009. A decline in student numbers in general education may open fiscal space to accommodate expanding full-day schooling and enrollments at secondary level. Falling student numbers due to declining age cohorts means that budget resources (fewer schools, fewer teach- ers) could be freed up to cover additional costs associated with expanding enroll- ments in secondary education and full-day schooling, including progressively abolishing tuition fees at secondary level. Better Schooling for All What matters is not just more schooling but more quality schooling with more creative curricula and teaching and assessment methods that foster the formation of higher-order cognitive and behavioral skills. More schooling should mean ­ better schooling through a general education curriculum that balances competency- based and content-based learning, coupled with the right teaching methods to stimulate creative and critical thinking in primary and secondary school students and the right approach to student assessment. Vietnam can benefit from the experience of Singapore and Korea—two countries with leading education sys- tems. These countries adopted curricula and student assessment systems that promote both knowledge acquisition and active learning and creative and critical thinking in schools. In Vietnam, steps toward modernizing the curriculum are getting under way: In response to a call from the XI Congress of the Communist Party in 2011, MOET launched an ambitious process of developing a new general education curriculum and new textbooks by 2015 with a definition of students’ essential competencies, which will then form the basis of educational objectives, standards, learning content, teaching methods, and assessment. Curriculum change and textbook reform are important steps, but what really matters is the resulting change in the teaching methods and instruction in the classroom with skilled teachers and school principals and parental involvement. Translating a new general education curriculum into concrete change in the class- room will require modernization of teacher professional development, both in-service and pre-service, and sustained investment in its rollout to all teachers. ­ To inform its curriculum modernization, Vietnam has adapted a promising Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 15 model from Colombia called Escuela Nueva, which features more group learning and problem solving than the predominant focus on memorization and copying often seen in Vietnamese primary school classrooms today. A Vietnam Escuela Nueva (VNEN) pilot under way in 1,500 schools across the country is already showing successes and holds lessons for broader reforms, and MOET intends to advance the pilot into lower secondary education. Teacher quality matters most for better schooling, and Vietnam already has a strong teaching workforce. The primary education teacher workforce has become significantly better qualified in recent years. Nearly 60 percent of all primary school teachers now hold a college or university degree—almost double com- pared to 2006. Increased teacher qualification matters: evidence from a school survey conducted as part of the Young Lives research project on child poverty in Vietnam in 2012 suggests that high-performing schools have higher shares of teachers with a college or university degree. High teacher capacity is also evident in their ability to correctly assess their students’ ability, which is critical to help them provide the support that their students need (Rolleston et al. 2013). Higher-quality in-service professional development can help to better equip teachers with the skills to teach a modernized curriculum. Teacher training needs to focus not only on how to teach curriculum content but also on how to impart behavioral skills. There is a lot to improve: in-service professional development among primary teachers is limited, and the content and methods require ­modernization—away from the traditional cascading model (in which the MOET trains trainers who train other trainers to deliver training in the summer months) toward one in which capacities in provincial teacher training ­ colleges are enhanced to provide more tailored programs all year round and with new teaching methods. Beyond curriculum and teaching methods, student assessment needs to be aligned with the objective of fostering higher-order cognitive and behavioral skills. Vietnam makes heavy use of educational assessment: classroom assessments with written and oral tests and marked assignments and homework are used to provide real-time feedback on students’ performance to inform teaching, and national examinations are used after grade 12 for making high-stakes decisions about students’ progression to the next level in the education system. Once the curricu- ­ lum and standards in general education are adjusted to better reflect higher-order cognitive and behavioral skills, the student assessment system needs to be equipped with the tools to help assess these skills (as opposed to just content knowledge that can be memorized) in students to see how schools perform in imparting these skills and to hold schools and local education authorities account- able for results. For example, the introduction of more open-ended questions would allow for greater emphasis on higher-order thinking and problem solving. Schooling That Involves Parents and Communities A prominent role for parents in school is important for several reasons. Parents have a strong interest in ensuring their children get a quality education. Providing them with information and a forum to voice views and advise the school can Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 16 Overview make the school more explicitly accountable to them for their children’s learning progress. Much learning takes place at home, and the home environment is a critical contributor to learning success. Parents need to be aware of the school’s learning process and academic content and how they can complement these by providing effective support to their children’s learning at home—after school and during the long summer vacations. A greater involvement of parents and com- munities can also help make instruction more reflective of local needs, traditions, and contexts and can help build bridges where there are cultural and other gaps between school and home, for example, in the case of ethnic minority children who are taught by Kinh teachers. The opportunities for formal parental involvement in schools, beyond making financial contributions, are limited in Vietnam. Schools can establish a parents’ council for a class or the school as a whole but, where they exist, they have little formal powers. Such councils can channel parents’ feedback to teachers on edu- cational issues and bring their voice to the principal regarding educational activi- ties and management of the school. Legally, however, the parents’ council has only limited weight to influence the operation and monitor the performance of a public school, and in practice the role of the parents’ council is often reduced to collecting parents’ voluntary contributions to the school. A greater role of parents in the school is possible even within the current system of central standards and predominant decision making at the province level. Provinces and districts could cede certain decisions to schools and involve parents. For example, schools could be entrusted with deciding on the arrange- ments for full-day schooling, and parents could contribute to this decision mak- ing. Parents could advise on how to incorporate extra classes into the formal program and how to arrange afternoon activities under formal full-day schooling. Greater parental involvement is already occurring in Vietnam: schools participat- ing in the VNEN pilot have the freedom to bring parents into the learning pro- cess and contribute to learning content. Step 3: Building Technical Skills through a More Connected System Higher education, vocational training, and on-the-job training are the key avenues for acquiring technical skills that people need to work in their chosen ­ profession. Higher education is booming in Vietnam and is viewed as the main avenue to raising the quality of human resources by the population, businesses, and the government alike. Returns to higher education in Vietnam are large, uggesting strong demand for university graduates. Employment prospects of s­ graduates from a prestigious university in urban areas are good, but less so for those in rural and remote areas (World Bank 2013). In response to high returns to education, enrollments have expanded dramatically since 2002, though they remain low relative to comparable countries in East Asia (World Bank 2012c). Moreover, there are concerns about quality, particularly given the fast pace of expansion and the relevance of what students and trainees learn. Vocational training is less popular than higher education, and the share of 19- to 21-year- olds in vocational training has remained stagnant (figure O.9). Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 17 Figure O.9 Share of 19- to 21-Year-Olds in Postsecondary Education, by Type of Education Received, 1998–2010 70 60 50 40 Percent 30 20 10 0 1998 2004 2010 1998 2004 2010 1998 2004 2010 National Urban Rural College/professional vocational Basic vocational College (nonvocational) University Source: World Bank staff estimates using the 1998, 2004, and 2010 VHLSS surveys. Note: VHLSS = Vietnam Household Living Standards Survey. The figure shows the fraction of 19- to 21-year-olds enrolled in vocational training, college, or university. In 1998, it is not possible to separate out university and college; therefore, all college and university admissions are included in the university figure. As they encounter skill gaps and shortages in the context of expanding enroll- ments in universities and in vocational schools, some employers choose to pro- vide on-the-job training for their workers. The purpose of such training is to deepen the technical skills acquired in formal education and training and to adapt employees to the individual workplace. Many Vietnamese businesses report that they provide on-the-job training; however, most of this appears to be internal training, while external training is limited to few businesses and workers, often those that are already relatively well educated and trained. Vietnam should not be concerned about the existence of skills gaps and occu- pational skill shortages, but about the ability of the skills development system to overcome them. Skills shortages and gaps are indicators of a dynamic economy that creates new, more skill-intensive jobs. The real concern is whether the edu- cation and training system is equally dynamic in adjusting quickly to supply graduates with the technical skills to keep up with a constant and accelerating evolution in the demand for technical skills. One indicator of responsiveness to expanding demand is the strong expansion in enrollments and in the supply of universities, colleges, and vocational training institutes. But gross enrollments in tertiary education remain lower than those in neighboring countries, suggesting that supply can and will need to expand further. Another indicator is whether the rising numbers of graduates and job applicants bring the skills that employers demand. And the evidence provided in this book suggests that they often do not. Vietnam’s skill development system today is not as responsive as it needs to be and is suffering from disconnects among employers, students, and universities and vocational schools. An unresponsive, underperforming skills development Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 18 Overview system is a disconnected system in which actors make choices and act in isolation and do not sufficiently interact with each other. Schools and universities may offer programs and produce graduates with skills that do not fully reflect the needs of the labor market. Students and parents may not be demanding the types of programs or teaching methods and content that would give graduates the skills they need to succeed in the labor market. Like many countries around the world, Vietnam suffers from such system disconnects (figure O.10). Disconnects result from imperfect and asymmetric information among actors and their inadequate capacity and weak incentives to make good use of informa- tion. Information, incentive, and capacity deficits make the system less dynamic in responding to the evolving technical skill needs in the economy. They reflect what economists call market failures. The government’s role in addressing market failures should shift away from planning and managing the education and train- ing system centrally and top-down to an approach that empowers students, universities and schools, and businesses to make good decisions—by facilitating the flow of information, providing the right incentives to schools and universi- ties to be responsive to information, and investing in raising their capacity. Interventions on these three drivers of system responsiveness are mutually reinforcing and should be conducted in parallel. ­ Better Information Information is the oxygen of responsive skills development systems. First, with- out good information about employers’ skill needs, conditions in the labor mar- ket, and returns to certain fields of study, education and training providers cannot make good choices on the programs to develop and offer. Second, without such information, students and parents cannot make good decisions on which school or university and which study program to choose. Third, without information Figure O.10  Disconnects in Skills Development and Their Causes a. Disconnects in skills development b. Causes of the disconnects Employers Poor Weak information incentives Education Low capacity Students and and training parents providers Source: Authors’ illustration, adapted from World Bank 2012c. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 19 on the quality of education programs and employment success of graduates, prospective students may not be able to make good choices. Strengthened coordination and partnerships between businesses and universi- ties and vocational schools can help to bridge many information gaps. Government at central and local levels can improve the flow and availability of information by using its convening power and using incentives to help initiate the establish- ment of formal and informal coordination mechanisms and partnerships between employers and training providers. Although institutional models and setups vary across countries, all successful skills development systems around the world have created such coordination mechanisms. They range from the highly formal and institutionalized dual system in Germany, which was built more than 100 years ago, to less formal and localized systems elsewhere. In Vietnam, partnerships already exist between leading businesses and universities, and the challenge is to learn from this experience and help spread them further. Today, however, the central government and local governments rarely act as a facilitator of such initia- tives. International experience suggests they could and should. Prospective students in urban Vietnam tend to have much better access to information to make education and career choices than their peers in rural areas have. In urban areas the market appears to provide adequate information to influence good decision making. Evidence shows that prospective students in urban areas choose those fields of study whose graduates earn the highest wages: business, information technology (IT), and sciences. Qualitative evidence sug- gests that prospective students in rural areas, by contrast, have fewer and less reliable information sources available than their urban peers. This finding sug- gests the need for more career advice in schools in rural areas and enhanced connectedness to the Internet in schools in these areas. Better information on graduates’ job placements through tracer studies can help future students choose the best schools, universities, and programs and ­ provide an incentive to universities to focus on quality. Tracer studies can also provide useful information to hiring firms on the quality and relevance of educa- tion programs and providers. Such studies collect information on employment patterns of graduates after a certain period, usually six months. Some universities in Vietnam conduct such studies to demonstrate their graduates’ labor market success, but the use of tracer studies is not systematic. Improving the frequency and accessibility of labor market information can also help. Vietnam is collecting quarterly labor force data, but its record in pub- lishing and disseminating this information is poor. It is usually limited to headline unemployment statistics. More disaggregated analysis and publication of returns to education, returns to occupations, and employment trends, for example, by levels of education and by occupations, can provide useful information to prospective students as well as to training providers. Removing the scope for rent seeking and corruption in education also helps with improving information. Anticorruption surveys show that making unofficial payments in education is widespread (World Bank 2012a; CECODES, VFF-CRT, and UNDP 2013). Corruption and unofficial payments deepen the disconnects Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 20 Overview by undermining the quality of information. Paying for grades compromises the information value of grades. With such payments, grades do not fully reflect a student’s real performance and therefore make diplomas less useful for students in their job search and for businesses in recruitment. Right Incentives Even in a world of perfect and symmetrical information, students and parents as well as education and training providers still may not be able to make the right choices if they face weak incentives. Universities that are not sufficiently autono- mous in their decision making and that have to seek permission from the central government on whether to develop a new program or change any curriculum content will find it hard to respond to good information. A rigid curriculum that does not give space for vocational schools and universities to adjust their teaching methods and content to the changing and local needs expressed by employers may undermine their responsiveness. Greater autonomy of decision making in education and training institutions, coupled with clear accountability for quality, is a critical precondition for enhanced linkages and partnership with industry. This is why the international trend in higher education and vocational training has been toward ensuring greater autonomy and accountability of institutions at the expense of central government control. In line with this international trend, Vietnam launched a comprehensive reform of the tertiary education sector that includes steps toward greater autonomy of higher education institutions. The recently adopted Law on Higher Education creates legal conditions for greater institutional autonomy for higher education institutions on many aspects such as planning, opening and closing units, new programs, financial management, and staffing. Vocational edu- cation and training institutions can choose up to 35 percent of curriculum con- tent locally and can also introduce new study programs at their own initiative, though subject to approval by the Ministry of Labor, Invalids, and Social Affairs (MOLISA). Vocational schools also have autonomy to decide on matters such as staffing and financing. Vietnam’s principal challenge in higher education and vocational training now is to translate a legal framework for greater institutional autonomy into de facto autonomy. Despite expanded de jure autonomy of decision making on curricu- lum content and study programs in vocational training, many vocational institu- tions decide to follow directions from the government, and their main source of revenue remains government transfers, rather than proceeds from tuition fees and partnerships with enterprises (CIEM and World Bank 2013). Likewise, de facto autonomy of many higher education institutions for decision making in response to labor market needs is still limited, and university councils are not fully empowered to hold universities accountable. Although the two national universities in Hanoi and HCMC as well as regional universities are largely autonomous in decision making, public and private universities and colleges have to follow operational and academic policies set by MOET. The steps toward greater autonomy of national and regional institutions have demonstrated the Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 21 benefits of a system in which MOET cedes more decision making to institutions; for example, one benefit is the establishment of partnerships with universities abroad and with local businesses. Greater institutional autonomy for universities also means that the role of government needs to change from direct management to stewardship of the system. Despite the recent moves toward promoting greater institutional auton- omy, the Vietnamese government still retains a strong say in managing the voca- tional and higher education systems, for example, by centrally setting enrollment quotas in higher education and regulating and approving curriculum content. In contrast, a more connected, responsive skills development system suggests a different role for government, with a shifting focus from controlling inputs (enrollment quotas, curriculum, teaching methods) to ensuring minimum quality levels (through accreditation) and incentivizing better outputs (qualifications and competencies of graduates). Government can use regulative and financing tools to steer the system and promote accountability for results. Rather than approving the content of a train- ing program to become an electrician, the government could invite employers and training providers to agree on occupational competency standards that an electrician should possess. Government could then focus on certifying electri- cians based on their competencies—whether they acquired them on the job, with a private or public training provider, or elsewhere. Other instances of part- nership can be identified among the government, employers, and providers in Vietnam in determining occupational competencies. One example is the tourism sector. The government can use financing tools to incentivize excellence in uni- versities (by allocating part of its financing based on results) or stimulate busi- nesses to partner with training providers and expand on-the-job training (through tax breaks). Enhanced Capacity Even in a world of perfect and symmetrical information and appropriate incen- tives, students and parents as well as providers may still not be able to make the right choices if they face capacity constraints. Students from less wealthy backgrounds often drop out because they are unable to afford the tuition and nontuition as well as opportunity costs associated with education and training. Scholarship and tuition fee waivers are important tools to help students to over- come this barrier. Among schools and universities, capacity constraints may come in the form of insufficiently trained teaching staff or managers, inadequate cur- ricula, or a simple lack of knowledge and experience on how to act on informa- tion. Financing capacity constraints can also prevent firms from investing in their workers’ training. Investments in the qualifications of staff and equipment will help universi- ties and vocational schools to respond more effectively to the information on employer needs. At present, few staff in higher education have advanced aca- demic degrees (figure O.11). Strengthening the graduate education and advanced training system as well as scholarships and programs to retain students in Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 22 Overview Figure O.11 Staff Qualifications in Higher Education Institutions 100 90 80 70 60 Percent 50 40 30 20 10 0 1999–2000 2010–2011 Doctorate Other university and college qualifications Other Master’s Professional qualifications Source: MOET 2012. universities and incentivize them to choose academic careers can help raise the overall qualification profile. Creating attractive conditions for research can help attract Vietnamese overseas PhDs back to Vietnam. Likewise, a strategic strengthening of the science, technology, and innovation system can create a better environment for attracting and retaining researchers and for promoting a ­ growing, capable critical mass of international-level professors at higher educa- tion institutions. But capacity is not limited to teaching and research; investments in managerial capacity will enable university and vocational school leaders to take advantage of greater autonomy. Better information, incentives, and capacity are mutually reinforcing. Government can use regulatory or financing incentives to promote partnerships between providers and industry and the generation and dissemination of better information on graduates’ employment successes. In turn, better information makes providers more accountable. Ambitious and successful universities and vocational schools want to demonstrate that they have strong linkages with industry and that their graduates find good jobs quickly. Investments in their managerial and teaching capacity can enable them to do so. Summary and Conclusion Vietnam’s continued transition toward a modern, industrial market economy is not automatic. Structural reforms in the enterprise and banking sectors and sound macroeconomic policies will matter in ensuring continued fast change, but so will the quality of Vietnam’s workforce. Vietnam’s return to strong economic Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 23 Table O.1  A Three-Step Agenda for Skills Development in Vietnam Objective Policies Step 1: Promoting school readiness through early childhood development Early childhood More systematic promotion of breastfeeding and child stimulation through parallel family- development for based interventions in hospitals after birth, in local health stations, in communities, and children aged 0–3 through communication campaigns. Social assistance to enable poor parents financially to make better choices for their children. Preschool for children Universalize access to full-day preschool. Translate modern and child-centered curriculum aged 3–5 into quality provision across all classrooms through upgrading of the competence of the current teaching workforce. Step 2: Building cognitive and social and behavioral foundation skills in general education More schooling for all Increase transition rates into secondary education through fee waivers and direct cash support for less well-off students. Expand formal full-day schooling to reduce informal extra classes and ensure more varied formal curriculum. Better schooling for all Modernize curriculum, teaching methods, and student assessment with stronger focus on critical thinking, problem solving, and behavioral skills. Equip teachers with tools to teach modernized curriculum through reformed in-service teacher professional development. Schooling that involves Empower parents’ councils in schools and involve them in decision making. Strengthen parents and school-community linkages in disadvantaged contexts, such as through ethnic minority communities teaching assistants and greater involvement of parents. Step 3: Building and updating technical skills in postsecondary education and training Better information Initiate and incentivize formal or informal skills coordination and partnership forums at national, provincial, and local levels between businesses and education and training providers. Make more use of graduate tracer surveys. Address information barriers in rural and remote areas. Disseminate available labor market information. Tackle corruption in education. Right incentives Increase de facto autonomy of providers. Government to shift from management to stewardship of the system. Focus on outcomes, not inputs: stop setting enrollment quotas, define quality and occupational skills standards, and assess and certify graduates. Adequate capacity Invest in faculty/teacher training. Develop leadership and management capacity to exercise autonomy at institutional level retaining graduates in academia. Scholarships. growth will come through increased labor productivity. Changes in education and training can take a generation to result in a workforce that is equipped with the right skills. To ensure that worker skills do not become a bottleneck over the coming decade and more, the time to modernize skills development is now. Table O.1 presents a list of key policy recommendations put forward in this book. The nature of work in a modernizing market economy will continue to change and become more sophisticated. Vietnamese employers already are looking for a mix of higher-quality cognitive, social and behavioral, and technical skills. These skills are accumulated at various points along the life cycle from birth into adult- hood, suggesting that a smart skill development strategy for Vietnam should encompass reforms and investments from early childhood development to on- the-job training. Views by Vietnamese employers are very similar to those of employers in more advanced middle- and high-income economies where, as in Vietnam, employers report that critical thinking and communication skills Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 24 Overview among workers are also in high demand but lacking. By reorienting its education system to focus more on teaching these types of skills, Vietnam can prepare itself to deliver skills that will never go out of fashion and are important in almost any industry. Vietnam’s challenge, therefore, is to turn graduates from good readers into critical thinkers and problem solvers who are well equipped to acquire tech- nical skills in universities, vocational training, and throughout their working lives. Preparing the workforce for a modern market economy is not just the govern- ment’s job. It requires a change in behavior by all actors in skills development— employers, schools and universities, and students and their parents. Businesses and universities need to build close partnerships. Parents need to become involved in their children’s schooling. Students need to have work experience before they graduate. The government’s role should be as steward, not manager, of the system. It can facilitate necessary changes in behavior by helping to ensure a better infor- mation flow between all the actors; to address capacity constraints, including financing capacity; and to set the right incentives by freeing up universities to partner more effectively with businesses. Pockets of excellence in the system of cognitive, social and behavioral, and technical skills development exist already; as the system’s steward the challenge for the government is to translate these pockets into system-wide change. ­ References Almlund, M., A. L. Duckworth, J. Heckman, and T. Kautz. 2011. “Personality Psychology and Economics.” In Handbook of the Economics of Education, edited by E. A. Hanushek, S. Machin, and L. Woessmann, 1–181. Amsterdam: Elsevier. CECODES (Centre for Community Support Development Studies), VFF-CRT (Centre for Research and Training of the Viet Nam Fatherland Front), and UNDP (United Nations Development Programme). 2013. “The Viet Nam Governance and Public Administration Performance Index (PAPI) 2012: Measuring Citizens’ Experiences.” Joint Policy Research Paper, Hanoi. CIEM (Central Institute for Economic Management) and World Bank. 2013. “Workforce Development.” Vietnam SABER [Systems Approach for Better Education Results] Country Report 2012. Cunha, F., and J. J. Heckman. 2007. “The Technology of Skill Formation.” American Economic Association Papers and Proceedings 97 (2): 31–47. Cunha, F., J. J. Heckman, and S. M. Schennach. 2010. “Estimating the Technology of Cognitive and Noncognitive Skill Formation.” Econometrica 78 (3): 883–931. GSO (General Statistics Office—Viet Nam) and UNICEF (United Nations Children’s Fund). 2011. Monitoring the Situation of Children and Women: Vietnam Multiple Indicator Cluster Survey 2011. Hanoi. Le Thuc Duc 2009. “The Effect of Early Age Stunting on Cognitive Achievement among Children in Vietnam.” Young Lives Working Paper 45, Department of International Development, University of Oxford, Oxford, U.K. MOET (Ministry of Education and Training of Vietnam). 2012. Early Development Instrument (EDI) in Vietnam. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Overview 25 Naudeau, S., N. Kataoka, A. Valerio, M. J. Neuman, and L. K. Elder. 2011. Investing in Young Children: An Early Childhood Development Guide for Policy Dialogue and Project Preparation. Directions in Development. Washington, DC: World Bank. OECD (Organisation for Economic Co-operation and Development). 2013a. OECD Skills Outlook 2013: First Results from the Survey of Adult Skills. Paris: OECD Publishing. ———. 2013b. PISA [Program for International Student Assessment] 2012 Results: What Students Know and Can Do: Student Performance in Mathematics, Reading and Science. Vol. 1, PISA. Paris: OECD Publishing. Pierre, G., M. L. Sanchez Puerta, and A. Valerio. Forthcoming. STEP Skills Measurement Surveys: Innovative Tools for Assessing Skills. Washington, DC: World Bank. Rolleston, C., Z. James, L. Pasquier-Doumer, and Tran Ngo Thi Minh Tam. 2013. “Making Progress: Report of the Young Lives School Survey in Vietnam.” Young Lives Working Paper 100, Department of International Development, University of Oxford, Oxford, U.K. Shonkoff, J. P., and D. A. Phillips, eds. 2000. From Neurons to Neighborhoods: The Science of Early Childhood Development. Washington, DC: National Academy Press. World Bank. 2012a. Corruption from the Perspective of Citizens, Firms, and Public Officials: Results of Sociological Surveys. 2nd ed. Hanoi: National Political Publishing House. ———. 2012b. Market Economy for a Middle-Income Vietnam. Washington, DC: World Bank. ———. 2012c. Putting Higher Education to Work: Skills and Research for Growth in East Asia. Washington, DC: World Bank. ———. 2012d. Well Begun, Not Yet Done: Vietnam’s Remarkable Progress on Poverty Reduction and the Emerging Challenges. Washington, DC: World Bank. ———. 2013. Vietnam Higher Education Project 2 Implementation Completion Report. Washington, DC: World Bank. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cha p t e r 1 Vietnam’s Economic Transformation and the Role of Education Vietnam is a global economic development success story. Since the launch of the d¯ôi mó’i reforms in the late 1980s, Vietnam has seen rapid economic growth, ? which catapulted it to middle-income country (MIC) status in 2010 and contrib- uted to one of the fastest declines in poverty ever recorded. This economic mir- acle was ­associated with substantial productivity increases and a rapid movement of labor out of agriculture and into wage employment. In large part, this struc- tural transformation was driven by rising levels of education and an influx of foreign and domestic capital investment. Vietnam’s focused investments over the last decades into universalizing primary education completion and expanding access at all levels have paid off and allowed larger shares of the population to take advantage of expanding economic opportunities. Vietnam’s development story is entering a new chapter, one that will shift the focus from factor accumulation to productivity growth.1 Despite the success, labor productivity remains low relative to competitors in the region. Unlike in the early period of Vietnam’s transition, growth in recent years has been entirely driven by factor accumulation rather than by productivity growth. Economic growth has slowed in recent years in the wake of domestic macroeconomic and structural challenges. The slower growth had an effect on the labor market, with evidence of a bifurcation that is associated with educational attainment. Well- educated workers are taking advantage of expanding opportunities in the private sector, especially in urban areas. But less-educated workers and youth from rural areas have more difficulty transitioning into the expanding private sector and are often left in the agricultural sector or in small informal enterprises such as street vending. With relatively flexible formal labor markets and still widespread infor- mality, even in wage employment (World Bank 2014), the main barriers to labor mobility in Vietnam today are skills gaps and shortages and the lack of informa- tion about vacancies and job opportunities. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   27   28 Vietnam’s Economic Transformation and the Role of Education Strengthening the skills development system is an important element of Vietnam’s restructuring needs to ensure that the structural transformation pro- ceeds apace and Vietnam succeeds as a MIC. The experience from Vietnam’s more advanced neighbors shows that a continued structural transformation over the coming decade and beyond will trigger a skills-biased occupational transition with growing importance of the types of jobs that require strong cognitive and behavioral skills. The pace of this change will depend on many things, most prominently on the scope of economic restructuring and on the soundness of macroeconomic policy. Taking decisive steps to modernize skills development now can help to accelerate the structural transformation, to improve productiv- ity and growth, to boost living standards, and to ensure that skills will not become a bottleneck. Trends in Vietnam’s Labor Market since Đổi Mới The d ¯ôi mó’i reforms and the transition from central planning to a market ? economy with a socialist orientation triggered a period of remarkable growth in the 1990s and throughout much of the first decade of the 21st century. As shown in figure 1.1, real gross domestic product (GDP) growth averaged 7.5 percent from 1995 to 2007, slightly below China’s average of 10 percent. Compared to other countries in the region, Vietnam’s economic growth has been remarkably robust in spite of the 1998 Asian financial crisis and the 2008–09 global eco- nomic crisis. Growth dipped to about 5 percent in 1998, but then quickly rebounded to 7 ­ percent in 2000. Since 2008 Vietnam has experienced a growth Figure 1.1 Real GDP Growth in Vietnam and Its Neighbors, 1995–2010 15 10 5 Percent 0 –5 –10 –15 97 98 99 00 01 02 03 04 05 06 07 08 09 10 95 96 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 China Thailand Indonesia Vietnam Korea, Rep. Philippines Source: IMF 2012. Note: GDP = gross domestic product. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Vietnam’s Economic Transformation and the Role of Education 29 ­ lowdown, which, in most recent years, has been driven by domestic macroeco- s nomic and structural challenges. Real GDP growth fell to 5 percent in 2008, temporarily rebounded to 7 percent in 2010, and fell again to 6 percent in 2011 and to 5.2 percent in 2012. Fast economic growth has helped millions of Vietnamese to escape poverty. Rising incomes have helped to boost living standards in urban and rural Vietnam alike. Poverty has fallen from 58 percent (1993) to 14.5 percent (2008) to under 10 percent (2010), using comparable series of Vietnam Household Living Standards Surveys (VHLSS), consumption aggregates, and the poverty line (World Bank 2012c). Changes in employment, including improvements in human capital and increases in the employment share of the export sector, accounted for more than 60 percent of the probability of households escaping poverty in rural Vietnam in the 1990s (Inchauste 2012). Fast increases in labor productivity have been the key to Vietnam’s impressive growth performance. Figure 1.2 indicates that Vietnam has seen the second-­ fastest growth in labor productivity in the region since 1990 after China, albeit from a very low base. The reallocation of labor across sectors, most notably from low-productivity agriculture into nonagricultural wage employment, has been a particularly important component, accounting for 2.6 percent of the 4.2 percent of labor productivity growth. Despite this fast growth, labor productivity remains low relative to Vietnam’s peers, with GDP per person (at constant 1990 GDP) at 10 percent of the U.S. level. Although productivity growth was the main driver of GDP growth in the early years of Vietnam’s transition, capital investment has become more impor- tant in recent years. In the early period after the d ¯ôi mó’i reforms, much of the ? fast GDP growth was driven by increases in total factor productivity (TFP), largely in the wake of liberalization in the agricultural sector and improvements in education, which triggered the reallocation of labor across sectors. Over the years, productivity gradually gave way to factor accumulation, in particular to increases in the capital stock, as the main driver of economic growth (­ figure 1.3). The contribution of TFP to GDP growth since 2007 appears to have declined to nearly zero. This trend is concerning because relying on factor accumulation as the sole source of economic growth is not a sustainable strategy for Vietnam if it wants to succeed as a MIC. Rather, a return to sustained strong economic growth will require productivity improvements through structural reforms and investments in human capital (World Bank 2012b). This is why it is appropriate that Vietnam’s “Socio-Economic Development Strategy 2011–2020” places the strengthening of human resources as one of the key breakthrough objectives. Productivity growth was intrinsically linked with a transformation in the struc- ture of the labor market. Reforms under d ¯ôi mó’i have had far-reaching effects on ? the labor market, pulling large numbers of workers out of less productive agricul- ture and into more productive wage jobs. In developing countries, jobs in the agricultural sector tend to be the least productive and worst paid. As countries develop, workers first shift into nonfarm self-employment and then into wage work. In Vietnam the strong growth during the 1990s was associated with Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 30 Vietnam’s Economic Transformation and the Role of Education Figure 1.2  Growth of Labor Productivity in Vietnam Compared with Peers, 1990–2010 a. GDP per person employed GDP per person employed (index, 1990 = 100) 550 500 450 400 350 300 250 200 150 100 90 92 94 96 98 00 02 04 06 10 08 19 19 19 19 19 20 20 20 20 20 20 China Malaysia Philippines Thailand Vietnam Singapore Indonesia Cambodia b. GDP per person employed (constant US$ 1990 PPP) as a percentage of the U.S. level 70 60 50 40 Percent 30 20 10 0 a m s ia a nd sia re ne di in s po na ne ay ila Ch bo pi et a al a do ilip m ng Th Vi M Ca In Ph Si 1990 2010 Source: World Bank staff estimates using ILO 2011. Note: GDP = gross domestic product; PPP = purchasing power parity. a substantial reduction in agricultural employment, driven by the dramatic decline in collective farming and a jump in the share of workers in salaried jobs (figure 1.4). More than half of Vietnam’s workforce is now working outside of ­ agriculture and is increasingly focused on wage employment. Vietnam’s economy is modernizing, but the path from agriculture to wage employment is not w­ ithout bumps. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Vietnam’s Economic Transformation and the Role of Education 31 Figure 1.3  Decomposition of GDP Growth in Contributions from Capital, Labor, and TFP, 1990–2010 12 10 Real GDP growth 8 6 4 2 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 Contribution of TFP Labor Capital Source: World Bank 2012b. Note: GDP = gross domestic product; TFP = total factor productivity. Figure 1.4 Share of Vietnam’s Workforce in Agricultural and Nonagricultural Wage Employment, 1993–2010 70 60 50 40 Percent 30 20 10 0 01 08 09 10 93 98 99 00 02 03 94 04 05 06 95 96 07 97 20 20 20 20 19 19 19 20 20 20 19 20 20 20 19 19 20 19 Agricultural employment Nonagricultural wage employment Source: World Bank staff estimates using the Vietnam Household Living Standards Survey (VHLSS). Note: The 2010 VHLSS used a new sample frame based on the 2009 census. The new sampling frame and 2010 VHLSS are more likely to include peri-urban areas and areas with migrant populations than the sampling frame used for the 2008 survey. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 32 Vietnam’s Economic Transformation and the Role of Education The reallocation of labor out of agriculture and into wage employment appears to have slowed down in recent years as economic growth has deceler- ated. The initial rapid fall in agriculture from 1998 to 2006 was followed by a slowdown between 2006 and 2008. This has been followed by what, at first glance, appears to be a remarkable shift out of agriculture between 2008 and 2010. Likewise, the share of workers in wage employment appears to have sig- nificantly declined between 2008 and 2010, but because of differences in the sample frame, the 2008 and 2010 results of the VHLSS are not fully comparable (figure 1.4). As will be shown, many less well-educated workers, especially in rural areas, appear to have retained a foot in the agricultural sector during the recent economically difficult years. While the share of employment in agriculture appears to have stagnated in rural areas and slightly expanded in urban areas, wage employment in the urban private sector has been expanding rapidly even during the recent period of eco- nomic slowdown. Wage employment in the private sector rose from 6 percent to over 8 percent between 2007 and 2010. This growth in the private sector has been more than enough to absorb a slight decline in public sector employment, which fell from 12 percent to just under 11 percent of the population. In urban areas, the share of private sector wage jobs outside of agriculture rose five percent- age points in four years, reflecting a remarkable shift from public to private employment in a relatively brief period (see figure 1.5). In rural areas, the growth in private sector employment was much smaller. Meanwhile, consistent with a slowdown in the overall economy, more workers pursued agriculture. Growth in agriculture was particularly noticeable in urban areas, as workers moved out of nonagricultural self-employment. Most nonagricultural jobs in Vietnam today are in blue-collar occupations and service and sales. Jobs as craftsmen, machine operators, or in elementary Figure 1.5 Share of Workers in Urban and Rural Areas, 2007–10 100 90 80 70 60 Percent 50 40 30 20 10 0 2007 2008 2009 2010 2007 2008 2009 2010 Urban Rural Agriculture Nonagricultural private wageworkers Own account and unpaid Employers Nonagricultural public wageworkers Source: World Bank staff estimates using Vietnam’s labor force surveys for 2007, 2008, 2009, and 2010. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Vietnam’s Economic Transformation and the Role of Education 33 Figure 1.6 Employment Shares in Nonagricultural Occupations of Workers Aged 15–64 Years, 2010 35 30 25 20 Percent 15 10 5 0 s ls ns ke l ke d en at e tio ry or ca er er hin or an na pa nta cia m w leri rs rs s ns ag or sio sw e op ac ts ni cu e an le vic C af oc lem M es ch M Cr sa Ser of Te E Pr Rural Urban Source: World Bank staff estimates using VHLSS 2010 data. Note: VHLSS = Vietnam Household Living Standards Survey. occupations jointly make up 40 percent of nonagricultural employment—much more than technicians. Another 30 percent of nonfarm workers have service or sales jobs. Professionals make up 16 percent of the nonagricultural workforce (figure 1.6). Jobs across all these occupations are divided almost equally between ­ rural and urban areas, suggesting that rural areas remain an important part of the nonagricultural economy. Despite the rapid structural change since the mid-1990s, Vietnam’s labor mar- ket development still trails that of many of its neighbors. Vietnam’s share of work- ers in agriculture remains higher than that in China, Indonesia, and the Philippines (see figure 1.7). Similarly, despite the rapid progress in creating wage jobs that has seen it catch up to Indonesia, Vietnam still lags behind Thailand, the Philippines, and especially the Republic of Korea in terms of the share of the workforce in a salaried job. What will Vietnam need to do to catch up? What will be drivers of Vietnam’s continued structural transformation in the labor market? The pace of Vietnam’s continued economic modernization will depend on the success of its economic restructuring efforts. The skills of the workforce are a critical part of that. Continued economic growth, expansion of the nonagricul- tural sector, and its move up along the value chain will be contingent on sound macroeconomic policy, well-planned and executed public investment, and reforms in the enterprise and banking sectors (World Bank 2012b). But worker skills matter, too. This book shows that equipping Vietnamese workers with the Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 34 Vietnam’s Economic Transformation and the Role of Education Figure 1.7 Employment Patterns in Vietnam and Its Neighbors, 2008 80 70 60 50 Percent 40 30 20 10 0 p. s a sia nd m ne in Re na ne la Ch pi ai et a, do ilip Th Vi re In Ph Ko Wage employment Agricultural employment Source: World Bank 2012a. Note: Wage employment data for China not available. right skills will enable them to continue to take advantage of expanding oppor- tunities in a growing, nonagricultural private sector. The remainder of this chap- ter first examines the role of education in the urban and rural labor market since the economic slowdown and then looks ahead to its likely evolution of labor demand over the coming decade. The Role of Education in Vietnam’s Labor Market Expanding educational attainment of Vietnam’s workforce has contributed to the shifts in the labor market. Over the last few decades, the share of Vietnamese without primary education has declined significantly, and many workers, espe- cially in professional and technical occupations, now have secondary and higher degrees. Figure 1.8 presents educational attainment by birth year for those born between 1920 and 1988. Educational attainment increased rapidly for those born before the 1960s: the share of the population with primary education or higher rose from 10 percent to over 70 percent for those born after 1960. This rapid rise in educational attainment stalled, and even reversed in the case of lower second- ary attainment, for the generation born during the turbulent war period. But the rapid rise in educational attainment continued for those born after 1980 with a particularly sharp increase for those with upper secondary education or higher. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Vietnam’s Economic Transformation and the Role of Education 35 Figure 1.8 Educational Attainment of Population by Age Cohort 100 90 80 70 60 Percent 50 40 30 20 10 0 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 Year of birth Less than primary Primary and above LSE and above USE and above Sources: World Bank staff estimates using the Vietnam Living Standards Survey (VLSS) 1998 data and the Vietnam Household Living Standards Survey (VHLSS) 2004, 2006, 2008, and 2010 data. Note: Year of birth was estimated based on age and year of survey. To capture those who have completed their education, only individuals older than 22 were included. The sample consists of 103,320 individuals from repeated VHLSS rounds. LSE = lower secondary education; USE = upper secondary education. The education profile of today’s workforce varies considerably across occupa- tions. Basic general education at a primary level and below or at a lower second- ary level continues to dominate the education profile of the bulk of Vietnam’s workforce today—workers in agriculture, in elementary occupations, sales and services, and among craftsmen (figure 1.9). In fact, few craftsmen have even basic vocational training, and only 30 percent of machine operators have completed any level of vocational training. Vocational education and training is predominant among technicians: almost half of technicians hold a professional vocational edu- cation and training degree and another 30 percent a higher education degree. Apart from technicians, the best educated are professionals, with almost 80 per- cent holding a university degree and another 10 percent a college degree. There is an important demographic aspect to this: younger workers are not only better educated than older workers, but they are also significantly more likely to work in professional and technical occupations. Despite the large increase in educational attainment in recent years, demand for well-educated workers remains high, and the economy continues to reward them. The rapid increase in educational attainment shown in figure 1.8 is partly Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 36 Vietnam’s Economic Transformation and the Role of Education Figure 1.9  Highest Level of Educational Attainment by Occupation, 2010 100 90 80 70 60 Percent 50 40 30 20 10 0 en ls re at e s ns ke l rs ke s or nua er er hin na or le tu ke m cia s ag rs w d sa rs or sio ul ts op ac a or ni an M ric af M lw es ch an Cr M Ag of w Te ica ice Pr er rv Cl Se University Secondary vocational Lower secondary College Higher secondary Primary and below Professional vocational Basic vocational Source: World Bank staff estimates using Vietnam Household Living Standards Survey 2010 data. a response to expanding demand for workers with higher degrees, which has been growing even faster than the supply. This is particularly noticeable at the top end of the education distribution, where the number of college graduates has not kept up with demand. Among wageworkers, the returns to college and ­ university edu- cation surged to 80 percent in 2008 (figure 1.10). The large increase in the num- ber of lower and upper secondary graduates has helped moderate the increase in returns at these lower levels, but upper secondary graduates in wage work could still expect to earn more than 30 percent more than primary school graduates. Strong demand for secondary and higher education graduates has remained robust during the recent years of economic slowdown, but the demand for poorly educated workers has been declining. As shown in figure 1.11, poorly educated workers in wage jobs were earning much less in 2010 than they were in 2007, suggesting a decline in the demand for workers with primary educa- tion or less. Meanwhile, returns appear to have hardly changed for graduates from secondary education and above during this period. Graduates with voca- tional education and training degrees are particularly attractive: earnings premi- ums for workers with elementary and secondary vocational education were higher than for workers with general lower and upper secondary degrees, respectively. The high rate of return for tertiary education can help to explain Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Vietnam’s Economic Transformation and the Role of Education 37 Figure 1.10 Estimated Education Earnings Premium among Wageworkers, 1993–2008 90 80 70 60 Percent 50 40 30 20 10 0 1993 1998 2002 2008 Lower secondary Upper secondary College or above Source: Coxhead and Phan 2012. Figure 1.11 Estimated Returns to Education among Wageworkers Relative to Lower Secondary Education, 2007 and 2010 60 50 40 30 Percent 20 10 0 –10 –20 –30 ee y y ry l l l l ge ty na oo na oo ar ar da rsi gr lle io io im im h ch ive on de sc Co at at es pr Pr c oc gh c Un No vo Se ad er yv Hi d Tr ry Un ar ta nd en co m Se Ele 2007 2010 Source: World Bank staff calculations using Vietnam labor force survey data. Note: The returns are estimated using a Mincerian wage regression in which the logarithm of hourly wages is regressed against education, sex, and experience. Various robustness checks were performed to examine whether the relative returns profile is robust to controlling for sector and occupation. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 38 Vietnam’s Economic Transformation and the Role of Education the substantial rise in the share of youth acquiring a tertiary education but also signals the need to continue to expand the fraction of workers with these sought-after qualifications. The urban private sector is a strong source of good jobs in Vietnam, and a secondary or tertiary education degree is increasingly a predictor of employment chances. Vietnam’s labor market appears to have become more bifurcated as public sector employment is declining and the structural transformation has slowed. Many well-educated workers in urban areas, in particular the young, are able to obtain wage work in the growing private sector. But many urban workers with primary or secondary education appear not to be attractive to private sector employers and are forced to take less productive jobs in agriculture (figure 1.12). The situation is starker still in rural areas, where even tertiary-educated workers struggle to obtain employment in the private sector and have to rely on agricul- tural employment. In short, the demand for well-educated workers in Vietnam is high and has remained robust during the recent economic slowdown. Figure 1.12 Change in Share of Employment by Education Group and Urban/Rural, 2007–10 a. Change in share of urban workers 15 10 5 Percent 0 –5 –10 –15 ry ary ary y ary y ry ry y tiar tiar tiar nta nta nta ond ond ond Ter Ter Ter me me me Sec Sec Sec Ele Ele Ele Youth Younger adults Older adults b. Change in share of rural workers 10 5 Percent 0 –5 –10 –15 ry ary y ry ary y ry ry y tiar tiar tiar nta nta nta a ond ond ond Ter Ter Ter me me me Sec Sec Sec Ele Ele Ele Youth Younger adults Older adults Change in agriculture Change in nonagricultural private wage sector Change in public sector Source: World Bank staff calculations using Vietnam labor force survey data. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Vietnam’s Economic Transformation and the Role of Education 39 Education and skills are a predictor of labor market success more than ever before (see also box 1.1). How can the demand be expected to evolve over the coming decade and beyond? Looking Ahead: Skill Needs for an Industrializing Vietnam The transformation in the structure of Vietnam’s economy since d ¯ôi mó’i has ? changed the type of work in Vietnam. The labor market that young Vietnamese job seekers face in 2014 is quite different from the labor market they would have entered in the early 1990s. The differences are evident not just in the employ- ment patterns we described, but also in the sources of household income: in 1998 the majority of household income came from agricultural production; by 2010 the majority of household income came from household enterprises and wage employment.2 Through the eyes of recent labor market entrants, the expansion of the nonagricultural sector has changed the type of jobs they pursue, the careers they can aspire to, and the education and skills they need for these careers. Box 1.1  What Are the Barriers to Labor Mobility in Vietnam? Labor market regulations set the legal parameters for employment through, for example, a minimum wage or hiring and firing restrictions. These regulations are often considered pro- tective in nature and are designed to address labor market imperfections, such as unequal power between job seekers and providers. However, they may come at an efficiency cost by affecting employment, unemployment, and earnings. Employment protection legislation (EPL) does not appear to be particularly severe in Vietnam compared to other countries. The EPL index displayed in figure B1.1.1 compares some of the most critical EPL costs faced by employers across Organisation for Economic Co-operation and Development (OECD) and East Asia and Pacific countries. In de jure terms, Vietnam’s EPL is not particularly stringent for dismissals or regulation on temporary employ- ment. Moreover, in de facto terms the impacts of regulations are likely to be relatively small because informal employment remains widespread, even among the wage employed. This book argues that skills gaps, skills shortages, and information barriers represent the main barriers to labor mobility in Vietnam today and that labor market regulations play a sub- sidiary role compared with these other issues. Employers surveyed for this book stated that they consider workforce skills and experience bigger obstacles to their business operation and growth than EPL, (minimum) wage levels, or payroll taxes (figure B1.1.2). Meanwhile, workers report that their main avenue for finding a job is their social network consisting of friends and family and not other, more formal, sources of vacancy and labor mar- ket information. People with limited networks—for example those living in rural areas far away from centers of economic agglomeration—have fewer chances to make good labor market (and education) choices. (See chapter 5 for further discussion of information barriers.) box continues next page Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Box 1.1  What Are the Barriers to Labor Mobility in Vietnam? (continued) 40 Figure B1.1.1 Employment Protection Legislation in Vietnam Compared with Other Countries, 2008–10 4.0 3.5 Employment protection legislation index 3.0 2.5 2.0 1.5 1.0 0.5 0 ga s ite Can re *** ngdo a Ne ala m eal a re d ne Au land ssa a lam itze an Mo rland rea lia Cz k Re ark Re blic Hu blic Ne Swed y the en *** Finla s Th nd *** *Lao nd mb R Po ia *** Au d *** ilippi ia VIE nes Ice ny d Lu Belg ly xem ium No urg *** way Fra na Po nce *** Gre al Ind ece Sp a Me ain Tu co y OE AN+ -30 A va nm . Ge NAM Slo De , Rep Sin ate nd rke ar i ad w Z ysi aru ali esi Ca PD an lan lan EC Ita od str g po Ko ngo xi a Sw Jap i ** aila Ch rtu ng CD i D str bo ech pu pu rm rla on r *** ed St E T AS I M dK Ph it *** Un Un Bru Specific requirements for collective dismissal Regulation on temporary forms of employment Protection of permanent workers against (individual) dismissal Source: World Bank 2014. Note: Scores range from 0 (least stringent) to 6 (most restrictive). OECD (Organisation for Economic Co-operation and Development) and ASEAN (Association of Southeast Asian Nations) unweighted average. OECD average includes a sample of 30 countries. OECD figures are for 2010. ECA (Europe and Central Asia) figures are for 2007 and only reflect a total (with no breakdown by category). *** = ASEAN+ countries. box continues next page Vietnam’s Economic Transformation and the Role of Education 41 Box 1.1  What Are the Barriers to Labor Mobility in Vietnam? (continued) Figure B1.1.2 Labor Market Issues Affecting Businesses’ Operations and Growth 3.5 Index score (range 0–5) 3.0 2.5 2.0 1.5 1.0 0.5 0 isla on y ve l ce ibu s and ge ver wo ng of w o on of ilit n ns rs rs en wa leg tecti e le ti o no r ke rke ilab tio eri ati ni co l taxe tur um ag ro rai ava exp uc ll w tp ob nim al t ntr ed l yro or us en hj era rm Mi ral Lab vio Hig ym Pa Ov Fo ne Pre plo Ge Em Source: World Bank staff estimates using STEP employer survey data. Note: STEP = Skills Toward Employment and Productivity; index score range from 0 (least problematic) to 5 (most problematic). N = 330. What will Vietnam’s future labor market look like, and what are the implica- tions for skill needs? A look at Vietnam’s neighbors is suggestive of the direction that Vietnam might take in the coming decades and of the transformations in the type of work that will be conducted in the next stage of Vietnam’s development. The share of the workforce employed in agriculture in Korea, Thailand, Malaysia, and Vietnam has seen a long-term decline (figure 1.13, panel a). While approxi- mately 50 percent of Korea’s workforce was employed in the agricultural sector in 1970, this figure had halved to 25 percent by the mid-1980s. Likewise, in Thailand the share of agricultural employment dropped from nearly 80 percent in 1970 to approximately 40 percent in 2008. The decline in agricultural employment was accompanied by an increase in employment in the manufactur- ing sector, from 13 percent of employment in Korea in 1971 to approximately 25 percent by the mid-1980s. The sectoral transformation that occurred in more industrialized countries has been accompanied by a shift to more skill-intensive jobs. In Korea, Malaysia, and Thailand, the share of white-collar workers expanded over time. Figure 1.13, panel b, shows the fraction of professional and technical workers in the labor force between 1971 and 2008. Professional and technical occupations include chemists, doctors, lawyers, technicians in information technology and science, teachers, accountants, and mechanical, civil, and other engineers. Similar, but less pronounced, increases were seen in the frac- tion of clerical (pink-collar) workers, such as receptionists and librarians. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 42 Vietnam’s Economic Transformation and the Role of Education Figure 1.13 Percentage Employed in Agriculture and Professional and Technical Occupations in Vietnam and Comparator Countries a. Agriculture b. Professional and technical occupations 100 25 90 80 20 70 60 15 Percent Percent 50 40 10 30 20 5 10 0 0 4 8 2 6 0 4 8 2 6 0 4 8 2 6 0 4 8 2 0 6 197 197 198 198 199 199 199 200 200 201 197 197 198 198 199 199 199 200 201 200 Vietnam Korea, Rep. Thailand Malaysia Source: World Bank 2012a. Skilled white- and blue-collar occupations dominate the manufacturing sec- tor employment in these more developed East Asian economies today. In Thailand in 2010, approximately 10 percent of workers in manufacturing conducted elementary unskilled work, while 27 percent were machinery operators, and 45 percent were craftsmen.3 Placing Vietnam’s economic transformation in the context of its neighbors’ development paths suggests that its economy is at a transitional juncture. In Vietnam the labor force employed in agriculture has declined from more than 60 percent in 1993 to 45 percent in 2010, and the share of the workforce in manufacturing has risen by 50 percent from 10 percent to 15 percent of the labor force. These numbers put Vietnam in a comparable moment to Korea’s economic transformation in 1975, a point at which the economy was transition- ing away from low value-added manufacturing activities toward heavy manufac- turing (Kim and Hong 1997). The skill-biased occupational transition that has taken place in more advanced economies in East and Southeast Asia is already under way in Vietnam. The demand for analytical and interpersonal skills has been growing in urban Vietnam since the early 1990s, while the demand for manual skills has been declining. Jobs that are nonrepetitive or nonroutine in nature—in other words, jobs that involve conducting different tasks on a regular basis—expanded between 1998 and 2010. At the same time, the jobs that require the worker to do the same tasks or movements all the time have been contracting (figure 1.14). Box 1.2 explains in greater detail how the measure of the skill content of the urban workforce has been constructed. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Vietnam’s Economic Transformation and the Role of Education 43 Figure 1.14 Trends in the Nature of Tasks in Vietnam’s Urban Labor Market, 1998–2010 60 58 56 Index (1998 = 50) 54 52 50 48 46 44 42 40 1998 2004 2006 2008 2010 Nonroutine manual Routine manual Nonroutine interactive Routine interactive Nonroutine analytical Routine analytical Sources: World Bank staff estimates using STEP and VHLSS survey data. Note: STEP = Skills Toward Employment and Productivity; VHLSS = Vietnam Household Living Standards Survey. See also box 1.2. Box 1.2 Vietnam’s Occupational Changes through the Lens of Skills The occupational changes that have occurred in Vietnam since the đổi mới reforms have changed the type of work that people do and the skills they use in the workplace. The analysis presented here uses the framework of Autor, Levy, and Murnane (2003) to examine the changes in the skills content of jobs. Jobs can be thought of as a series of tasks or activities, such as moving an object, presenting information, or conducting a calculation. A worker conducting a job needs to make overarching decisions on what tasks and activities to do next, through prioritizing tasks and making trade-offs in the face of unknown or partial information. For example, an engineer may be required to conduct and choose between multiple tasks, including complex analysis, to solve problems, to supervise members of a team, and to make presentations about their work. Classifying jobs into the skills they require allows researchers to consider the types of skills that are needed to conduct different types of work and to examine how the skills used in the workforce in Vietnam have evolved over time. The Skills Toward Employment and Productivity (STEP) household survey conducted in 2012 and covering Vietnam’s urban working-age population asks individuals about the tasks that they conduct in their jobs. For example, workers are asked how often they have to think for at least 30 minutes about a problem or how often they learn new things in their workplace. Activities or tasks conducted in different occupations are separated into four main categories: routine or nonroutine activities, analytical work, interactive work, and manual work. Routine and nonroutine is used as a primary classification because it allows a separation of jobs into those that are predictable and repetitive (routine tasks, such as those conducted by assembly- line workers in factories) and those that require workers to be adaptive to changes in their box continues next page Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 44 Vietnam’s Economic Transformation and the Role of Education Box 1.2  Vietnam’s Occupational Changes through the Lens of Skills (continued) Table B1.2.1 Tasks and Types of Occupations Conducted in Different Skill Brackets Analytical Interpersonal Manual Routine: Conducting short Thinking for at least 30 Making contact with people Driving a car repetitive tasks all the time minutes at least once other than coworkers Operating heavy machines or Nonroutine: Conducting short a week Making formal equipment repetitive tasks less than half Learning new things presentations to clients/ Work is considered to be the time every day colleagues to persuade relatively physically them on a topic demanding Directing or supervising Lifting or pulling anything other workers weighing at least 50 pounds Examples of jobs Routine: Armed forces Routine: Shop assistants, Routine: Truck operators, officers, shop sales hairdressers food preparation workers, persons, machinery Nonroutine: Engineers, craftspeople mechanics sales and marketing Nonroutine: Shop sales Nonroutine: Architects, assistants and persons, transport clerks, marketing professionals repairpeople professionals, finance professionals, teachers environment and not repeat the same processes on a regular basis (nonroutine tasks, such as those conducted by architects, engineers, and salespersons) (table B1.2.1). Using the information in the STEP household survey on the task content of jobs and data from the VHLSS, it is possible to estimate the fraction of the urban workforce that are in jobs using analytical, interpersonal, and manual skills between 1998 and 2010. The average skill used in occupations (at a one-digit level) can be calculated using the STEP survey, and then the average skill usage can be applied to the fraction of the urban population in that one-digit occupation, as captured in the VHLSS. An increase in the fraction of the population with, for example, nonroutine analytical skills implies that occupations that are relatively intensive in the use of these skills are expanding over time. Figure 1.14 shows the evolution of these skills in the workforce over time, using the fraction of the workforce using those skills in 1998 as the benchmark. In absolute terms, the fraction of the population doing routine tasks and using manual skills continues to be high. However, the fraction of the population in jobs that use analytical and interpersonal skill sets has increased over time in urban Vietnam, while the fraction of the population in jobs that use manual skills has declined over time. Therefore, although work using manual skills continues to be in demand, there has been a gradual shift in the fraction of jobs that use analytical and interpersonal skill sets. Analytical and interpersonal skills are in high demand and highly valued, as signaled by high wage returns to these skills relative to manual skills. It is not just that the use of analytical and interactive tasks has expanded over the last decade. These tasks also carry high wage returns. Figure 1.15 shows the return to con- ducting analytical, interactive, and manual skills, broken down by whether these skills are used in repetitive or nonrepetitive tasks. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Vietnam’s Economic Transformation and the Role of Education 45 Figure 1.15 Percentage Return to Different Task Combinations, Controlling for Education and Demographics 25 20 15 Percent 10 5 0 –5 Analytical (***) Interactive (*) Manual Analytical Interactive (***) Manual Nonroutine Routine Source: World Bank staff estimates using STEP household survey data. Note: STEP = Skills Toward Employment and Productivity. Jobs are divided into categories based on the type of tasks that people in the jobs are reported to do. In particular, a job is first divided into routine or nonroutine tasks, and is further classified into those that are analytical (require continuous thinking and problem solving), interactive (that require interacting with others), and manual. Jobs can be classified into more than one category; for example, jobs can be nonroutine analytical and interactive. The return displayed is the return of being in a job in which a task is performed relative to being in a job that is nonanalytical, noninteractive, and nonmanual, such as office clerks. The returns are estimated using a Mincerian wage regression that controls for education, sex, experience, and one-digit sector as well as the task content of jobs. See box 1.2 for more information on the evidence used to generate this figure. Significance level: * = 10 percent, ** = 5 percent, *** = 1 percent. The transition into jobs requiring more advanced cognitive and behavioral skills has already begun with the youngest generation of labor market entrants. Figure 1.16, panel a, shows the fraction of workers employed in professional and technical occupations, by location and age cohort. Among labor market partici- pants aged 25–34, there appears to have been a sharp increase in the fraction employed in professional and technical occupations in urban areas. These occupa- tions have also been on the rise among other age cohorts in urban areas, albeit less rapidly, and have also expanded to account for 7 percent of jobs among younger rural workers. In rural areas, as shown in panel b of figure 1.16, the expansion of the manufacturing sector has increased the demand for craftsmen and machine operators. The fraction of 25- to 34-year-olds working in skilled blue-collar occu- pations in manufacturing has more than doubled, from 7 percent of the rural workforce in 1998 to 18 percent in 2010. Summary and Conclusion The expanding educational attainment of its workforce has been an important driver of the rapid modernization of the Vietnamese economy since the launch of the d¯ôi mó’i reforms. Universal primary education and expanding secondary ? education have helped workers make the transition out of agriculture into Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 46 Vietnam’s Economic Transformation and the Role of Education nonagricultural wage employment and from the rural sector to the urban sector. Education has become an ever more important predictor of success in finding a good job in the expanding occupations and in the urban private sector. While the majority of jobs are in skilled blue-collar occupations, employment in profes- sional and technical occupations has grown rapidly in urban areas and with it the demand for workers with a secondary general and vocational or higher education degree. The experience of Vietnam’s neighbors suggests that the sectoral and occu- pational transformations witnessed over the last 20 years are likely to continue. Figure 1.16  Growth of Employment in Technical and Professional Occupations among Different Age Cohorts a. Employment in professional and technical occupations 35 30 25 20 Percent 15 10 5 0 1998 2004 2006 2008 2010 Urban, 35–44 Urban, 25–34 Rural, 25–34 Urban, 45–64 Rural, 35–44 Rural, 45–64 b. Employment in manufacturing by occupations 30 25 20 Percent 15 10 5 0 1998 2010 1998 2010 1998 2010 24–35, total in manufacturing 24–35, urban in manufacturing 24–35, rural in manufacturing Elementary occupations Clerical, service, and sales Craftsmen and machine operators Managers, professional, and technical Sources: World Bank staff estimates using the Vietnam Living Standards Survey (VLSS) 1998 data and Vietnam Household Living Standards Survey (VHLSS) 2004, 2006, 2008, and 2010 data. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Vietnam’s Economic Transformation and the Role of Education 47 This transformation is not automatic, however, and the question to be answered is how fast its pace will be. Structural reforms and sound macroeconomic poli- cies will matter in ensuring continued fast change, but so will the quality of Vietnam’s workforce. With changes in education and training taking a genera- tion to result in a workforce equipped with the right skills, now is the right time to modernize skills development to ensure worker skills do not become a bottleneck. Jobs that are likely to grow in Vietnam—in professional and technical ­ occupations—require workers to have more advanced skills than those working in jobs that are likely to decline in demand over the next 20 years. Traditional jobs in agricultural and elementary occupations require routine and manual work. The jobs of the future involve performing increasingly complex tasks that require workers to be able to solve problems, learn on the job, and be responsive to shifting needs. The jobs of the future also require workers to have strong social and behavioral skills because they will require workers to conduct tasks such as working in teams and supervising others. These more complex tasks command higher wages, commensurate with the more advanced skill sets they demand. The next chapter will review the demand for skills by Vietnamese employers today and assess to what extent the education system is providing graduates with these skills. Notes 1. Factor accumulation is an increase in the basic factors used to produce goods and services in the economy: labor and capital. 2. In 1993, 60 percent of rural household income came from agriculture and sideline activities (McCaig, Benjamin, and Brandt 2009). In 2010 approximately 34 percent of rural household income came from these activities (Badiani and Brandt 2013). 3. Due to changes in occupational codes over time, it is difficult to examine the change in the share of skilled blue-collar occupations in the manufacturing sector over time. References Autor, D., F. Levy, and R. Murnane. 2003. “The Skill Content of Recent Technological Change: An Empirical Exploration.” Quarterly Journal of Economics 118 (4): 1279–1334. Badiani, R., and L. Brandt. 2013. “Inequality in Vietnam: Explanations of Changes in Disparities.” Working Paper, World Bank, Washington, DC. Coxhead, I., and D. Phan. 2012. “Long-Run Costs of Piecemeal Reform: Wage Inequality and Returns to Education in Vietnam.” Staff Paper Series 566, University of Wisconsin, Agricultural and Applied Economics. ILO (International Labour Organization). 2011. Key Indicators of the Labour Market. 7th ed. Geneva, Switzerland: International Labour Organization. IMF (International Monetary Fund). 2012 (October). World Economic Outlook: Coping with High Debt and Sluggish Growth. Washington, DC: International Monetary Fund. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 48 Vietnam’s Economic Transformation and the Role of Education Inchauste, G. 2012. “Jobs and Transitions Out of Poverty: A Literature Review.” Background Paper for the World Development Report 2013, World Bank, Washington, DC. Kim, K. S., and S. D. Hong. 1997. Accounting for Rapid Economic Growth in Korea, 1963–1995. Seoul: Korea Development Institute. McCaig, B., D. Benjamin, and L. Brandt. 2009. The Evolution of Income Inequality in Vietnam between 1993 and 2006. University of Toronto. VHLSS (Vietnam Household Living Standards Survey). Multiple years. National Statistics Organization, Hanoi. Vietnam Labour Force Survey. Multiple years. General Statistics Office of Vietnam, Hanoi. World Bank. 2012a. World Development Indicators 2011. Washington, DC: World Bank. ———. 2012b. Market Economy for a Middle-Income Vietnam. Washington, DC: World Bank. ———. 2012c. Well Begun, Not Yet Done: Vietnam’s Remarkable Progress on Poverty Reduction and the Emerging Challenges. Washington, DC: World Bank. ———. 2014. East Asia Pacific at Work: Employment, Enterprise, and Well-Being. East Asia and Pacific Regional Report. Washington, DC: World Bank. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cha p t e r 2 Skills for Current and Future Jobs The shift away from agriculture seen since the d ¯ôi mó’i reforms has changed the ? type of work that Vietnamese people do and the skills they need to do their jobs. Jobs can be thought of as a series of activities, such as harvesting rice, sewing clothes, checking the temperature of a patient, calculating profits, and presenting analysis. A worker conducting a job needs to make overarching decisions on what tasks and activities to do next, through prioritization and recognizing trade-offs. Making these choices and conducting these activities require a set of skills for the person to perform them well, from physical strength and manual dexterity to numerical skills and the self-confidence to put forward new ideas. Vietnam is gradually moving away from the type of jobs that consist mainly of manual and repetitive activities and is moving toward jobs that require workers to solve prob- lems and to use more modern technology. Although the shift in the demand for skills in Vietnam has been gradual, it has been transformative. The change in the type of jobs that Vietnamese people do over time has implications for the skills that the education system needs to build. A young urban labor market entrant in Vietnam faces not only a more diversified choice of career paths than ever before, but also a more demanding set of employers. Rural households that were previously focused on agricultural activi- ties have moved in large numbers into nonfarm enterprise activities that require choosing products and suppliers, interacting with customers, setting prices, and calculating profits. Although this book focuses on data from urban areas, the rise in nonagricultural activity in rural areas implies that similar, if not as fast-paced, transitions are under way there. These changes to what people across rural and urban Vietnam do on a daily basis imply that the way that they use their educa- tion has changed over time. Both employers and employees in urban areas report that the education system does not provide all the skills needed in the current Vietnamese labor market. The skill shortages are reported to be greatest for businesses with international links and among employees expected to do complex tasks. Although education has improved over the last 30 years, employers and employees recognize that the education system today does not provide Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   49   50 Skills for Current and Future Jobs graduates with all the needed skills for their enterprises, workplaces, and career aspirations. Reports from employers suggest that the economy suffers from a skills shortage and that the shortage is a substantial obstacle to the operation and growth of their businesses. “International” firms—foreign direct invest- ment (FDI) firms, firms that are engaged in international trade, and firms that have international links—are affected by the skills shortage more than “local” businesses. This means that the skills shortage, if not addressed, may become a ­ binding constraint to the modernization and growth of the Vietnamese econ- omy. Workers of all education levels report that their literacy and information technology (IT) skills are a constraint to their career growth.1 Although technical skills are in high demand, employers value a broader skill set. There is a strong return to education in urban Vietnam, and the return to education has increased over time (Coxhead and Phan 2012). One reason that people with upper secondary or university education earn more than those with primary education is that they have better technical, cogni- tive, social, and behavioral skills. Employers value and pay for cognitive and technical skills, such as being able to solve problems and think critically. Employers also value social and behavioral skills, such as being able to com- municate well, work in teams, and have positive job attitudes. This chapter discusses the type of skills that employers in urban Vietnam demand and examines the importance of skills in Vietnam’s economy. It shows that to serve the emerging needs of the labor market, it is necessary to look beyond educational attainment to focus on the underlying skills that are produced by the education system. Shifting the Dialogue: From Education to Skills Vietnam has made impressive strides in raising education levels and in reducing inequalities in education access over the past two decades. Among young adults between 20 and 24 years of age, 90 percent had completed primary education in 2010 compared to 85 percent in 2004 (figure 2.1, panel a). The rise in primary school completion among this age cohort has been dominated by poorer house- holds, and primary completion rates among the rural and urban population are nearly identical among individuals transitioning into the labor market in 2010. More important, these gains in education and narrowing disparities across income groups are also seen at lower and upper secondary levels. The share of 20- to 24-year-olds who have completed at least lower secondary education has increased across all expenditure quintiles, most notably among the poorest house- holds (figure 2.1, panel b). In urban Vietnam, 6 in 10 workers have attained a higher level of education than their parents, and the youngest cohort of labor market participants is more likely to have graduated from tertiary education than older workers. Enrollment rates reported by the United Nations Educational, Scientific, and Cultural Organization’s (UNESCO) Institute for Statistics reveal a rapid increase in tertiary enrollment from 10 percent in 2000 to 24 percent in 2011 (UNESCO 2013). Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 51 Figure 2.1 Educational Achievement of the Population Aged 20–24 Years, 2004–10 a. Percentage of the population who have b. Percentage of the population who have completed primary, lower secondary, upper completed lower secondary or above, secondary, or above by expenditure quintile 100 100 90 90 80 80 70 70 60 Percent 60 Percent 50 50 40 40 30 30 20 20 10 10 0 0 2004 2006 2008 2010 2004 2006 2008 2010 Primary and above Q5 (wealthiest) Q3 Lower secondary and above Q4 Q2 Upper secondary and above Average Q1 (poorest) Source: World Bank staff estimates using VHLSS survey data, 2004–10. Note: VHLSS = Vietnam Household Living Standards Survey. Despite the impressive rise in education acquisition, many Vietnamese busi- nesses report a shortage of workers with adequate skills as a significant obstacle to their activity. A majority of employers surveyed under the Skills Toward Employment and Productivity (STEP) employer survey (see box 2.1) report that hiring new workers is difficult either because of inadequate skills of job applicants (a skills gap) or because of a scarcity of workers in some occupations (skills shortage) (see box 2.2 for a definition of these terms).2 STEP evidence suggests that worker skills and availability are more binding concerns for employers than labor market regulations and taxes. Over 60 percent of interna- tional firms view the shortage of labor with the right skills as an obstacle to their activity, and nearly half of these firms view it as a major obstacle (figure 2.2). Nearly 40 percent of international firms see the general education of workers as an obstacle, and 46 percent see vocational education as an obstacle. Employers from international firms estimate that approximately 14 percent of their employees are not fully qualified to do their jobs, which suggests that despite expanding attainment, the educational system does not respond to labor market needs and that improving the quality of education will remove an important barrier to productivity and growth of Vietnamese firms. Vietnamese employers are highly critical of the quality of the education sys- tem. Almost half of the employers in the STEP survey complain that graduates do not have the level of skills needed in their workplace. International firms complain about the quality of education more often than local businesses do. Two-thirds of all international firms claim that both the general and vocational education systems do not meet the skill needs of their workplace. In the eyes of Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 52 Skills for Current and Future Jobs Box 2.1 Skills Toward Employment and Productivity (STEP) Household and Employer Surveys The STEP Skills Measurement Project collected information on the supply and demand side for skills in multiple countries across the world, including in a first round Vietnam (urban), Yunnan Province, China (urban), the Lao People’s Democratic Republic (urban and rural), Sri  Lanka (urban and rural), and Bolivia (urban). The Vietnam STEP data, collected in 2011 and  2012, consist of two surveys, a household and employer survey, aimed at collecting information on the supply and demand for skills in the population of Ho Chi Minh City (HCMC) ­ and Hanoi. The STEP household survey collected detailed information on education, skills, work history, family background, and labor market outcomes for 3,405 individuals of working age (between 15 and 64). The survey includes four modules to capture different types of skills: (a) a core literacy assessment that asks eight easier literacy questions to determine basic literacy skills; ­ (b) an extended and more advanced literacy assessment that measures the level of compe- tence of the individual to access, identify, integrate, interpret, and evaluate information; (c) a battery of self-reported information on personality and behavior; and (d) a series of ques- tions on task-specific skills that the respondent possesses or uses in his or her work. The same questions were asked in all countries participating in the survey, thereby allowing for interna- tional comparisons of skills and skill development. The literacy assessment in the STEP household survey and the Survey of Adult Skills (a­ ­ product of the Programme for the International Assessment of Adult Competencies, or  ­ PIAAC) conducted by the Organisation for Economic Co-operation and Development (OECD) in 24 OECD and partner countries (OECD 2013) were linked and their results can be placed on the same scale. Comparisons should be interpreted with caution given differences in the surveys’ target population, assessment areas, and technical standards. More detail on this can ­ be found in annex 2A. The skill profile of older workers reflects a lifetime of accumulation at work and school, while the skill profile of younger individuals reflects accumulation during earlier stages. Skills depend on innate abilities, learning at home and school during early childhood and subsequently, and on acquisition on the job. More discussion on the measurement of skills can be found in annex 2A. The STEP employer survey was conducted in HCMC and Hanoi and immediately surround- ing provinces; it can therefore be considered to be representative of these two major urban conglomerations. The employer survey gathers information on hiring, compensation, termina- tion, and training practices as well as enterprise productivity. The survey includes questions to identify: (a) employers’ skill needs and utilization; (b) the types of skills that are considered of most value; and (c) the tools used to screen prospective job applicants. Throughout the text, “international firms” are defined as businesses that have international business contacts with entities in other countries. International firms are considered as mod- ern firms, while businesses that do not have international business contacts are considered as percent traditional firms. International firms represent 35 percent of all firms, but account for 93 ­ of total employment in the survey. International firms are therefore much larger than local box continues next page Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 53 Box 2.1  Skills Toward Employment and Productivity (STEP) Household and Employer Surveys (continued) businesses: on average they employ 490 workers compared with 29 workers employed by local ­businesses. International firms are more likely to report good economic performance than local firms and more frequently introduce innovations. The share of blue-collar occupa- tions is significantly higher in international firms, while the share of white-collar occupations (including professionals and technicians) is lower. There are no significant locational differ- ences between international and local firms. The employer and household surveys use the same skills concepts and definitions, which enables the analysis of skills constraints from demand- and supply-side perspectives. On the person or worker side, the household survey measures the human capital stock of skills—the skill supply. On the employer side, the employer survey captures the types of skills demanded and potential shortages—the demand for skills. The simultaneous measurement of skills stocks and demands allows an in-depth analysis of skill needs and the skill profile of the popu- lation of HCMC and Hanoi. Box 2.2  Defining Skill Gaps and Occupational Skill Shortages Businesses report that hiring workers is difficult. Although the explanation for this difficulty varies by occupation, two explanations stand out. First, applicants lack required skills—a skills gap. Second, there are no or few applicants—an occupational skills shortage. Other reasons, such as excessive wage expectations or unsatisfactory working conditions (meaning that the applicants turn down the job offer), are usually secondary. An occupational shortage occurs when, given the prevailing wage level, the demand for workers with certain technical skills exceeds their supply. When businesses are not able to fill vacancies in a certain occupation because there are too few applicants, this is an indication of an occupational shortage. For example, when the job vacancy rate for electricians is high, it indicates a shortage of electricians. An occupational shortage tends to be associated with a growth in relative wages for the workers in the occupation that is in short supply. In a competi- tive labor market, the growing relative wages induce an increase in the supply of workers in the given occupation; this eventually leads to an equilibrium whereby demand and supply match. A skills gap occurs when workers lack the skills required by employers. They may lack tech- nical skills, cognitive skills, or social and behavioral skills (or some combination of them). An indication of a skills gap is employers finding it difficult to hire workers with the required skills despite the fact that there are numerous job applicants. For example, there are many applicants for a position of an office clerk, but employers are not satisfied with the applicants’ skills. A skills gap points to weaknesses in the educational system in the sense that it does not equip workers with the skills demanded by employers. Accordingly, a skills gap should be addressed by reforms to the education and training systems. box continues next page Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 54 Skills for Current and Future Jobs Box 2.2  Defining Skill Gaps and Occupational Skill Shortages (continued) Figure B2.2.1 illustrates the difference between these two concepts. If there is an occu- pational shortage, job vacancies are difficult to fill because there are few applicants. Craftsmen are the case in point. Many employers found it hard to hire craftsmen because there were no or few applicants, meaning that the supply of craftsmen fell short of the demand, which may point to an underdeveloped vocational education and training system. This is in sharp contrast to the case of technicians (as well as professionals) where it is the lack of adequate skills among the job applicants, rather than the lack of applicants, that is the main problem. This is a clear case of a skills gap. Workers have the diplomas (formal qualifications) required for the jobs that they apply for, but they lack the actual skills they need to do their jobs, which may indicate that the quality of tertiary education does not keep up with employers’ expectations. Figure B2.2.1 Problems Businesses Encountered When Trying to Hire 100 90 Percent experiencing problem 80 70 when hiring 60 50 40 30 20 10 0 Applicants did not Applicants Applicants lacked No or few like working expected wages required skills applicants conditions higher than offered Technicians Craftsmen Source: World Bank staff estimates using STEP employer survey data. Note: STEP = Skills Toward Employment and Productivity. Employers were asked if they had tried to hire workers for various positions during the previous 12 months and what problems they encountered. The data cover reports from 132 businesses that hired craftsmen and 34 businesses that hired technicians. Because the number related to technicians is small, care should be taken in interpreting this figure. The displayed differences between technicians and craftsmen are statistically significant at a 5 percent level for two responses: applicants lacking required skills and too few applicants. the employers, school leavers are equipped neither with the appropriate skills acquired through the school and university system nor with the appropriate vocational skills. Concern about missing skills is particularly pronounced among white-collar workers, such as professionals and technicians. A lack of required skills among job Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 55 Figure 2.2 Reported Obstacles to Business Activity 70 60 50 Percent 40 30 20 10 0 Labor General Vocational Labor General Vocational Labor General Vocational availability education training availability education training availability education training All firms International firms Local firms Major obstacle Some obstacle Source: World Bank staff estimates using STEP employer survey data, n = 305. Note: STEP = Skills Toward Employment and Productivity. Employers were asked to report whether any of the following was an obstacle to the operation and growth of their businesses: labor availability; general education of workers; or formal training of workers. applicants is cited by approximately 80 percent of employers who were trying to hire professionals and technicians. By comparison, a lack of required skills is cited by only 40 percent of employers who were hiring craftsmen.3 The severity of the skills gap among blue-collar workers should not, however, be underestimated. The percentage of employers who complain that blue-collar workers lack required skills is substantial: 25 percent of businesses claim that workers applying for a position as a machine operator lack the required skills (figure 2.3). There is substantial room to improve the skills of blue-collar workers in order to match the job requirements. Employers’ concerns on skill constraints are mirrored by workers’ views that their skills limit their ability to advance in the workplace. Although workers value their education, they report that their skills constrain their workplace development. Approximately half of workers report that their education was either moderately or very useful for their current work. More highly educated workers and those working in skilled occupations are more likely to report this to be the case. The majority of workers, however, report that their writing and reading skills—core analytical skills—are a constraint to their career advance- ment (figure 2.4). Highly educated workers and those who are required to read and write lengthy documents as part of their work are the most likely to report that they do not have all the literacy skills needed to advance. Although these workers have strong basic literacy skills—they score very well on the literacy assessment and have the highest self-reported literacy and writing skills—they may not have the full set of written analytical skills and argument foundation skills they need for their workplace development.4 Similarly, these individuals report that their IT skills are not as advanced as they would need for their careers. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 56 Skills for Current and Future Jobs Figure 2.3 Percentage of Employers Claiming that Job Applicants Lacked Skills Required for the Job 90 80 70 60 50 Percent 40 30 20 10 0 s ls ns rs ke s en at e rs er or le er hin na ke ke cia m rs w d sa s ag or sio or or op ac ts ni an lw lw af M an es ch M Cr of ica ua Te ice Pr an er rv Cl M Se Source: World Bank staff estimates using STEP employer survey data. Note: STEP = Skills Toward Employment and Productivity. Employers were asked if they had tried to hire workers in various positions during the last 12 months and if the applicants for the positions lacked the required skills. The data came from 350 firms that were asked about hiring. The figure covers the following number of employers hiring a given position: managers, 36 businesses; professionals, 18; technicians, 34; clerks, 98; service and sales workers, 114; craftsmen, 132; machine operators, 87; and laborers, 78. Figure 2.4 Percentage of Individuals Reporting that the Lack of Literacy or Computer Skills Has Prevented Obtaining a Job or Advancement 70 Literacy skills are a 60 constraint 50 40 Percent 30 20 10 0 No formal Primary Lower Upper Higher Higher Average schooling (ISCED 1) secondary secondary education education V+G (ISCED 2) V+G (ISCED 3) (V+G) (ISCED 4) (V+G) (ISCED 5) Source: World Bank staff estimates using STEP household survey data. Note: N = 3,316. The data displayed reflect responses to the question: “Has a lack of reading or writing skills in Vietnamese ever kept you from getting a job, a promotion, a pay rise, or held you back from advancing your career?” A similar question was repeated for business/own activity. G = general education; ISCED = International Standard Classification of Education; STEP = Skills Toward Employment and Productivity; V = vocational education. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 57 What Do We Mean by Skills? This book focuses on three domains of skills: cognitive skills, social and behav- ioral skills, and technical skills. These domains cover the technical skills that are directly applicable to particular occupations, the various personality traits that are crucial to labor market outcomes, and the cognitive ability generally believed to underpin human capital.5 Figure 2.5 puts forward the definition of skills used in this book. Annex 2A, “What Are Cognitive, Social and Behavioral, and Technical Skills and How Are They Measured?” explains in greater detail what these skill domains capture and how they are measured in the STEP surveys. Basic cognitive skills are separated from more advanced cognitive skills. Cognitive skills include the use of logical, intuitive, and creative thinking as well as problem solving using acquired knowledge. They include literacy and numeri- cal ability as basic or foundational cognitive skills and extend to the ability to understand complex ideas, learn from experience, and analyze problems using logical processes. The fast expansion of education in Vietnam has meant that basic cognitive skills are widespread in urban areas. The STEP household survey conducted in Hanoi and Ho Chi Minh City (HCMC) in 2012 tested the literacy skills of working-age individuals (see annex 2A). This survey revealed solid achieve- ment by urban Vietnamese in important basic literacy ability. Figure 2.6 pres- ents the percentage of individuals who passed a “core” literacy assessment in the five countries in which the STEP household survey was administered— Bolivia, the Lao People’s Democratic Republic, Sri Lanka, Yunnan province of China, and Vietnam. The core literacy assessment assesses basic literacy skills Figure 2.5 Skills Measured in the STEP Survey Cognitive Social and behavioral Technical Involving manual dexterity and Involving the use of logical, Soft skills, social skills, the use of methods, materials, intuitive, and creative thinking life skills, personality traits tools, and instruments Raw problem-solving ability Openness to experience, Technical skills developed versus knowledge to conscientiousness, extraversion, through vocational schooling solve problems agreeability, emotional stability or acquired on the job Verbal ability, numeracy, problem Self-regulation, perseverance, Skills related to a specific solving, memory (working and decision making, interpersonal occupation (e.g., engineer, long-term), and mental speed skills economist, IT specialist, etc.) Source: Pierre, Sanchez Puerta, and Valerio, forthcoming. Note: IT = information technology; STEP = Skills Toward Employment and Productivity. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 58 Skills for Current and Future Jobs Figure 2.6 Percentage of Individuals, by Literacy Assessment Score Pass core 100 test 80 60 40 Percent 20 Pass to 0 advanced test Fail core –20 text –40 Lao PDR Sri Lanka Bolivia Vietnam Yunnan, China 8 7 6 5 4 3 0 1 2 Source: World Bank staff calculations using STEP household survey data. Note: N = 3,328. STEP = Skills Toward Employment and Productivity. All country samples are restricted to urban only for comparison reasons. The scores reflect performance of individuals on a reading literacy test; individuals who score 3 or higher on the test are considered sufficiently skilled to be able to continue on to the next level of the test, and those who score below 3 are considered to have failed the test of basic literacy skills. Greater information on the measurement of literacy skills is given in annex 2A. and sorts the most literate from those with lower levels of literacy skills.6 Vietnam came ­ second to Yunnan in the share of respondents who passed the literacy assessment. Nearly two-thirds of the sample obtained full marks on the test, suggesting strong average basic literacy skills among the Vietnamese urban population. Although Vietnamese workers are well equipped with basic literacy skills, the urban workforce is lacking more advanced skills. The literacy proficiency of urban Vietnamese lies below the levels seen in many Organisation for Economic Co-operation and Development (OECD) countries. The extended literacy ­ module in the STEP household survey and the Programme for the International Assessment of Adult Competencies (PIAAC) literacy proficiency test conducted in multiple OECD countries were linked and results can be placed on the same scale (see annex 2A for further details). As figure 2.7 shows, the literacy profi- ciency of Vietnam’s urban workforce lies below the proficiency level seen among urban and rural workforces in the countries in which the PIAAC literacy assess- ment has been conducted. More urban Vietnamese workers than urban and rural workers in wealthier OECD countries perform at the lowest competency level, but Vietnam also has a relatively high share of urban workers at the highest competency level. More than a quarter of workers in urban Vietnam fall into the two lowest compe- tency levels (figure 2.8). Such individuals are able to locate basic information in simple texts but do not have the literacy proficiency to deal with more Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 59 Figure 2.7 PIAAC and STEP Literacy Proficiency Scores 300 Literacy score (unadjusted) 290 280 270 260 250 240 230 n d s lia da e p. y es nd ce n ly m k nd an ar ag pa ai an Ita Re na at an ra na la Sp nm rm la er nl Ja St st Po et Fr a, Ca er Av Fi Au Ge De Vi re d th ite Ko n Ne ba Un Ur Sources: OECD 2013. Vietnam estimates from World Bank staff estimates using STEP household data. Note: PIAAC = Programme for the International Assessment of Adult Competencies; STEP = Skills Toward Employment and Productivity. Literacy scores from other countries were measured as part of the PIAAC, and the unadjusted scores are taken from table A2.2a in OECD 2013. Figure 2.8 Literacy Competency Levels 100 90 80 70 60 Percent 50 40 30 20 10 0 Germany Japan Korea, Rep. Spain United States Urban Vietnam Below 1 1 2 3 4 5 Sources: OECD 2013. Vietnam estimates from World Bank staff estimates using STEP household data. Note: STEP = Skills Toward Employment and Productivity. Literacy scores from other countries were measured as part of the Programme for the International Assessment of Adult Competencies, and the unadjusted scores are taken from table A2.2a in OECD 2013. complex texts (see annex 2A for further details on the proficiency levels). Despite the substantial number of individuals who fall into the lowest catego- ries, urban Vietnam also has a similar share of individuals in the top three competency levels as Spain has. Although the literacy skills of older urban workers in Vietnam lie below those seen in many OECD countries, the skills of younger urban adults are Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 60 Skills for Current and Future Jobs Figure 2.9 Literacy Proficiency of Vietnamese Adults a. Literacy proficiency of 16- to 24-year-olds 310 PIAAC and STEP literacy scores 300 290 280 270 260 250 240 ly n a De m No a ay ite nce es En s n d nd Ge ge d lia y p. k u an tri ar d ai pa Ko an an Ita Re na at pr rw ra na a la Sp nm us Un ra rm er nl gl Ja St st Po Cy et a, Ca F A Av Fi Au Vi re d n ba Ur b. Literacy proficiency and GDP per capita 305 PIAAC and STEP literacy scores, 16- to 24-year-olds 300 295 290 PIAAC participating countries 285 280 275 Urban Vietnam 270 265 260 255 0 10,000 20,000 30,000 40,000 50,000 GDP per capita (2005 international $) Sources: Vietnam estimates from World Bank staff analysis using STEP household survey data. Literacy scores from other countries were measured as part of the PIAAC (Programme for the International Assessment of Adult Competencies), and the unadjusted scores are taken from table A2.2a in OECD 2013. GDP per capita are based on 2005 purchasing power parity and were obtained from World Bank 2012. Note: GDP = gross domestic product; STEP = Skills Toward Employment and Productivity. comparable to their urban and rural peers in many wealthier countries. Figure 2.9 presents the literacy proficiency scores of 16- to 24-year-olds in urban Vietnam and other PIAAC countries. Younger respondents score better on the literacy assessments overall in Vietnam. The same is true in most countries where the PIAAC has been administered, which might be Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 61 attributable to younger respondents’ higher levels of education. But even after taking into account their higher education levels, younger respondents perform better than older respondents.7 The literacy levels of younger adults in urban Vietnam are comparable to the levels of their peers in many richer OECD countries and have similar literacy levels to those in Austria, Canada, Denmark, France, Germany, and Norway. The difference between the literacy skills of older and younger workers in urban Vietnam is substantial. Figure 2.10 shows the difference in the average literacy score between 55- to 64- and 16- to 24-year-olds. The difference in scores in urban Vietnam is substantial, and second only to Korea in size. This suggests that the education system has done an impressive job in imparting key literacy skills to the young urban workforce, taking Vietnamese worker skills from below those seen in OECD countries for the oldest generation to levels on a par with wealthier OECD countries. Although basic and midlevel cognitive skills are widely used in urban Vietnam, more advanced skills are less likely to be used.8 Figure 2.11 shows the use of numeracy skills in urban Vietnam, where numerical tasks are split by the complexity of operations conducted. Approximately 90 percent of indi- viduals conduct at least basic numerical operations, such as estimating weights and distances or calculating prices or costs. Moving to the next level of com- plexity, three-quarters of the population do more complicated operations such as using decimals, percentages, multiplication, or division. Similarly, although over 80 percent of the urban working-age population reports reading or writ- ing either at home or at work, the majority of workers make only basic use of their literacy and writing skills. Figure 2.10  Difference between Literacy Proficiency of Older and Younger Adults Korea, Rep. Vietnam (urban) Spain Finland France Italy Japan Germany Average Australia United States 0 10 20 30 40 50 Di erence between average literacy scores of 16- to 24-year-olds and 55- to 64-year-olds Sources: Vietnam estimates from World Bank staff analysis using STEP household survey data. Literacy scores from other countries were measured as part of PIAAC (Programme for the International Assessment of Adult Competencies) and are taken from table A3.1 (L) in OECD 2013. Older adults are defined as aged 55 to 64 years and younger workers as aged 16 to 24 years. Note: STEP = Skills Toward Employment and Productivity. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 62 Skills for Current and Future Jobs Figure 2.11  Use of Numeracy Skills 90 Percent reporting use of mathematical 80 70 techniques, by intensity 60 50 40 30 20 10 0 No formal Primary Lower secondary Upper secondary Higher education Higher education schooling (ISCED 1) V+G (ISCED 2) V+G (ISCED 3) (V+G) (ISCED 4) (V+G) (ISCED 5) Calculating prices and costs Using fractions, decimals, percentages Using more complex algebra, geometry Source: World Bank staff estimates using STEP household survey data. Note: G = general education; ISCED = International Standard Classification of Education; STEP = Skills Toward Employment and Productivity; V = vocational education. Social and behavioral skills refer to the social ability and personality traits that have been found to be strongly linked to success in life, including doing well in school and at work. These skills are captured in the STEP household survey using the “Big Five” taxonomy of personality traits, which are viewed as high-order ­proxies of behaviors or actions that are a manifestation of per- sonality and that are associated with a myriad of socioemotional skills. The measures include whether individuals are open to new experiences; whether they can be considered to be conscientious, to have perseverance, and to be motivated (conscientiousness); whether they are socially energetic (extraver- sion); whether they are agreeable toward others (agreeableness); and whether they are self-regulating or broadly secure and comfortable in them- selves (emotional stability or neuroticism). These traits, and the behaviors and actions that they are associated with, are described in greater detail in table 2.1. Technical skills reflect knowledge and technical know-how that is often built through in-depth training or experience. Technical skills range from manual dexterity for using complex tools and instruments to occupation-­ specific technical know-how (for example, engineering, economics, or ­ medicine). Because technical skills are often discipline- or domain-specific, they are harder to capture using a survey instrument aimed at the general population. The technical skills that are measured in the STEP skill survey therefore reflect specialized abilities that are relevant to perform tasks that can be found in multiple jobs. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 63 Table 2.1 Social and Behavioral Skills: The Big Five Personality and Motivational Traits Personality trait Characterization of individual a What is it associated with? Openness to Openness to experience is a personality dimension Openness is positively associated with experience that characterizes someone who is intellectually intelligence, especially aspects of curious and who tends to seek new experiences and intelligence related to creativity, such as explore novel ideas. Someone who scores high on divergent thinking (McCrae and Costa openness can be described as creative, innovative, 1987). imaginative, reflective, and untraditional. Someone low on openness could be seen as conventional, narrow in interests, and unanalytical. Conscientiousness Conscientiousness indicates an individual’s degree Conscientiousness has been the most of organization, persistence, hard work, and consistent personality predictor of motivation in the pursuit of goal accomplishment. job performance across all types of work This personality dimension may be an indicator and occupations (Barrick, Mount, and of the desire or ability to work hard (Barrick and Judge 2001). Mount 1991). Emotional stability An individual who scores low on an emotional stability Emotional stability has been linked to scale can be thought of as self-confident, calm, education and labor market outcomes, even-tempered, and relaxed. Individuals who although the trait is not as robust or score high on the emotional stability scale tend consistent as conscientiousness. Traits to experience a number of negative emotions, related to emotional stability (for including anxiety, hostility, depression, self- example, the locus of control and self- consciousness, impulsiveness, and vulnerability esteem) predict a variety of labor market (Costa and McCrae 1992). outcomes, including job search effort (Almlund et al. 2011). Extraversion Extraversion describes the extent to which people Traits related to extraversion have been are assertive, dominant, energetic, active, talkative, found to be linked to wages, but the and enthusiastic (Costa and McCrae 1992). People relationship differs by occupation who score high on extraversion tend to be (Cattan 2010). For example, adolescent cheerful, like people and large groups, and seek sociability has been found to increase excitement and stimulation. People who score the wages of managers, sales workers, low on extraversion prefer to spend more time and clerical workers, but to decrease the alone and are characterized as reserved, quiet, wages of professionals and technicians. and independent. Agreeableness Individuals who score high on the agreeableness scale Agreeableness has been found to be can be thought of as having cooperative values and negatively related to salary levels and a preference for positive interpersonal relationships. career performance (McClelland and Those at the low end of the dimension can be Boyatzis 1982; Seibert and Kraimer characterized as manipulative, self-centered, 2001). suspicious, and ruthless (Costa and McCrae 1992; Digman 1990). a. These characterizations draw heavily on Zhao and Seibert 2006. What Skills Are in Demand and Used in the Urban Labor Market? Employers in urban Vietnam place the heaviest emphasis on job-related skills, including technical skills and the ability to solve problems and think critically. Employers were asked what types of skills or characteristics they considered to be most important when deciding to keep an employee after a probation period. Figure 2.12 shows the relative importance placed on job-related skills, social and behavioral skills, and personal characteristics among employers at international and local firms. Job-related skills were valued most highly, but social and Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 64 Skills for Current and Future Jobs Figure 2.12 Importance of Job-Related Skills versus Social and Behavioral Skills or Personal Characteristics Job-related skills Social and behavioral skills Personal characteristics 0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Index of importance of skills (0–2) International firms Local firms Source: World Bank staff estimates using STEP employer survey data. Note: STEP = Skills Toward Employment and Productivity. Employers were asked to indicate which attributes—job-related skills, social and behavioral skills, and personal characteristics—were the first and second most important when deciding which workers should be retained after a probation period. N = 330, of which 149 firms have international links and 181 do not. Job-related skills were defined to include: job-specific technical skills, being able to communicate well, displaying leadership abilities, working well in teams, being able to engage in creative and critical thinking, being able to solve problems, being able to work independently, and being able to manage one’s time. Personal characteristics include age, appearance, gender, family relations, and personal ties. Social and behavioral skills include measured personality traits, notably whether an individual is conscientious, emotionally stable, agreeable, extraverted, and open to new experiences. The differences between international and local firms that are displayed are not statistically significant at a 10 percent level. behavioral skills are also important. In contrast, personal characteristics (such as age, sex, and appearance) have little impact on hiring decisions. The relative importance of these three broad skill groups is the same for both white- and blue-collar workers, and across international and local firms. Among job-related skills, employers consider strong technical competencies as the most important attribute a worker can have. Employers were asked to define which job-related skills were most important in determining whether an employee on probation should be retained. Job-specific technical skills were ranked highest by employers among both blue- and white-collar workers (figure 2.13). International firms value job-specific technical skills more than local businesses do. They also attach a somewhat higher value to the ability to work independently, to whether workers are open to new experiences, and to teamwork skills. Local businesses value leadership and communication skills more than international firms do. The reason may lie in the different produc- tion profiles of both types of businesses or it may be that local businesses find it more difficult to attract workers with these skills, perhaps because they offer lower remuneration.9 Employers value employees who are able to think criti- cally and creatively and who are able to solve ­ problems. These employee attributes are typically associated with having advanced cognitive skills. Being able to solve problems and think creatively and critically were highly valued Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 65 Figure 2.13 Importance of Job-Related Skills among White- and Blue-Collar Workers Job-specific technical skills Leadership Problem solving Creative and critical thinking Communication Ability to work independently Teamwork Numeracy Foreign language Literacy Time management 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Index (0–4) Blue-collar workers White-collar workers Source: World Bank staff estimates using STEP employer survey data. Note: STEP = Skills Toward Employment and Productivity. White-collar workers include the following worker types: managers; professionals, technicians, and associated professionals. Blue-collar workers are classified as the following workers: clerical support; service; sales; skilled agriculture, craft, and related trades; plant and machine operators; and elementary occupations. This figure is based on the 328 and 329 firms that reported having at least one worker in the white- and blue-collar category and were willing to respond about the skills used and needed by that worker in his or her work. The differences between blue- and white-collar occupations are all statistically significant with the exception of job-specific technical skills and communication skills. attributes for both blue- and white-collar workers—they were considered the third and fourth most valuable job-related skills for white-collar workers, while problem solving was ranked third most important for blue-collar work- ers. Creative and critical thinking was, however, not viewed by employers as an important skill for blue-collar workers. Employers value workers who display strong leadership abilities, are able to work in teams as well as independently, are able to manage their time, and com- municate well. Employers valued employees who displayed leadership compe- tencies as the second most valuable trait among white-collar workers, while being able to communicate well and work in a team were among the most valued attributes for blue-collar workers. These workplace skills draw upon workers’ Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 66 Skills for Current and Future Jobs social and behavioral abilities. For example, conscientious workers are more likely to push forward on work independently and manage their time. Employee reports of what they are asked to do in their jobs often mirror employer demands for certain skills. Managers, professionals, and technicians are more likely than other workers to be asked to solve problems and to think in a creative and critical way. The STEP household survey complemented the STEP employer survey by asking workers what they do in their jobs. This question allows a comparison of the skills that employers demand with the skills that are actually used by employees. Workers were asked to report how often they need to find a solution to a challenging situation at work through thinking for at least half an hour. Approximately three-quarters of managers, professionals, techni- cians, and clerical workers reported having to solve problems as part of their work (figure 2.14). The intensity with which these skills are used is also high—nearly one in two of these workers report having to problem solve at least once a week. Although employers indicate that they value problem-solving skills in all their workers, craftsmen, machine operators, and manual workers are much less likely than professional and technical workers to report having to solve problems as part of their jobs. Craftsmen and machine operators also report a lower intensity of Figure 2.14 Percentage of Wageworkers in Different Occupations Who Report Having to Problem Solve at Work, by Frequency 100 90 80 70 60 Percent 50 40 30 20 10 0 s ls ns rs en s rs rs er or na ke ke cia ke m ag at io or or ts or er ni an s sw lw af es w ch op M Cr of ua al Te le ne ic Pr sa an er hi d M Cl ac an M ce rvi Se Less than once a month At least once a month At least once a week Every day Source: World Bank staff estimates using STEP household survey data. Note: STEP = Skills Toward Employment and Productivity. The figure shows responses to the following question: “Some tasks are pretty easy and can be done right away or after getting a little help from others. Other tasks require more thinking to figure out how they should be done. As part of this work as [occupation], how often do you have to undertake tasks that require at least 30 minutes of thinking (examples: mechanic figuring out a car problem, budgeting for a business, teacher making a lesson plan, restaurant owner creating a new menu/dish for restaurant, dressmaker designing a new dress).” Respondents were asked to indicate how often they conducted a task of this kind. The sample includes only wage employees (n = 1,313). Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 67 problem solving. Approximately 45 percent of craftsmen and 30 percent of machine operators report having to solve problems in their work, although half of these workers report using these skills less than once a month. Worker reports of problem ­ solving contrast with the importance and value placed on these skills by ­employers—as shown in figure 2.13, employers place almost as much value on these skills for white-collar workers as they do for blue-collar workers. The dis- crepancies between these reports may reflect a shortage of problem-solving skills among certain types of workers. Nearly all wageworkers report that their job requires them to be adaptive to changes in their work environment since they are continuously learning on the job. Learning new skills requires workers to have strong core cognitive skills to build off. Workers were asked how often their work involved learning new things (figure 2.15). Nine in ten managers, professionals, and technicians report con- tinuous learning as part of their work, and of these, more than half report learn- ing every day. The incidence of learning among craftsmen and machine operators is also high and relatively intensive—70 percent of craftsmen report learning on the job, and 26 percent of them report having to learn new things every day. Workers who carry out manual tasks are the only category of workers for whom learning does not appear to be an important component. Among social and behavioral skills, employers value conscientiousness most highly for all types of workers, while openness to experience is highly valued for Figure 2.15 Percentage of Wageworkers in Different Occupations Who Report Having to Learn New Things, by Frequency 100 90 80 70 60 Percent 50 40 30 20 10 0 s ls ns rs en s rs rs er or na ke ke cia ke m ag at sio or or ts or er ni an sw lw af es lw ch op M Cr of ua Te le ica e Pr sa n an er hi d M Cl ac an M ice rv Se At least every 2–3 months At least once a month At least once a week Every day Source: World Bank staff estimates using STEP household survey data. Note: STEP = Skills Toward Employment and Productivity. The figure shows responses to the following question: “How often does (did) this work involve learning new things?” Respondents were asked to indicate how often they conducted a task of this kind. The sample includes only wage employees (n = 1,313). Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 68 Skills for Current and Future Jobs white-collar workers. Conscientiousness emerges as a key employability skill in virtually all countries where the demand for skills has been studied (for example, the former Yugoslav Republic of Macedonia, Poland, the Russian Federation, and the United Kingdom). Conscientiousness includes elements such as responsibility, self-discipline, carefulness, thoroughness, self-organization, and the need for achievement (motivation). Workers who do a thorough job are hard-working and do things efficiently, and they are more likely to be hired and retained than workers who lack these traits. In addition, employers deem openness to new expe- ­ riences to be important traits for managers, professionals, and technicians, while being emotionally stable is considered to be important for blue-collar workers (figure 2.16). The high value placed on workers who are conscientious and open to expe- rience is mirrored in earnings: workers with these types of skills earn more. There are, however, substantial differences across jobs in the types of social and behavioral skills that are most valued, likely reflecting differences in the types of tasks conducted in different jobs (figure 2.17). Among managers, professionals, and technicians, people who display higher levels of openness Figure 2.16 Importance of Social and Behavioral Skills for White- and Blue-Collar Workers Conscientiousness Openness Emotional stability Extraversion Agreeableness 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Index of the importance of personality trait (0–4) Blue-collar workers White-collar workers Source: World Bank staff estimates using STEP employer survey data. Note: STEP = Skills Toward Employment and Productivity. Employers were asked to indicate which was the first most to fourth most important personality trait when deciding which new employees should be retained. N = 330. White-collar workers refers to managers, professionals, and technicians, and blue-collar workers refers to workers in all other occupations, notably clerks, sales and service workers, craftsmen, machine operators, and manual laborers. Differences in emotional stability, agreeableness, and openness to new experiences are statistically significant at a 5 percent level. Among white-collar workers, conscientiousness and openness to new experiences are statistically different from zero at a 5 percent level; among blue-collar workers, emotional stability is statistically different from zero at a 5 percent level; and conscientiousness and agreeableness are statistically different from zero at a 10 percent level. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 69 Figure 2.17 Returns to Social and Behavioral Skills, by Occupation Type Agreeableness *** ** Emotional stability ** Openness *** ** Conscientiousness * Extraversion –8 –6 –4 –2 0 2 4 6 8 10 12 Return to a one-standard-deviation increase in measured personality trait Blue-collar wageworkers White-collar wageworkers Source: World Bank staff estimates of returns to monthly incomes among white-collar (managers, professionals, and technicians) and blue-collar (clerical, service and sales, craftsmen, machine operators, and elementary) wageworkers, STEP household survey data (n = 1,244). Note: The reported results are from a Mincerian earnings regression that controls for demographics, cognitive skills, and education. Reported standard errors are jackknifed bootstrapped, and outliers are eliminated using a robust regression technique based on Cook’s distance measure. Significance level: * = 10 percent, ** = 5 percent, *** = 1 percent. and conscientiousness earn more. Those who are more agreeable actually earn less—this is a finding that reflects patterns in the international literature. More disagreeable people have been found in multiple contexts to have higher incomes and wages (Diaz, Arias, and Tudela 2012; Seibert and Kraimer 2001). Among pink- and blue-collar workers, social and behavioral skills appear to play a greater role in wage setting. Workers who are more open and conscien- tious again earn more ­ (figure 2.17, blue bars). Among these workers more emotionally stable workers earn more. Wageworkers need strong social and behavioral skills because they are often required to persuade others of their ideas and work with and supervise others. Workers in multiple occupations report needing to be persuasive through provid- ing information to clients or having to convince colleagues of their point of view (figure 2.18). These attributes are most needed in occupations that require direct contact with workers outside of their enterprises—70 percent of sales and service sector workers report that they regularly have to sell ideas, inform others, or persuade others of their opinion. Tasks that involve interaction with others and persuasion require workers with strong social and behavioral skills such as self- esteem and agreeableness—these workers will be required to pick up on social cues to change their strategies according to the personality of the person with whom they are interacting. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 70 Skills for Current and Future Jobs Figure 2.18 Percentage of Wageworkers Who Report Having to Interact with Others, Present Ideas to Others, or Supervise Others at Work 100 90 80 70 60 Percent 50 40 30 20 10 0 s ls ns rs en s rs rs er or na ke ke cia m ke ag at sio or or ts or er ni an sw lw af es ch lw op M Cr of ua Te le ica ne Pr sa an er hi d M Cl ac an M ice rv Se Present ideas or persuade clients Interact with noncolleagues Supervise others Source: World Bank staff estimates using STEP household survey data. Note: STEP = Skills Toward Employment and Productivity. The figure shows responses to the following questions: (a) “As part of this work, do you (did you) have to make formal presentations to clients or colleagues to provide information or persuade them of your point of view?” (b) “As a normal part of this work do you direct and check the work of other workers (supervise)?” (c) “As part of this work, do you (did you) have any contact with people other than coworkers, for example, with customers, clients, students, or the public?” The sample includes only wage employees (n = 1,313). Skills are not a formal sector phenomenon: strong social skills are most highly valued in the informal sector. The earnings premium to being more open to new experiences and conscientious is higher for self-employed people than for wageworkers (figure 2.19).10 This may reflect the observation that more edu- ­ cated workers cluster into wage employment and that openness to experience and conscientiousness are both highly associated with education. In studies in other countries, entrepreneurs have been found to be more conscientious and open to experience than managers (Zhao and Seibert 2006). There is, however, no clear evidence in Vietnam that the average self-employed person is more open or conscientious than the average wageworker or manager. One reason that openness and conscientiousness are more highly rewarded in self-employment is that the work of entrepreneurs—engaging with clients, need- ing to be self-motivated—is more intensive in the use of these skills. Entrepreneurs are more likely to report doing interactive tasks, such as talking to and assisting individuals outside of their business. In addition, they are more likely to have to supervise others or make formal presentations. Their work is less likely to involve technology such as computers, more likely to afford a higher level of freedom, and more likely to be nonroutine and manual in nature, implying that their work involves readjustment. Although self-employed work is less analytical than the work reported by wageworkers, many self-employed workers report needing to think for at least 30 minutes on a regular basis. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 71 Figure 2.19 Returns to Social and Behavioral Skills for Wage Employment and Self-Employment Agreeableness Emotional stability *** * Openness * *** Conscientiousness Extraversion *** –2 0 2 4 6 8 10 12 Return to a one-standard-deviation increase in measured personality trait Self-employed Employed Source: World Bank staff estimates of monthly income returns among wageworkers and self-employed workers, STEP household survey data (n = 2,058). Note: The reported results are from a Mincerian earnings regression that controls for demographics, cognitive skills, and education. Reported standard errors are jackknifed bootstrapped, and outliers are eliminated using a robust regression technique based on Cook’s distance measure. Significance level: * = 10 percent, ** = 5 percent, *** = 1 percent. Summary and Conclusion Vietnam’s education system is producing strong basic cognitive skills, an impor- tant asset that enhances the country’s competitiveness in the global economy. There are, however, signals that the education system is not building all the skills needed by employers and the workforce. The STEP household survey data sug- gest that the education system is producing workers with strong basic cognitive skills. Higher-level cognitive skills are highly valued by employers but are less likely to be used in the workforce. Employers are concerned that the education system is not providing all the skills they need of their workers, and these con- cerns are mirrored among workers. The good news for Vietnam is that it will be investing in the missing skills from a strong base—the urban workforce has strong basic literacy and numeracy skills, a necessary requirement for building more advanced cognitive and job-relevant skills. The diversity of skills used in the urban labor market has implications for the education system, which is expected by employers to develop the whole range of employability skills in addition to technical skills. The need to have strong cognitive, technical, and social and behavioral skills is not a formal sector phe- nomenon or limited to certain professional or technical occupations. Cognitive, behavioral, and technical skills are required in all types of wage employment and are strongly predictive of labor market outcomes and enterprise success. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 72 Skills for Current and Future Jobs The informal and enterprise sector appears to use a different but overlapping skill set to the skills used in wage employment. In rural areas, over 30 percent of households engage in self-employment activities in the nonfarm sector. Therefore, recognizing that skills go beyond the formal sector workforce is likely to raise enterprise success. As its economy continues to grow and transition into higher value-added sectors, Vietnam needs to focus its attention on building the advanced cogni- tive, technical, and social and behavioral skills that are already being used in today’s urban labor market and will be increasingly used in the future. In today’s urban labor market, workers are already being asked to think on their feet, to solve problems, to learn on the job, and to interact with others on a regular basis. Demand for workers who are able to perform these tasks is likely to rise, and workers will be asked to be responsive to shifting needs and labor markets. Consequently, the skills shortage that is reported today is likely to grow as employers ask more of their workers and the transition toward mod- ern jobs continues. To meet the current and future demands of employers, the focus needs to shift to laying a foundation for strong skills. The next chapters examine when skills are formed and puts forward a framework to understand how disconnects in the current education and training system may result in underinvestment in the skills needed for a modern industrialized Vietnam. Annex 2A: In Depth What Are Cognitive, Social and Behavioral, and Technical Skills and How Are They Measured? The STEP household data focus on three domains of skills: cognitive, social and behavioral, and technical. Cognitive skills can be defined as “the ability to understand complex ideas, to adapt effectively to the environment, to learn from experience, to engage in various forms of reasoning, to overcome obstacles by taking thought” (Neisser et al. 1996). The literature on intelligence has sepa- rated cognitive skills into a general intelligence factor (g factor) and multiple second-order factors, which display different paths over an individual’s life cycle (Carroll 1993). Two seminal and widely discussed factors are fluid intel- ligence and crystallized intelligence. Fluid intelligence reflects the capacity to perceive and act upon complex problems under novel conditions, independent of acquired knowledge (Cattell 1971). In contrast, crystallized intelligence reflects learned skills and knowledge and is therefore dependent on education and the formation and learning of knowledge (Horn and Cattell 1967). Cognitive skills are typically measured using achievement or assessment tests that capture, to different degrees, fluid and crystallized intelligence. Broadly speaking, aptitude tests are designed to measure differences in the rates at which individuals learn (fluid intelligence), whereas achievement tests are designed to measure acquired knowledge (crystallized intelligence). The relative weight of fluid versus crystallized intelligence captured by a test depends on the amount of prior knowledge or experience that is required to perform well on the test. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 73 In the STEP household survey, cognitive skills are measured in two ways. First, respondents are asked to report whether and how often they read, write, and do numerical tasks both at work and at home. The questions were designed to capture both overall use of reading, writing, and numeracy skills as well as the intensity of their use. These measures are likely to capture a combination of the person’s actual ability to conduct tasks involving these skills and their motivation/opportunity to do so. In this case, they may represent a lower-bound estimate of these skills in the population. For example, an individual may be able to write long documents but have no recourse to do so in his or her work or home life. On the other hand, individuals may claim to read on a regular basis but may actually not be able to do so. This miscategorization would result in overestimates of the skill stock. The survey asks respondents the following questions on the three skill categories: ­ Self-reported reading: “Do you read anything [in daily life/at this work], including very short notes or instructions that are only a few sentences long?” “Among the things that you normally read [in daily life/at this work], what is the size of the longest document that you read?” Self-reported writing: “Do you ever have to write anything (else) [in daily life/ at work], including very short notes, lists, or instructions that are only a few sen- tences long?” “Thinking about all the things you normally write (wrote) [in daily life/at work], what is the longest document that you write (wrote)?” Self-reported numeracy: “[As a normal part of this work/in daily life], do you do any of the following . . . ?” A second measure of cognitive ability captures an individual’s literacy by test- ing their reading competency. The STEP literacy assessment is aligned with and draws from other large-scale international surveys, which have included the International Adult Literacy Survey (IALS), Adult Literacy and Life Skills Survey (ALL), and the PIAAC. STEP is based on the same conception of literacy used in other large-scale assessments, notably “understanding, evaluating, using and engaging with written texts to participate in society, to achieve one’s goals, and to develop one’s knowledge and potential” (PIAAC Literacy Framework). The STEP household survey restricts the target population to all urban adults aged 15–64, while in the PIAAC survey the target population includes all rural and urban adults aged 16–65. Both surveys define the target population to include all residents, regardless of citizenship, nationality, or language, and to exclude all individuals living in institutions (e.g., prisons, hospitals, nursing homes). STEP’s target population excludes adults living at school in a ­ student group quarter, but PIAAC includes this group. The sampling frames in both sur- veys require at least 95 percent of the target population to be included. As urban populations tend to be better educated and belong to higher socio- economic groups than rural residents and are also more likely to hold jobs requir- ing advanced skills, they are expected to perform better on the reading literacy assessment when compared to the rest of the population. The STEP household survey in Vietnam focused on Hanoi and HCMC. Both cities account for close to 35 percent of the country’s urban population and close to 16 percent of the Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 74 Skills for Current and Future Jobs overall population. Results from the STEP survey should not be interpreted as providing an estimate of the reading proficiency of Vietnam’s adult population as a whole. Rather, they provide an estimate of the proficiency of a specifically defined subgroup of that population (adults in Hanoi and HCMC) whose read- ing proficiency may differ considerably from that of the 15- to 64-year-old popu- lation as a whole. The STEP survey concentrates narrowly on the measurement of reading lit- eracy, whereas PIAAC measures reading literacy, numeracy, and problem solving in technology-rich environments. The design for the STEP literacy assessment has two primary goals: to provide items that target the lower end of the literacy scales and to link results to the literacy scale used in PIAAC. The selection of items for any assessment requires meeting certain constraints. To meet the psy- chometric linking requirements, the pool of items used in STEP is limited to items used in PIAAC as well as some items from the Adult Literacy and Life Skills Survey. The literacy items selected for STEP were all developed based on the same literacy frameworks developed for PIAAC. The assessment design for STEP specifies a Core block with the easiest items, a reading components block, and four additional blocks of literacy items. Respondents who pass the Core are administered two of the four booklets of literacy items at random. Findings from PIAAC included in this report all refer to its reading literacy assessment section. The sample size requirement for STEP usually ranges between 2,400 and 3,000 observations per reporting language using a paper-and-pencil approach. In PIAAC, which assesses four different cognitive areas and uses both paper-and- pencil and computer-based instruments, the sample size requires at least 5,000 observations per reporting language. Although the translation and adaptation of the survey instruments follow the same methodology in both surveys, STEP’s field test requirements call for testing in-depth about 20–30 cases. In the case of PIAAC, however, field test require- ments require about 1,500 cases to test all items and in all of its administration modalities. Although STEP and PIAAC field team composition and size differ slightly due to smaller sample sizes in STEP, training requirements and supervision stan- dards during data collection are very similar. Finally, the weighting process is different, as PIAAC uses replicate weights and STEP uses probability weights. Whenever reliable data were available, STEP weights were adjusted using bench- mark variables for age and gender. The literacy proficiency score for urban Vietnam that was generated can be separated into six different proficiency levels (taken from OECD 2013, pages 68 and 69): • Proficiency at Level 5 (scores equal to or higher than 376 points) Level 5 is the highest proficiency level on the literacy scale. Adults reaching this level can perform, among others, tasks that involve searching for and Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 75 integrating information across multiple, dense texts; constructing syntheses of similar and contrasting ideas or points of view, or evaluating evidence and arguments. • Proficiency at Level 4 (scores from 326 points to less than 376 points) At Level 4, adults can perform multiple-step operations to integrate, interpret, or synthesize information from complex or lengthy continuous, noncontinu- ous, mixed, or multiple-type texts that involve conditional and/or competing information. • Proficiency at Level 3 (scores from 276 points to less than 326 points) Adults performing at Level 3 can understand and respond appropriately to dense or lengthy texts, including continuous, noncontinuous, mixed, or multi- ple pages. They understand text structures and rhetorical devices and can iden- tify, interpret, or evaluate one or more pieces of information and make appropriate inferences. • Proficiency at Level 2 (scores from 226 points to less than 276 points) At Level 2, adults can integrate two or more pieces of information based on compare and contrast or reason about information, and make low- criteria, ­ level inferences. • Proficiency at Level 1 (scores from 176 points to less than 226 points) At Level 1, adults can read relatively short continuous, noncontinuous, or mixed texts to locate a single piece of information, which is identical to or synonymous with the information given in the question or directive. They can complete simple forms, understand basic vocabulary, and read texts with a degree of fluency. • Proficiency below Level 1 (scores below 176 points) Individuals at this level can read brief texts on familiar topics and locate a single piece of specific information identical in form to information in the question or directive. They are not required to understand the struc- ture of sentences or paragraphs and only basic vocabulary knowledge is required. The literacy items cover a range of areas, notably: • Material types, focusing on non-school-based materials in adult contexts (example 1); • Task types, including tasks that require respondents to access and identify information (in both text-based and nonprose materials such as tables, graphs, and forms), to integrate and interpret information, and to evaluate information by assessing the relevance, credibility, or appropriateness of the material for a particular task (example 2); and • Difficulty, with tasks ranging from locating a single piece of information in a very short advertisement to summarizing reasons for using generic drugs as presented in a newspaper article. Tasks are reported along a scale divided into five levels, with Level 1 characterized by the least demanding tasks and Level 5 the most demanding. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 76 Skills for Current and Future Jobs Example 1 Example 2 Does the following sentence make sense? THE MAN WAS TOO TIRED TO BRUSH HIS PLANT SO HE WENT STRAIGHT TO SLEEP. STAR SAND GLASS Circle the correct word: IT STARTED RAINING, SO I PUT UP Circle the correct word. MY UMBRELLA/MUSHROOM. The self-reported reading, writing, and numeracy questions capture a con- cept of cognitive skills different from the literacy assessment. The literacy assessment captures an objective assessment of an individual’s literacy that can be compared to the literacy of others in the survey. In comparison, the self- reported questions capture the use of reading and writing skills; because these measures are self-reported, they may well differ from an individual’s actual ability to read or write. Figure 2A.1 displays the fraction of correct responses in Figure 2A.1 Self-Reported Reading Length and Fraction of Correct Responses in Literacy Assessment 100 90 80 70 60 Percent 50 40 30 20 10 0 Don’t <1 2 to 5 6 to 10 11 to 25 More read than 25 Self-reported reading length (pages) 0.95–1 0.75–0.84 0.55–0.64 0.35–0.44 0.15–0.24 0–0.04 0.85–0.94 0.65–0.74 0.45–0.54 0.25–0.34 0.05–0.14 Source: World Bank staff estimates using STEP household survey data. Note: STEP = Skills Toward Employment and Productivity. The literacy scores reflect performance of individuals on a literacy assessment, and the self-reported reading length reflects how much the person reports reading. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 77 the literacy assessment by self-reported reading category. The average number of correct responses increases as self-reported reading intensity rises—among those who read more than 25 pages, 75 percent got over 95 percent of the ques- tions correct on sections A and B of the reading assessment compared to approximately 40 percent correct by those who read less than a page. However, nearly 33 percent of those who do not read anything on a regular basis also scored in the highest category. It is therefore clear that although self-reported skills are related to reading ability as captured in the literacy assessment, they do not fully capture a person’s actual skills. Technical skills reflect learned knowledge in particular domains and are there- fore more likely to reflect crystallized intelligence than fluid intelligence. As such, technical skills can be strengthened later in life, but are likely to be most respon- sive to investment earlier in life. Because technical skills are often discipline specific, they are harder to capture using a survey instrument aimed at the gen- eral population. The technical skills that are measured in the STEP skill survey reflect specialized types of skills that are relevant to perform tasks that are spe- cific to multiple jobs. Behavioral skills refer to academically or occupationally relevant skills and traits that are not directly related to intelligence but are otherwise associated with personality or motivational traits. These skills include self-regulation, perse- verance, motivation, and effort (Borghans et al. 2008). The measures used to capture behavioral attributes are less well established than those used to capture cognitive skills, a reflection in part that there is less consensus regarding the structure and evolution of personality.11 The most common and widely accepted taxonomy for capturing personality traits is the Big Five. The Big Five includes conscientiousness, openness to experience, extraversion, agreeableness, and emo- tional stability, and within each of these five factors lie lower-order facets (John and Srivastava 1999). This taxonomy has been found to be replicable across cultures and can capture the evolution of personality over the life course (John and Srivastava 1999). Gender and Skills in Vietnam There are few differences between men and women in terms of their measured cognitive skills. Men and women performed equally well on the literacy assess- ment, suggesting that no gender gaps in basic literacy skills exist in Vietnam. Women, however, are slightly less likely to report reading or writing and do so in a lower intensity. The differences between men and women are substantially reduced once education is considered, suggesting that these differences are likely to reflect gender gaps in education. Gender differences in cognitive skills are smaller for the population under 40, for whom gender gaps in educational invest- ment are less marked. The exception to this is the fraction reporting conducting complex numerical tasks, which is higher for men than for women even among the population under the age of 40. Several gender differences can be found in social and behavioral skills, mirror- ing patterns seen internationally. Women in the sample are more risk averse, are Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 78 Skills for Current and Future Jobs less open to new experiences, and have lower levels of self-esteem, but similar levels of other social and behavioral traits, such as extraversion, agreeableness, and grit (figure 2A.2).12 Studies in OECD countries have found that female ­ students have higher levels of social and behavioral skills, which has contrib- uted to women performing relatively well at school (Cornwell, Mustard, and Van Parys 2013; Jacob 2002). There is little evidence of this finding in urban Vietnam—no differences in social and behavioral skills can be seen between male and female students at upper secondary or tertiary levels. Gender gaps in education access at primary, lower secondary, and upper secondary levels appear to be reversing over time. Girls are slightly more likely than boys to be enrolled in lower and upper secondary school (see figure 2A.3, panel a). The growth in women’s enrollment at a tertiary level has been remarkable and substantially higher than men’s enrollment growth: women’s enrollment has nearly tripled over time, and women’s gross enrollment has overtaken that of men (see figure 5.3). The differences in the education profile of men and women at a postsecondary level are substantial, as are the differ- ences in their chosen fields of study (figure 2A.3, panel b). Women are more likely than men to study business and education and are less likely to be study- ing technical fields such as IT, engineering, science, and craftsmanship. These gender ­ differences in the choice of field of study are also seen among current students—68 percent of urban women engaged in postsecondary education report studying business, compared to approximately 30 percent of men. In comparison, 45 percent of men are engaged in studies in IT, science, or crafts- manship, compared to only 7 percent of women. Figure 2A.2  Gender Differences in Social and Behavioral Skills and Openness to Experience, after Accounting for Education and Age a. Social and behavioral skills b. Distribution of openness to new experiences Index of social and behavioral skills 2.35 0.8 2.30 2.25 2.20 0.6 2.15 Density 2.10 0.4 2.05 2.00 1.95 0.2 1.90 1.85 1.80 0 –2 –1 0 1 2 *) n ss *) s es io (** (** ne Big Five: openness index (higher is less open) en rs us em ss ve bl io ne tra ea te nt Female Male en re Ex es ie Op Ag lf- c ns Se Openness is measured using the Big Five questions Co and is plotted net of age using a third-order Male Female polynomial and education. Source: World Bank staff estimates using STEP household survey data. Note: STEP = Skills Toward Employment and Productivity. n = 3,405. *** = statistically significant difference between female and male at a 1 percent level. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 79 Figure 2A.3  Gender Gaps in Enrollment in Secondary Education and Choice of Fields of Study a. Total net enrollment, by education level and gender 100 90 80 70 60 Percent 50 40 30 20 10 0 Male Female Male Female Male Female Primary Lower secondary Upper secondary 1998 2004 2010 b. Percentage of the urban workforce with a specified field of study, by type and gender 20 18 16 14 12 Percent 10 8 6 4 2 0 F M F M F M F M F M F M Adminis- Business Education/ IT/ Crafts Other tration health science Vocational General Sources: Panel a: World Bank staff estimates using VHLSS data; panel b: World Bank staff estimates using STEP household survey data. Note: F = female; M = male; STEP = Skills Toward Employment and Productivity; VHLSS = Vietnam Household Living Standards Survey. N = 3,405 of which 1,493 have studied in a specified field at upper secondary level or above. Of the 1,493, 683 are male and 810 are female. The higher number of females does not reflect a greater propensity for females to have studied a specific field of study, but is instead reflective of a greater number of female respondents in the STEP survey (60 percent). Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 80 Skills for Current and Future Jobs Although there is little evidence of gender differences in cognitive skills in the workforce, there are substantial differences in the types of work that men and women do in urban Vietnam and the payment they receive for their work. Women are less likely than men to be working in the labor market—they are more likely to be inactive than men, but no more likely to be unemployed. Once in the labor market, women are less likely to be working for wages and are slightly, but not statistically significantly, more likely to be self-employed. Among the men and women conducting wage work, women earn substantially less per month than men in both wage and self-employment. Differences in monthly earnings are primarily attributable to lower hourly wages/earnings rather than any marked gender differences in hours worked. The majority of the gender dif- ference in wages is attributable to gender differences in the returns to education, experience, and occupational premium. Comparing Skills in Ho Chi Minh City and Hanoi The STEP household data suggest that both measures of cognitive skills— self-reported and the literacy assessment—are slightly lower in HCMC than in Hanoi. The fraction of the population conducting any tasks that involve read- (figure 2A.4, ing, writing, or numerical abilities is lower in HCMC than in Hanoi ­ panel a), although the differences are not statistically significant at the 10 ­percent level for numeracy skills. Differences between the two cities show up in the intensity of skills used: complex skills usage is more prevalent in Hanoi than in HCMC, and these differences are statistically significant across Figure 2A.4 Cognitive Skills: Hanoi versus Ho Chi Minh City a. Percentage using reading, writing, and numeracy skills, by complexity b. Literacy test scores by education level 100 100 90 90 80 80 70 70 60 60 50 Percent Percent 50 40 40 30 30 20 10 20 0 10 HCMC Hanoi HCMC Hanoi HCMC Hanoi HCMC Hanoi HCMC Hanoi 0 Hanoi HCMC Hanoi HCMC Hanoi HCMC All Studying, Lower Upper Tertiary Reading Writing Numeracy 15–29 secondary secondary completed Complex Mid Basic 8 7 6 3 to 5 1 to 2 0 Source: World Bank staff estimates using STEP household survey data. Note: HCMC = Ho Chi Minh City; STEP = Skills Toward Employment and Productivity. Panel a, n = 3,405. Panel b, n = 3,328. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 81 all three skill categories. A similar pattern emerges from the scores on the lit- eracy assessment (figure 2A.4, panel b). The fraction of the population attain- ing full marks is lower in HCMC overall, and in particular among students aged 15–29. To ensure that these differences are not driven just by differences between the two cities’ education levels, we examine whether there are differ- ences in test scores among individuals who have completed the same level of education. We find statistically significant differences in the fraction obtaining full marks among those who have completed lower secondary or tertiary educa- tion, although no difference is found for those with upper secondary education (figure 2A.4). Hanoi and HCMC also differ on a number of social and behavioral skill scales. For example, residents of Hanoi tend to score lower on the agreeable- ness, openness to experience, and extraversion scales ­ (figure 2A.5). Hanoi residents are more risk averse than residents of HCMC, less conscientious, and display lower levels of grit, which captures perseverance for long-term goals. Higher levels of grit have been found to be positively associated with labor market outcomes and educational performance (Duckworth et al. 2007). Finally, the use of technology is higher in Hanoi than in HCMC. For example, 78 percent of residents in Hanoi reported using technology compared to only 73 percent of residents in HCMC (figure 2A.6). HCMC residents were also less Figure 2A.5 Social and Behavioral Skills: Hanoi versus Ho Chi Minh City Index of social and behavioral skills (0–4) 2.5 2.0 1.5 1.0 0.5 0 ) ) (** ce *) *) *) *) (** ** ** (** (** (** n s( *) rie s( n s it g n io ne es pe sio in Gr rs en ak us ex ve er m l io av ab tra to nt n e sk Ex ss io ie re Ri ne cis c Ag ns en De Co Op HCMC Hanoi Source: World Bank staff estimates using STEP household survey data. Note: HCMC = Ho Chi Minh City; STEP = Skills Toward Employment and Productivity. N = 3,405. Index varies between 0 and 4. Higher values imply a lower level of the social and behavioral skill. Significance level: * = 10 percent, ** = 5 percent, *** = 1 percent. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 82 Skills for Current and Future Jobs Figure 2A.6 Technical Skills: Hanoi versus Ho Chi Minh City 90 80 70 Percent using skill 60 50 40 30 20 10 0 ct al (** gy (** ve ta ical ** f ne f s ( ir o hi ir o ra on ns titi lo n *) *) s *) ry s sk cle a ac a io hy no te rs tio e hi ep m /rep in rpe ac rep l/p ch ve se/r e te te ua y/ Us In U m of an no e M Us to Au HCMC Hanoi Source: World Bank staff estimates using STEP household survey data. Note: HCMC = Ho Chi Minh City; STEP = Skills Toward Employment and Productivity. N = 3,405. likely to be in repetitive jobs and more likely to be operating or repairing vehi- cles. No statistically significant difference in interpersonal interaction, use or repair of machinery, or manual and physical tasks were found. Social and Behavioral Skills in Vietnam Social and behavioral skills are linked to good educational and labor market outcomes. Personality traits such as self-esteem, self-control, emotional stabil- ity, and other social and behavioral characteristics have been shown to be linked to labor market outcomes including earnings, type of employment, and experi- ence (Duckworth et al. 2007; Heckman, Stixrud, and Urzua 2006; Mueller and Plug 2006; Nyhus and Pons 2005; Salgado 1997; Urzua 2008). Social and behavioral skills such as self-control and grit have been linked to better perfor- mance in school as well as to a number of other consequential life ­ outcomes. For example, self-control at age 10 has been found to be correlated to income, savings behavior, financial security, occupational prestige, health, and other outcomes later in life among 1,000 students tracked in New Zealand (Moffitt et al. 2011). Self-discipline among a population of adolescents was found to be as statistically significant a predictor of correlates of academic success and dili- gence, such as final grades achieved and the number of hours spent doing homework (Duckworth and Seligman 2005). Some studies suggest that social and behavioral skills are actually more important than cognitive skills for deter- mining labor market outcomes (Bowles, Gintis, and Osborne 2001; Goff and Ackerman 1992; Segal 2008, 2012). Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 83 Social and behavioral skills, such as conscientiousness and openness, vary with education. Figure 2A.7 shows differences in openness to experience by age and across two different education levels. Panels a and b show openness to experience and conscientiousness for individuals who have completed ­ primary- and university-level education, after taking into account age and sex. Individuals educated at a higher level of education are more open to new experiences and are more conscientious. The lowest levels of both openness and conscientiousness are found among those who have completed only pri- mary school (those who have six years of education). Among those who have completed primary school or less, both conscientiousness and openness to experience decline systematically with education. These patterns resemble those seen in other countries, where higher educated individuals display Figure 2A.7 Index of Openness to Experience and Conscientiousness, by Education Level and Age a. Openness, by education b. Conscientiousness, by education Big Five: conscientiousness index (higher is less conscientious) 0.4 index (higher is less open) 0.05 Big Five: openness 0.2 0 0 –0.05 –0.2 –0.4 –0.1 0 5 10 15 20 0 5 10 15 20 School year School year Openness is measured using the Big Five Conscientiousness is measured using the Big Five taxonomy of questions, and is plotted net of age taxonomy of questions, and is plotted net of age effects using a third-order polynomial and sex. effects using a third-order polynomial and sex. c. Openness, by age d. Conscientiousness, by age Big Five: conscientiousness index (higher is less conscientious) 0.05 0.2 index (higher is less open) Big Five: openness 0 0.1 –0.05 0 –0.1 –0.1 10 20 30 40 50 60 10 20 30 40 50 60 Age in years Age in years Openness is measured using the Big Five Conscientiousness is measured using the Big Five taxonomy of questions, and is plotted net taxonomy of questions, and is plotted net of schooling and sex. of schooling and sex. Source: World Bank staff estimates using the STEP (Skills Toward Employment and Productivity) household survey data. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 84 Skills for Current and Future Jobs higher levels of grit, openness, and conscientiousness, but lower levels of extra- version and agreeableness. Personality traits evolve with age in Vietnam (see figure 2A.7, panels c and d), mirroring patterns found across the world but with notable differences. Personality traits respond to changes in a person’s environment but also evolve with age due to biological processes. For example, attitudes toward risk have commonly been found to be highest among adolescents and fall in people in their early twenties (Paulsen et al. 2012; Spear 2000). This observation has been linked to development changes in the prefrontal cortex and limbic regions of the brain among adolescents, which include an apparent shift in the balance between mesocortical and mesolimbic dopamine systems (Spear 2000). Older people in other countries have been found to be more socially dominant, conscientious, and emotionally stable (Roberts, Walton, and Viechtbauer 2006), while open- ness to experience rises early in life and falls with old age. The Vietnamese data corroborate these patterns for social dominance, conscientiousness, and emo- tional stability, but suggest that openness to experience is lowest for middle-aged individuals and higher for teenagers and older people. Unlike in the United States, individuals appear to become less risk averse, less socially dominant, and less emotionally stable after age 55. Notes 1. The constraints are reported to be greater among workers with higher levels of educa- tion, suggesting that skill constraints may be most present among those workers who have jobs in which more complex tasks are conducted. 2. It should be noted that these reports of skill obstacles reflect perceived skills shortages by employers. Skills shortages are perceived by employers in many countries with education systems of all standards (World Bank 2012), suggesting that employers’ concerns about skills may be more pervasive than flaws in the education system in any given country. These reports can, however, be viewed as informative as a reflection of perceived concerns about growth constraints. 3. Craftsmen are the single largest occupational group in the sample. 4. It should be noted that self-reported constraints reflect a combination of the actual individual’s skill profile and the job or career path that he or she is placed in and expects to follow. Therefore, higher reports of constraints among more educated workers are likely to reflect the observation that they are in jobs in which greater analytical and literacy skills are required. Indeed, 40 percent of workers with higher education report having to do tasks involving at least 30 minutes of thinking at least once a week compared to 18 percent of workers with upper secondary education and only 6 percent of workers with primary education. A similar issue may be raised for workers reporting that their education is useful for their work. 5. Cognitive ability is a key measure of human capital and skills. Human capital is the stock of knowledge, skills, or characteristics of a worker that contribute to his or her productivity (Acemoglu and Autor, forthcoming). Although education has been found to raise long-term rates of economic growth, the effect of education on eco- nomic growth has been found to be largely driven by the cognitive skills acquired through the education process (Barro 2001; Hanushek and Woessmann 2008, 2012). Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills for Current and Future Jobs 85 The evidence suggests that expanding educational enrollment without ensuring improvements in cognitive skills may not result in economic growth (Hanushek and Woessmann 2008). This evidence does not imply that social and behavioral skills are unimportant for economic growth, as cognitive skills are likely to be closely related to social and behavioral skills. Therefore, the effect of cognitive skills on economic growth may indeed reflect a combination of cognitive and social and behavioral skills. 6. The test covers foundational reading skills, including word meaning, sentence process- ing, and passage comprehension. More information on the measurement of literacy skills can be found in annex 2A. 7. It should be noted that factors other than differences in education quality could also explain a decline in score with age among individuals with similar levels of education, such as differences in the use of their literacy skills, differences in motivation to learn across age cohorts (regardless of the quality of schooling offered), and a decline in mental faculties. 8. Although the literacy assessment is the preferred measure of cognitive skills, the test captured only basic literacy skills; therefore, we turn to examining self-reported skills to look at more advanced skills. 9. Data on wages paid by international firms versus local businesses in Vietnam are not available. Evidence from the Vietnam Household Living Standards Survey (VHLSS) suggests that there is a substantial wage premium for working in foreign firms com- pared to domestic businesses for workers with similar characteristics. 10. It should be noted that the return to emotional stability is not statistically significant at a 10 percent level among self-employed individuals. 11. Dominant models of personality assume a hierarchical taxonomy similar to that used to model intelligence, but without the prevalence of a single factor equivalent to g (Almlund et al. 2011). 12. These differences continue to be found after accounting for age and education differ- ences within the sample studied. References Acemoglu, D., and D. Autor. Forthcoming. Lectures in Labor Economics. http://economics​ .mit.edu/files/4689. Almlund, M., A. L. Duckworth, J. Heckman, and T. Kautz. 2011. “Personality Psychology and Economics.” In Handbook of the Economics of Education, edited by E. A. Hanushek, S. Machin, and L. 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Urzua, S. 2008. “Racial Labor Market Gaps: The Role of Abilities and Schooling Choices.” Journal of Human Resources 43 (4): 919–71. World Bank. 2012. World Development Indicators 2012. Washington, DC: World Bank. Zhao, H., and S. E. Seibert. 2006. “The Big Five Personality Dimensions and Entrepreneurial Status: A Meta-Analytical Review.” Journal of Applied Psychology 91 (2): 259–71. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cha p t e r 3 Skills Formation and the Importance of the Early Years The skills of Vietnam’s future workforce are being built now—before birth and after, and in kindergartens, schools, in higher education, and on the job. To make the most of the resources devoted to skills development, Vietnam needs to align its skills policy with the critical junctures at which skills are built. This chapter summarizes key aspects of the emerging literature on skills formation. It shows that the most sensitive moments for skill development differ by type of skills, with cognitive and behavioral skills formed earlier in life and technical skills later. Investing early can have a multiplier effect because new skills build off those already learned. A child who learns how to read fluently by second grade will be better prepared to learn mathematics during third grade than a child who is unable to read fluently. The early years are the most sensitive for laying the foundations of cognitive skills, and they are also when children from disadvantaged backgrounds start to irrevocably fall behind. Because the early childhood period is critical for the development of strong cognitive skills, creating the right conditions for early childhood development is more effective and less costly than trying to rectify problems at a later age. This important early period marks the first step of skills development, particu- larly for closing the gaps between children from poorer and better-off house- holds. This chapter discusses early childhood development in Vietnam and argues that Vietnam still has important policy gaps: almost a quarter of chil- dren below the age of 5 are stunted mostly as a result from inadequate feeding practices in early age, and stunting severely negatively impacts cognitive devel- opment. Vietnam is successfully expanding access to full-day preschool for children aged 5, but more attention should be directed to helping parents make better choices for their youngest children, especially disadvantaged and poor parents. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   89   90 Skills Formation and the Importance of the Early Years What Do We Know about the Formation of Cognitive, Social and Behavioral, and Technical Skills? The skills that a Vietnamese worker brings to the labor market reflect invest- ments made throughout their lifetime—from the stimulation and nutrition he or she received as a baby to on-the-job learning as an adult. For all people, adult human capital, such as workforce skills and cooperative behavior, builds on capacities that are developed early in childhood and continue to be built through training and learning by doing. The skills of young workers entering the labor market are the consequence of decisions made throughout their childhood and adolescent years, including their home and school environments. The skills of older and more experienced workers additionally reflect knowledge and know- how acquired through learning by doing and training in their workplaces. There are critical and sensitive moments when a skill is the most responsive to investment and when skills can be most effectively and efficiently formed. The foundations of cognitive and behavioral skills are set early on. Because these foundations are the platform upon which later skills are built, a skills strategy must be built up from the early investments made during early childhood. Figure 3.1 summarizes the different points in childhood and early adulthood Figure 3.1 The Process of Skill Formation Primary Secondary Post- Lifelong 0 to 3 3 to 5 school school secondary learning Social and behavioral skills Technical skills Cognitive skills Source: Authors’ illustration based on international evidence from a range of disciplines studying the development of abilities, including psychology, economics, and neuroscience. Note: An overview of this literature can be found in Shonkoff and Phillips (2000), Naudeau et al. (2011), Almlund et al. (2011), Cunha, Heckman, and Schennach (2010), and Cunha and Heckman (2007). It should be noted that the research underlying this figure is fast moving, complex, and includes many questions that remain to be solved. This schematic portrays one model for understanding the formation of skills, but this model may be subject to evolution as the research continues to expand. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills Formation and the Importance of the Early Years 91 during which cognitive, social and behavioral, and technical skills may be formed. The four noteworthy features of skill formation summarized in figure 3.1 are explored in greater depth in this chapter. First, there are sensitive and critical periods for building skills, and it is more efficient and effective to build skills at these periods than to address skill deficits at a later age. In the figure, the most sensitive moments for skill acquisition are depicted in dark shading. Periods during which the skills are less sensitive to investment are indicated in light shading, and periods during which sensitivity is most limited are indicated in white. Cognitive skills are more intensively formed in the earliest years of a child’s life. Behavioral skills begin to be formed in the early years and continue to evolve throughout adult life. Second, new skills are built off old skills and benefit from previous invest- ments. A child who has learned to read by second grade will be able to absorb more in third grade than a child who cannot yet read fluently. This implies that earlier investments are likely to have a greater and longer-term impact on skills, as it is easier and less costly to build these skills when children are most receptive to learning. Third, behavioral skills are valuable early in a child’s life because they feed into, and benefit from, cognitive skills. A child who has more initiative and greater self-confidence is more likely to be imaginative and creative. Such chil- dren are likely to apply themselves more diligently at school. This implies that these skills are valuable both in themselves and because they feed into the devel- opment of strong cognitive skills. Fourth, strong cognitive and behavioral skills beget strong technical skills. Technical skills—often acquired last, through technical and vocational education and training (TVET), higher education, and on-the-job ­ learning—will benefit from the stronger cognitive and behavioral skills acquired earlier in the education system. The skills learned in formal education will help workers to continuously update their technical skills during their working lives. Sensitive and Critical Periods for Building a Skill There are sensitive and critical moments in a person’s life when cognitive, social and behavioral, and technical skills are most responsive to investments. The “malleable” moments are depicted in dark shading in figure 3.1, and periods ­ when the skills are less sensitive to change are depicted in white.1 A critical period is one for which there is no substitute, which means that a similar invest- ment at another point in life is unable to change that ability. A period is defined as “sensitive” if an investment during that period can have a greater impact than during others (Cunha and Heckman 2008; Doherty 1997). The foundations of an individual’s intelligence are formed early in life. During the first few years of life, brain development occurs rapidly and in a bottom-up manner whereby the simple circuits and skills formed provide the scaffolding for more advanced circuits and skills over time. During this period of rapid brain development, the foundations are set for later development, resulting in path dependence: adverse circumstances such as malnutrition, stressful home Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 92 Skills Formation and the Importance of the Early Years environments, or a lack of stimulation during this period can have long-term consequences on adult capacities. Food supplementation to address nutritional deficits before age 5 have been found to have strong positive impacts on cogni- tive ability, motor development, and mental development, but are less effective thereafter (Walker et al. 2005). The foundations of an individual’s intelligence are fairly well set early in life. Two seminal and widely discussed factors of an individual’s intelligence are fluid intelligence and crystallized intelligence. Fluid intelligence reflects the capacity to perceive and act upon complex problems under novel conditions, independent of acquired knowledge (Cattell 1971). In contrast, crystallized intelligence reflects learned skills and knowledge, and is therefore dependent on education and the formation and learning of knowledge (Horn and Cattell 1967). IQ scores, which capture to a greater degree fluid intelligence, become stable between ages 8 and 10, suggesting a particularly sensitive period for their formation before age 10 (Hopkins and Bracht 1975). There is, however, evidence to suggest that the devel- opment of fluid intelligence c ­ ontinues until age 16 (Garlick 2002). Children continue to acquire knowledge and cognitive skills based on early cognitive foundations. Although a person’s analytical and deductive capacity is most responsive to investments early in childhood, knowledge accumulation con- tinues throughout adolescence and into adulthood and continues to grow with further education and on-the-job training (see annex 2A; Almlund et al. 2011). Social and behavioral skills also begin to form in the early years and continue to evolve throughout adult life. There is evidence that social and behavioral skills are malleable during adulthood and that they may be more responsive to inter- ventions during adolescence than in early childhood (Almlund et al. 2011). Interventions to strengthen behavioral skills can, therefore, be successful through- out a person’s life. For example, the Jóvenes programs targeting disadvantaged youth in many Latin American countries combine socioemotional learning with the acquisition of technical skills (see chapter 5). Personality traits, like cognitive traits, are responsive to environmental stimulus but are also subject to evolution due to predictable biological processes. Attitudes toward risk have been found to be highest among adolescents and fall in the early twenties (Paulsen et al. 2012; Spear 2000). The focus on behavioral skills formation early in life is growing worldwide. Because personality traits have been found to causally impact performance at school and in the labor market, interventions targeting social and behavioral skills are likely to be more effective when conducted earlier in life—before path- changing decisions are taken, such as whether to drop out of upper secondary school. Higher levels of perseverance and persistence have been found to be posi- tively related to attendance and grades at school (Duckworth and Seligman 2005; Moffitt et al. 2011). Efforts are under way to anchor socioemotional learn- ing in preschool and school curricula (e.g., the Tools of the Mind program in the United States), to establish standards for socioemotional learning (e.g., in Colombia), to record behavioral skills in student report cards (e.g., in Germany and the United States), and to provide relevant training to teachers. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills Formation and the Importance of the Early Years 93 Evidence from Vietnam indicates that consistent with international patterns, foundational cognitive skills are more malleable in childhood. The Young Lives survey in Vietnam follows a sample of children from early childhood to adoles- cence. The survey allows assessing changes in test score ranks as children mature, notably using the Peabody Picture Vocabulary Test (PPVT), a widely used test for cognitive ability at age 5 to measure vocabulary, and a Cognitive Development Assessment (CDA) to capture notions of quantity. Panel a of figure 3.2 shows rising correlations in the ranks of children in math and vocabulary tests as chil- dren grow older. This indicates that an individual’s rank in the population becomes more stable over time—a sign of reduced malleability of cognitive skills with age. Panel b shows the scores achieved by children of different ages on the same test, on average and by wealth tercile. Two noteworthy messages emerge from this data. First, the children who performed relatively poorly at a younger age are less likely to overtake those who performed better, and those performing better are more likely to stay ahead of their lower-scoring peers. Second, older children attain higher scores in the vocabulary test than younger children. Therefore, although an individual’s intelligence rank within a population becomes more stable over time, the knowledge they have expands over time and results in better performance on these tests. Creating the right conditions for skill development in early childhood is more effective than rectifying gaps at later ages. Because the brain develops in a bottom-up manner, as described in box 3.1, it is harder to alter its capacity after it has stabilized with age. The windows of opportunity for skill development and Figure 3.2 Changes in Cognitive Skills as Children Age a. Rank correlations of test scores across age b. PPVT scores, by age and wealth tercile groups 0.6 180 Rank correlations across age groups 160 0.5 140 0.4 120 PPVT score 100 0.3 80 0.2 60 40 0.1 20 0 0 5 and 8 8 and 12 12 and 15 3 4 5 6 7 8 9 10 11 12 Math PPVT Age PPVT scores, top wealth tercile PPVT scores, average PPVT scores, bottom wealth tercile Sources: World Bank staff estimates using data from Young Lives survey, 2002, 2006–07, and 2009. Note: PPVT = Peabody Picture Vocabulary Test. Panel a uses information from repeated rounds of the Young Lives survey to examine rank order correlations between rounds. Panel b uses information from the 2009 round of the Young Lives survey, in which a single PPVT was adminstered to younger children and their siblings of different ages. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 94 Skills Formation and the Importance of the Early Years Box 3.1  Why Are the Early Years So Fundamental for Building Skills? Brains are built over time, in a process that starts before birth and continues into childhood. Building a brain is similar to building a house—the foundations must be laid, rooms framed, and the electrical system wired in a predictable sequence. The architecture of the brain, similar to a house, eventually incorporates distinctive features that reflect increasing individuality over time. The wiring occurs under the influence of both genetics and environment—that is, the environment a child is born into can affect the architecture of the brain through stimulat- ing and secure interaction that promotes healthy development or continuous “toxic” stress that can have a damaging impact on early development. Toxic stress can occur as a result of prolonged exposure to extremely trying circumstances, such as extreme poverty or violence, that are not mitigated by the strength of reciprocal and nurturing relationships that can help a child to cope. The brain’s architecture is built over a succession of sensitive moments, each of which is associated with the formation of particular neural circuits—connections among brain cells— that are associated with specific abilities. The development of increasingly complicated skills and their underlying circuits builds on the circuits and skills that were formed earlier. Brain circuits that process basic information are wired earlier than those that process more complex information. Higher-level circuits build on lower-level circuits, and adaptation at higher levels is more difficult if lower-level circuits were not wired properly. Parallel to the con- struction of brain circuits, increasingly complex skills build on the more basic, foundational capabilities that precede them. For example, the ability to recognize and then say the names of objects depends upon earlier development of the capacity to differentiate and reproduce the sounds of one’s native language. And the circuits that underlie the ability to put words together to speak in phrases form a foundation for the subsequent mastery of reading a writ- ten sentence in a book. Stated in simple terms, circuits build on circuits and skill begets skill. As the maturing brain becomes more specialized to assume more complex functions, it is less capable of reorganizing and adapting to new or unexpected challenges. Once a circuit is wired, it stabilizes with age, making it difficult to alter. Scientists use the term plasticity to refer to the capacity of the brain to change. Plasticity is maximal in early childhood and decreases with age. The windows of opportunity for skill development and behavioral adaptation remain open for many years, but trying to change behavior or build new skills on a foundation of brain circuits that were not wired properly when they were first formed requires more work and is more “expensive.” For the brain, this means that greater amounts of energy are needed to com- pensate for circuits that do not perform in an expected fashion. For society, the expense may be costly. Remedial education and other professional interventions for vulnerable children living in difficult circumstances may be more costly than the provision of nurturing, protective ­ relationships and appropriate learning experiences earlier in life. Through this process, early experiences create a foundation for lifelong learning, behavior, and physical and mental health. A strong foundation in the early years increases the probabil- ity of positive outcomes, and a weak foundation increases the odds of later difficulties. Source: This box draws heavily upon National Scientific Council on the Developing Child 2007. Note: Research in this area is fast moving and complex and includes many questions that are far from resolved. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills Formation and the Importance of the Early Years 95 behavioral adaptation remain open for a period of years, but it becomes more difficult and more expensive to change behaviors or to build new skills on the foundation of brain circuits that were not wired properly when first formed. Remedial and second-chance education and training interventions are typically more costly than the provision of an appropriate learning and development envi- ronment earlier in life. The environment that a child is born into has a fundamental influence on his or her development and has the ability to alter their genetic inheritance (see box 3.1). Stimulating interactions and stable responsive relationships with care- givers provide the sensory inputs necessary to build a healthy brain needed for lifelong learning and behaviors. Negative experiences such as malnutrition or exposure to toxins before birth or in early childhood are built into the architec- ture of the developing brain, putting in place a biological memory that not only can affect physical and mental health but also can impair future learning capacity and behavior. A child growing up in a particularly stressful environment can have difficul- ties in learning, memory, and self-regulation because of disruptions in brain development at an early age. Being raised in a stressful environment without an adult who provides a protective barrier to support the child can disrupt the architecture of a developing brain and result in harmful long-term consequences. This type of stress is termed toxic stress and includes adverse repeated events that are coupled with limited consistent, supportive relationships to help the child cope with the circumstances. The circumstances that can lead to toxic stress include extreme poverty, chronic neglect, and repeated exposure to violence in the community or family. Excessively stressful conditions early in childhood have been linked to a number of changes in the brain that can compromise healthy development and life trajectories. Extreme poverty can also weaken marital and parenting relationships as families struggle to make ends meet and parents’ distress in the economic domain spills over to more detached and less nurturing and stimulating parenting that is not responsive to a child’s needs (Duncan, Ziol-Guest, and Kalil 2010). New Skills Are Built Off Earlier Skills and Benefit from Previous Investments Skills learned later in life benefit from earlier foundations. In the early years of brain development, the brain is shaped by genetics as well as by the environment in which it is formed, from prenatal nutritional supplements to supportive and responsive adult interactions. These early years and investments lay down the foundation for learning and behavior. Therefore, early investments have a multi- plier effect because early abilities provide the foundations upon which later skills are constructed. This process has been referred to as dynamic complementarity in skill formation (Carneiro and Heckman 2003). Unless corrected, early disadvantages compound into poorer performance throughout school. Children with lower initial cognitive and behavioral skills are able to absorb less knowledge (Cunha et al. 2006). When children spend their early years in a less stimulating, or less emotionally and physically supportive Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 96 Skills Formation and the Importance of the Early Years environment, brain development is affected and leads to cognitive, social, and behavioral delays. High levels of adversity and stress during early childhood have been found to increase the risk of stress-related disease and learning problems later in life (Grantham-McGregor et al. 2007; National Scientific Council on the Developing Child 2007). In Vietnam, children who fall behind early on are likely to have difficulty catching up, consistent with earlier disadvantages compounding into poor per- formance later in life. Children from disadvantaged backgrounds display a lower ability to recognize words and to read fluently, which affects their ability to acquire further knowledge at school. An Early Grade Reading Assessment in primary education conducted in round 3 of the Young Lives survey in 2009 showed that children from poorer households had a lower level of reading fluency than children from richer households, and they also had lower levels ­ of word recognition on average. At age 8, children living in the poorest 25 ­percent of households recognized approximately 22 fewer words per min- ute on average than children born to households in the richest quantile, and they displayed lower levels of oral fluency—they read 40 fewer words per minute. Fifty-six percent of children with the bottom 20 percent of scores were found in the poorest wealth quantile. This has an implication for compre- hension of written texts: children from poorer backgrounds show poorer com- prehension of these texts. Technical skills learned at higher educational establishments are built off the basis of the foundational cognitive and behavioral abilities developed in child- hood. Investment in technical skills later in life will have a greater impact on workforce development, the greater an individual’s initial cognitive and behav- ioral skills (Cunha and Heckman 2007). Technical skills that focus on knowledge specific to occupations, jobs, and vocations are often acquired later in life, undergo continuous change, but benefit from cognitive skills acquired earlier— for example, individuals with better numeracy abilities are likely to make more competent engineers. Social and Behavioral Skills Feed into Cognitive Skills and Vice Versa Higher perseverance and an interest in learning have been associated with chil- dren staying longer in school. Policies that shape behavioral skills are likely to be pathbreaking when conducted earlier in life before important decisions, such as whether to drop out of upper secondary school, are taken. Behavioral skills such as self-control and determination (or grit) have been linked to better perfor- mance in school and a number of other consequential life outcomes. Self-control at age 10 was found to be associated with higher levels of income, savings behav- ior, financial security, occupational prestige, better health, and other outcomes later in life among 1,000 students tracked in New Zealand (Moffitt et al. 2011). Similarly, self-discipline among a population of adolescents was found to be a strong predictor of academic success and diligence such as the final grades achieved and the number of hours spent doing homework (Duckworth and Seligman 2005). Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills Formation and the Importance of the Early Years 97 Evidence from Vietnam supports the importance of social and behavioral skills for the accumulation of cognitive skills. A school survey with an assessment of competencies in mathematics and Vietnamese language at grade 5 conducted as part of the Young Lives project in 2012 included questions to assess a student’s academic confidence and academic effort at the beginning and the end of the school year. The evidence from this exercise underscores the importance of chil- dren’s behavioral skills for their learning outcomes in mathematics and Vietnamese language over the course of the school year in grade 5. Academic confidence and effort are important for learning success even when controlling for initial scores and student background characteristics. At the same time, scores in mathematics and language were associated with increases in academic confi- dence and effort, highlighting the dynamic interaction between cognitive and social and behavioral skill formation (Yorke and Rolleston, forthcoming). The results also suggest that to be effective, teaching in early childhood and general education should not place emphasis only on the accumulation of knowledge but also on behavioral skills such as academic confidence and self-esteem. Social and behavioral skills are not just demanded by employers, as shown in chapter 2; they also contribute to the accumulation of learning in school. Step 1: School Readiness through Early Childhood Development The evidence in skills formation suggests that early childhood development and education interventions for children below the age of 6 to promote their readi- ness for school should be the first step in a holistic skills development strategy for Vietnam. The concept of school readiness has emerged over the past decade or so and represents the ability of children entering primary school to succeed at school. Offord Centre for Child Studies in Canada (2013) defines readiness to learn as a “child’s ability to meet the task demands at school” and as a “child’s ability to benefit from the educational activities provided by the school.” School readiness is considered to be the product of a young child’s cognitive, physical, and socioemotional development from an early age onward (Hair et al. 2006; Naudeau et al. 2011, 36). Figure 3.3 presents interventions to promote school readiness of children entering primary school as the first step in skills develop- ment. The right nutrition and stimulation through effective parenting before the age of 3 and quality preschool between 3 and 5 contribute to children’s readiness for school. A recent assessment of school readiness of 5-year-olds confirms that much of the inequality in learning outcomes between different types of young Vietnamese observed in primary education and beyond is already established before the age of formal schooling. In 2012 the Ministry of Education and Training (MOET) assessed school readiness among 5-year-old children in public preschools (MOET 2012). The survey adapted the Early Development Instrument (EDI) (Offord Centre for Child Studies 2013) to measure the development of children across five domains: physical health and well-being, social knowledge and competence, emotional health/maturity, language and cognitive development, and general Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 98 Skills Formation and the Importance of the Early Years Figure 3.3 Step 1 in Skills Development: Promoting School Readiness to Help Children Learn in School Technical and behavioral skills Cognitive and behavioral skills foundations deepening Primary Secondary Post- Lifelong 0 to 3 3 to 5 school school secondary learning 3. Employability 2. Cognitive and behavioral foundations 1. School readiness • Quality preschool • Good parenting • Good feeding practices • Early stimulation • Child health knowledge and communication skills. Shares of children at various levels of school readiness can be determined from scores for each of the five domains. Children who scored in the lowest decile in one or more of the domains are considered vulnerable in terms of school readiness. Although the EDI cannot be used to diagnose whether a particular child is ready or not ready for school, it can be used to identify the shares and types of children who are most vulnerable to not being ready. The degree of school readiness varies substantially across Vietnam’s primary school entrants. Children from poor households in Vietnam run a greater risk of being limited in the various domains of school readiness. Figure 3.4 shows the percentage of Vietnamese 5-year-olds in the bottom 10 percent—the EDI defi- nition of vulnerable—between households officially deemed poor and those deemed not poor. Children living in poor households are more likely to be vul- nerable in each of the five developmental domains. More than 40 percent of children from poor households are vulnerable in at least one domain—almost twice the incidence of vulnerability among children in nonpoor households. Children are most vulnerable in the domains of communication and general knowledge, also the domain with the largest difference across poor and nonpoor households, as well as in the domains of physical health and well-being and language and cognitive development. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills Formation and the Importance of the Early Years 99 Figure 3.4 Percentage of 5-Year-Olds in the Lowest Decile of Each School Readiness Domain 45 40 41.3 35 34.3 30 Percent 25 20 15 21.4 18.5 16.3 14.5 18 10 9.7 5 8.2 9.2 8.1 7.1 0 Low in at least one Physical health and Social development Emotional maturity Language and Communication and domain well-being cognitive general knowledge development Poor households Nonpoor households Sources: World Bank staff estimates using Vietnam’s Early Development Instrument (EDI) and MOET 2012. Effective Parenting for Children Aged 0–3 The arguably gravest form of inequality of opportunity manifests itself quickly in life—in the form of chronic child malnutrition, which remains one of Vietnam’s biggest human development and skills challenges. Vietnam’s youngest popula- tion is at a high risk of malnutrition and in particular of stunting. Although Vietnam has made considerable progress on improvement of child nutrition, in 2010 almost a quarter of children below the age of 5 remained stunted; that is, they had low height for age as a result of chronic malnutrition (GSO and UNICEF 2011; see figure 3.5). Rates are considerably higher among ethnic minority children, children from the poorest households, and children whose mothers have not attended school, as well as in certain, predominantly rural, regions across the country. Child malnutrition has substantial negative effects on a child’s brain development and therefore on his or her cognitive skill formation. Confirming international evidence, analysis using data from Young Lives suggests that stunting at age 1 has a long-term impact on cognitive development in Vietnam, independent of birth weight, environmental factors, or parental and home background. Le Thuc Duc (2009) finds that an increase on one standard deviation in the height for age Z-score at age 1 leads to an increase by 24 percent in the log score in the PPVT. Apart from poverty and living conditions such as access to clean water and sanitation, child malnutrition can be explained by inadequate infant and young child feeding (IYCF) practices. The role of parents in cognitive and behavioral skill development through their care for and stimulation of their young children is critical. But not all parents are taking, or are capable of taking, the right deci- sions for their infants and young children. Table 3.1 presents estimates of key breastfeeding indicators for Vietnam and for the poorest and wealthiest quintiles of the population. The World Health Organization (WHO) recommends that children be breastfed within one hour of birth, be exclusively breastfed for the first six months, and continue to be breastfed in addition to receiving solid food Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 100 Skills Formation and the Importance of the Early Years Figure 3.5 Percentage of Children under 5 with Low Height for Age 45 40 35 30 Percent 25 20 15 10 5 0 oa es ry y y ry t ds ast a r al ne nal Q3 Q4 ) st) an Q2 lta ins est oas dar dar elt ma a riti lan ore h/H Urb Ru e No a the tio i thi t rD rD t al c n con Ter n no Pri igh Na (po eco ou Kin Sou al ive ive mi ntr (we r se al h d/m er s gR dR Q1 l/ce nic pe Q5 ntr kon e Low n Eth R tra Up dla Ce Me cen mi rth rth No No Wealth index Area Ethnicity Mother’s education Region Source: GSO and UNICEF 2011. Note: Percentage below two standard deviations. Table 3.1  Feeding Practices for Young Children All Poorest quintile Wealthiest quintile Breastfed within one hour of birth (percentage of ­ last-born children in the past two years) 40 52 33 Percentage of children 0–5 months exclusively breastfed 17 28 11 Percentage of 20- to 23-month-old children still being breastfed 19 39 4 Source: GSO and UNICEF 2011. for two years or longer (WHO 2010). As table 3.1 shows, adherence to these recommendations is very low in Vietnam. Only 40 percent of children born in the two years prior to the survey were breastfed within the first hour of birth. Only 17 percent of children aged 0–5 months were exclusively breastfed, and only 19 percent of children aged 20–23 months were still being breastfed. Wealthier Vietnamese parents are less likely to breastfeed their infants than are the poor. It is not clear whether parents stray from optimal feeding practices because of a lack of knowledge or value for these practices or because of the opportunity cost of doing so. Parents in the wealthiest quintile are less likely to follow optimal feeding practices than parents in the poorest quintile, possibly because alternatives to breast milk are more accessible among wealthier house- holds. But it also suggests a lack of value or knowledge. These patterns also reflect differences in work habits and the jobs that women do—women in the ­ wealthiest quintile may be engaged in work that is incompatible with breastfeeding. Beyond sound feeding practices, early stimulation of children is essential for cognitive development. More parents in Vietnam are engaging in educational and school readiness activities for young children. Table 3.2 presents the prevalence of activities in households to promote children’s education and school readiness. Educational and school readiness activities include reading or looking at picture Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills Formation and the Importance of the Early Years 101 Table 3.2  Activities to Promote Learning and School Readiness in the Past Three Days Poorest Wealthiest All quintile quintile Percentage of children aged 35–59 months With whom adult household members engaged in four or more activities 77 63 94 With whom the father engaged in at least one or more activities 61 55 79 Mean number of activities Any adult household member engaged with the child 4.5 3.8 5.4 The father engaged with the child 1.6 1.2 2.4 Source: GSO and UNICEF 2011. books with the child, telling stories, singing songs to or with the child, taking the child outside the home, playing with them, and naming, counting, and drawing things with the child. Among 3- to 5-year-old children, 77 percent had an adult member engage in four or more of these types of activities in the three days prior to the survey. The father engaged in at least one of these types of activities for 61 percent of children. On average, adult members engaged in 4.5 of these types of activities, and fathers engaged in 1.6 activities. Vietnam’s better-off parents are more likely to engage in educational activities with their young children. The father in the wealthiest households was engaged in twice as many activities on average as fathers in the poorest households. These differences may be due to wealthier parents being more aware of educational needs of children or valuing education more. They may also reflect ­ parental pres- ence; poorer parents may have to devote more time to income-generating activi- ties to make ends meet. None of these activities except for one (reading and showing books) requires the household to own learning materials; consequently, it is unlikely that the poorest are unable to provide as many activities due to income constraints. Enhancing parenting capacity for feeding and stimulation among disadvan- taged parents is an important element of early childhood development. International evidence shows that parent counseling and curriculum-based parenting classes have been effective at improving parenting practices, particu- larly related to feeding. Interventions that have been found to be effective range from individual and group counseling for breastfeeding (see Bhutta et al. 2008 and Britton et al. 2007 for reviews) to curriculum-based parenting classes (Naudeau et al. 2011). Community-based learning may also be effective for influencing parenting practices. Evaluation of community meetings to identify and resolve childbirth and childcare issues for mothers in Bolivia, India, and Nepal found positive effects on parenting behavior and subsequent health out- comes. A community-based mechanism for providing information to mothers on nutrition practices in Senegal also yielded improvements in nutrition prac- tices (see Naudeau et al. 2011, 115 for a review). A long-term evaluation of an early childhood development program in Jamaica launched in 1986–87 and targeted to mothers of babies that were stunted due to malnutrition showed that support and guidance on how to stimulate their babies’ cognitive, physical, Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 102 Skills Formation and the Importance of the Early Years and emotional development proved more effective than the provision of nutri- tional supplements. A survey 20 years later showed that beneficiaries of this program were earning higher wages than a control group and that they had caught up to their peers who had not suffered from malnutrition in early age (Gertler et al. 2013). Support for the development of children aged 0–3 remains underdeveloped in Vietnam. Despite high rates of stunting among children under the age of 5 and evidence of low and declining use of breastfeeding, child nutrition and IYCF are not adequately prioritized in government policy. Recent consultations with gov- ernment leaders at central and local levels on the reasons for high child malnutri- tion in Vietnam showed that a majority of leaders acknowledge that the overall policy framework for addressing malnutrition was reasonably accurate, but that the main problems lie in implementation (Alive and Thrive 2012). The weaknesses in early childhood development in Vietnam can be explained through both coordination and policy disconnects. First, key agencies at the ­ central and local levels are not sufficiently aligned to coordinate government policy in the multisectoral arena of early childhood development. The Ministry of Health is in charge of young child health, the MOET is in charge of early childhood education, and the Ministry of Labor, Invalids, and Social Affairs is in charge of child welfare issues, but there is no apparent coordination mechanism to bring these disparate strands of early childhood development into an inte- grated and focused policy and implementation framework. Second, there is sig- nificant scope to be more systematic in promoting breastfeeding and child stimulation through a variation of parallel interventions in hospitals after birth, in local health stations, in communities, and through communication campaigns (Alive and Thrive 2012). The extensive poverty reduction policies in place for poor families with children, including through a myriad of more than a dozen cash transfer programs, are mostly aimed at families with children of school age and not at young children below the age of 5. The availability of parenting pro- grams and support to parents from disadvantaged backgrounds through social workers or community volunteers remain limited and not systematic, even though the Women’s Union has piloted and is gradually expanding a program of women-led parenting groups. Institutional childcare for children below the age of 3 through crèches is very limited and largely concentrated in urban areas in the Red River Delta (Jarvie 2010). International evidence suggests that an integrated approach to early childhood development aimed at improving parental information and capacity constraints can help to overcome malnutrition and to get children off to the right start. Improving nutrition outcomes and early stimulation in the earliest years, in par- ticular for children growing up in disadvantaged circumstances, requires address- ing information and capacity constraints for parents. An integrated early childhood development package for children aged 0–3 could involve three con- nected pillars, all of which require close institutional coordination both at the policy and service delivery levels. First, a targeted cash transfer program for poor families with children from birth could help address income poverty and Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills Formation and the Importance of the Early Years 103 improve the financial capacity of parents to make good decisions for their children. Second, curriculum-based parenting programs focused on feeding and ­ early stimulation, complemented by regular visits to families by social workers or community volunteers, could help to address information and knowledge capac- ity gaps. Third, greater outreach by community health stations could help facili- tate access to child health services. High-Quality Preschool for Children Aged 3–6 The promotion of preschool for children aged 3–6 is currently the main policy lever of the government of Vietnam to enhance school readiness. The govern- ment recognizes the importance of early childhood education to better prepare children, particularly the most disadvantaged children, for school. This is why it has modernized the preschool curriculum, has launched a program to universal- ize full-day preschool for 5-year-old children (Program 239), and is making investments to facilitate access to preschool among the most disadvantaged chil- dren aged 3–5. While access to some form of preschool for 5-year-old children is high countrywide (see figure 3.6), the enrollment in full-day preschool, the key national goal, is still limited and there are wide variations across the country. Moreover, enrollments among children of less than 5 years of age are often ­significantly lower. An enhanced focus on quality can help to further strengthen early childhood education. Vietnam’s early childhood education has many strengths, including a sound policy framework, child-focused curriculum, and rapidly expanding pro- vision, particularly for 5-year-olds. But a disconnect still exists between policies Figure 3.6 Preschool Enrollment Rates across Regions in Vietnam, 2011–12 100 90 80 70 60 Percent 50 40 30 20 10 0 vin d es es es vin rn l rov d and na pro ghlan ces ces es pro rthe inc inc inc tio inc rov rov rov tra lan Na o i ino nd n al h ap ap np cen n mid lp ntr elt elt ter us a mo dland gD rD Ce eas er rth ive uta on uth No Mi dR uL So Re Cu 3- to 5-year-olds 5-year-olds 5-year-olds in FDS Source: Education statistics from Ministry of Education and Training, 2011/12. Note: FDS = full-day preschool, including lunch in line with Program 239. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 104 Skills Formation and the Importance of the Early Years to promote access and quality at the national level and the actual provision of facilities in the provinces. As a result, there are wide variations in quality and access, with significant weaknesses in provision for disadvantaged children. While promoting access remains a priority, particularly in underserved regions, the gov- ernment’s focus should concentrate on improving the quality of provision. Taking advantage of its modern and child-centered curriculum and translating it into higher-quality provision across all classrooms require investment in the effective- ness of teachers and principals through major teacher training reforms and through upgrading the competence of the current workforce. Also required is a special focus on ethnic minority children, including through increasing the number of ethnic minority teachers and integration of ethnic minority teaching ­ assistants (Jarvie 2010). Summary and Conclusion Skills formation happens throughout life, but the early years are particularly important in setting the cognitive and behavioral foundations. The most sensi- tive moments for skill development vary across different dimensions of skills, with cognitive and behavioral skills formation more sensitive to interventions earlier in life and technical skills later. Behavioral skills and cognitive skills for- mation are intertwined: evidence from Vietnam shows that academic confi- dence helps with learning, and learning success fosters academic confidence. And good cognitive and behavioral skills facilitate the formation of technical skills. The stronger their cognitive and behavioral foundation skills, the better Vietnamese workers will be able to acquire technical skills and keep them up to date with accelerating technological progress over longer working lives. The early years are also the sensitive moment when children from disadvan- taged backgrounds start to irrevocably fall behind and when focusing more investment can yield the highest return. Strong international evidence suggests that targeting these skill gaps at the ages at which they emerge is more efficient and effective than remedial interventions. At present, almost a quarter of Vietnamese children suffer from stunting by the time they reach the age of 5. Stunting undermines cognitive development. Children aged 5 from poor house- holds are considerably behind across a range of dimensions of school readiness compared to their nonpoor peers. This suggests that Vietnam needs to expand efforts to strengthen early childhood development interventions for children below the age of 3, beyond current efforts to universalize preschool for 5-year- olds, to provide all children with the opportunity to form the right foundation skills early on. Note 1. Malleability can be defined as rank-order change or rank-order stability, which establishes the extent to which an individual’s ordinal ranking of a trait remains stable ­ over time. Although the rank order of scores remains stable after a pivotal moment, Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills Formation and the Importance of the Early Years 105 IQ scores exhibit absolute changes over time. Therefore, individuals continue to see changes in the absolute levels of their scores, although the order of scores within a population exhibits greater stability over time. Malleability can also refer to change over time in absolute levels of a trait. IQ scores have been shown to become relatively rank stable at age 10 or so (Hopkins and Bracht 1975; Roberts and Del Vecchio 2000), although absolute changes in IQ within a population are observed throughout the life cycle. References Alive and Thrive. 2012. Policy Support for Infant and Young Child Feeding: Leader Perspectives. Hanoi. Almlund, M., A. L. Duckworth, J. Heckman, and T. Kautz. 2011. “Personality Psychology and Economics.” In Handbook of the Economics of Education, edited by E. A. 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Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Skills Formation and the Importance of the Early Years 107 Walker, S. P., S. M. Chang, C. A. Powell, and S. M. Grantham-McGregor. 2005. “Effects of Early Childhood Psychosocial Stimulation and Nutritional Supplementation on Cognition and Education in Growth-Stunted Jamaican Children: Prospective Cohort Study.” The Lancet 366: 1804–07. WHO (World Health Organization). 2010. Guidelines on HIV and Infant Feeding 2010. Geneva: WHO. Yorke, L., and C. Rolleston. Forthcoming. The Importance of Non-Cognitive Skills for Academic Achievement in Vietnam. Young Lives Working Paper, Department of International Development, University of Oxford, Oxford, U.K. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cha p t e r 4 Cognitive and Behavioral Foundation Skills in the General Education System General education has been important in advancing basic cognitive skills among Vietnam’s children and workforce over the last two decades. Vietnam’s general education system has undergone a remarkable transformation since the d ¯ôi mó’i ? reforms. Enrollments have expanded dramatically at every level, and Vietnam’s population has become increasingly well educated. An initial successful focus on expanding access to and completion of primary education, as called for under the Millennium Development Goals, has opened the way to an increased emphasis on expanding pre-primary and secondary education enrollments. Available evi- dence suggests that the education system succeeds in equipping graduates with basic literacy and numeracy skills, perhaps more successfully than education systems in richer countries. Strengthening higher-order cognitive and social and behavioral skills among all school graduates means entering a new phase in Vietnam’s education develop- ment from expanding access to deepening quality. In other words, with employ- ers highlighting the importance of advanced cognitive and social and behavioral skills, Vietnam needs to strengthen its system further to provide graduates with those needed foundation skills and to overcome inequalities in learning out- comes. It is the second step of a holistic skills development strategy (figure 4.1). This chapter provides a snapshot of the current general education system and discusses how Vietnam can do more to build the right cognitive and behavioral foundations. It calls for more schooling, with expanded full-day instruction at primary level and enhanced access to secondary education; better schooling, with a curriculum and teaching methods that foster the development of higher-order cognitive and behavioral skills in students; and schooling that involves parents and local communities more. Vietnam is in a good position to implement such reforms—the school infrastructure is there, and because of the declining birthrate, the school population is also declining. ­ Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7   109   110 Cognitive and Behavioral Foundation Skills in the General Education System Figure 4.1 Step 2 in Skills Development: Developing the Cognitive and Behavioral Skills Foundation Technical and behavioral skills Cognitive and behavioral skills foundations deepening Primary Secondary Post- Lifelong 0 to 3 3 to 5 school school secondary learning 3. Employability 2. Cognitive and behavioral foundations • More full-day schooling and expanded enrollments 1. School readiness • Curriculum, teaching methods, • Quality preschool and assessment • Good parenting • Greater role for parents • Good feeding practices • Early stimulation • Child health General Education in Vietnam at a Glance Ever greater shares of Vietnamese children and young people attend and com- plete primary, lower secondary, and upper secondary education, but inequalities exist in enrollment at the postprimary level. Primary enrollment is universal today, and lower and upper secondary enrollments were above 80 percent and close to 60 percent, respectively, in 2010 after considerable increases in enroll- ments since 1998 (figure 4.2, panel a). The universality of primary enrollment is evident from the breakdown by wealth quintile (panel b): 90 percent of children from the poorest households are enrolled in primary education. Primary educa- tion in Vietnam is compulsory and involves formal half-day provision, which is free of charge. Secondary education is not compulsory, and schools levy tuition fees, which are exempt for children from registered poor households. Despite this assistance, net enrollment rates at secondary level vary significantly between rich and poor children, in particular at the upper secondary level. The failure by many children from less well-off households to progress to upper secondary education is also a key predictor of their subsequent underrepresentation in higher education. A nuanced picture emerges: in Vietnam today, primary educa- tion is for all, and upper secondary and above is mainly for the wealthy. Half-day tuition time in primary education is short relative to the needs of children and compared to other countries. Half-day schooling runs between Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 111 Figure 4.2 Net Enrollment Rates and Enrollment by Wealth Quintile a. Net enrollment rates b. Net enrollment rates by wealth quintile, 2010 100 100 90 90 80 80 70 70 60 60 Percent Percent 50 50 40 40 30 30 20 20 10 10 0 0 Primary Lower Upper Q1 Q2 Q3 Q4 Q5 secondary secondary (poorest) (wealthiest) 1998 2004 2010 Primary Lower Upper secondary secondary Source: World Bank staff estimates based on VHLSS 1998, 2004, and 2010 data. Note: VHLSS = Vietnam Household Living Standards Survey. 23 and 25 instruction periods (40 minutes long) per week over a school year of 36 weeks (that is, between 550 and 600 hours per year). The amount of time in school is deemed too short to cover the curriculum adequately. Teachers in Vietnam are paid for 40 hours (the norm of working hours in the civil service), but deliver only about 15.3 hours of tuition a week (23 periods). The amount of tuition time per teacher is low compared to other countries with established full- day schooling. In advanced economies, teachers typically spend between 22 and 25 hours per week teaching, which corresponds exactly to the amount of tuition received by students (on average between 800 and 1,000 hours of tuition each year) (SEQAP 2012). Even with relatively short formal instruction time, the Vietnamese general education system performs well in imparting basic cognitive skills such as literacy and numeracy. Vietnam’s participation in the 2012 Programme for International Student Assessment (PISA) allows, for the first time, for the benchmarking of its educational outcomes internationally (figure 4.3). Like their peers in many other East Asian countries, Vietnam’s 15-year-old students showed stronger achieve- ments in mathematics, science, and reading than the average of much wealthier countries in the Organisation for Economic Co-operation and Development (OECD). PISA assesses competencies of 15-year-olds in school, which means that it captures only those Vietnamese students who remain in upper secondary education—typically the better-off, and likely better-performing, students—and ­ excludes those who have already dropped out. Vietnam’s overall impressive performance in mathematics hides significant variation in students’ competencies across different dimensions of mathematics use. PISA allows differentiating between the formulating domain (translating a Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 112 Cognitive and Behavioral Foundation Skills in the General Education System Figure 4.3 Mean 2012 PISA Mathematics Scores, Selected Cities and Countries 650 600 PISA score 550 500 450 400 350 300 na e a na p. a n am e nd sia sia in in or ag pa Re hi hi ay ne la Ch Ch OE etn ap er Ja ,C ,C ai a, al do av ng Th R, R, Vi re M ai an In SA SA gh Si Ko CD iw an ng ao Ta Sh ac Ko M ng Ho Source: OECD 2013. Note: OECD = Organisation for Economic Co-operation and Development; PISA = Programme for International Student Assessment. real-world problem into a mathematics problem), the interpretation domain (linking the mathematical outcome to the situation of the problem), and the employing domain (choosing the right mathematical tools to solve a math ­ problem). Vietnam’s performance on the formulating and interpretation domains is significantly lower than its average score, while its performance on the employ- ing domain is relatively higher (figure 4.4). The scores suggest that Vietnamese students are not equally familiar with different dimensions of mathematics and relatively less so in formulating and interpreting mathematical problems. Gaps in student performance are large between disadvantaged and other children, but primary schooling shows some success at helping children from ­ disadvantaged backgrounds catch up. The Young Lives School Survey in 2012 involved a curriculum-based test at the beginning and the end of grade 5 (figure  4.5, panels a and b). It shows, first, that there are large gaps in curriculum ­ mastery between ethnic Kinh and ethnic minority children both at the beginning and end of the school year. It also demonstrates, however, that ethnic minority children in grade 5 reduced the performance gap with their ethnic Kinh peers in curriculum mastery in Vietnamese language and mathematics over the course of the school year. Catch-up in Vietnamese language was particularly pronounced. In mathematics, the learning progress was fast for all the children, with less bridging in the learning outcome gap. In mathematics, the gap at the end of grade ­ 5 remains the equivalent of one year of instruction (the average increase in scores between the first and second rounds was 41 points—less than the differ- ence in performance between ethnic Kinh and minority children). Primary education overall is not able to help disadvantaged children fully make up for unequal starting positions. Figure 4.5 (panels c and d) shows data from Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 113 multiple rounds of Young Lives surveys presenting the evolution of learning out- comes of children over time by the wealth index of the children’s households (panel c). Differences in learning outcomes between children from different socioeconomic groups are already well established at age 5, consistent with the evidence from the Early Development Instrument (EDI) shown in chapter 3. Although there is some narrowing of the gap in learning outcomes between Figure 4.4 PISA Mean Mathematics Scores, by Subscale, 2012 530 525 520 515 510 PISA score 505 500 495 490 485 480 475 Vietnam OECD average Overall Formulating Employing Interpreting Source: OECD 2013. Note: OECD = Organisation for Economic Co-operation and Development; PISA = Programme for International Student Assessment. Figure 4.5 Math and Language Test Scores of Children of Different Backgrounds a. Test scores in math b. Test scores in Vietnamese 560 540 540 520 520 500 500 Test score Test score 480 480 460 460 440 440 420 420 400 400 First test Second test First test Second test Kinh Ethnic minority figure continues next page Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 114 Cognitive and Behavioral Foundation Skills in the General Education System Figure 4.5  Math and Language Test Scores of Children of Different Backgrounds (continued) c. Math test ranking of children from d. Math test ranking of children from different wealth quantiles, over 10 years different wealth quantiles, ages 5 and 8 Average rank in math test 0.7 Average rank in math test 1.0 0.6 0.8 0.6 0.5 0.4 0.4 0.2 0.3 0 Age 5 Age 8 Age 12 Age 15 Age 5 Age 8 Top wealth quantile Better-off children with high test scores (n = 126) Third wealth quantile Poorer children with high test scores (n = 44) Second wealth quantile Better-off children with low test scores (n = 44) Bottom wealth quantile Poorer children with low test scores (n = 108) Sources: Rolleston et al. 2013, using Young Lives survey data (panels a and b); World Bank staff estimates using Young Lives survey data (panels c and d). children in richest and poorest households within grade 5, gaps remain through time. In fact, the average rank in mathematics and Vietnamese language test scores of initially well-performing students from disadvantaged backgrounds are not able to keep pace with well-performing students from better-off backgrounds (panel d).1 This finding suggests that although schooling contributes to bridging the gap in learning outcomes, it is not sufficient to make up for the effects of disadvantage already incurred before the age of 6, that is, gaps in school readiness. To improve learning outcomes among disadvantaged children, it is necessary to look not only at the classroom—the quality of the teacher—but also at how the situation at home can be improved, including through engagement with the parents and tar- geted additional support for children from disadvantaged backgrounds. Vietnam’s focus on ensuring minimum quality standards across all primary schools appears to be bearing fruit in terms of relatively equitable provision. More than a decade ago the Ministry of Education and Training (MOET) intro- duced the Fundamental School Quality Level (FSQL), which encompassed indicators of quality that would be monitored and enforced for primary schools. The indicators related to teaching staff, teaching materials, infrastructure, and school management. The 2012 Young Lives School Survey shows that students in more advantaged sites surveyed across Vietnam were on average receiving more periods of instruction per week, their teachers were more qualified, and the facilities were of higher quality. But the difference in many key indicators of quality between more and less advantaged sites was relatively small and did not follow a clear pattern (Rolleston et al. 2013).2 More important, although ­ children in more advantaged sites were more likely to attend better-performing schools, some of the best-performing schools in terms of the “value added” to students’ learning achievement are in disadvantaged sites. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 115 Step 2: Building Cognitive and Behavioral Foundation Skills in General Education Vietnam’s general education system is successful in providing graduates with good basic cognitive skills, and any reforms should carefully build on the system’s strengths. Shifting the emphasis in general education toward making sure that more children learn and acquire the higher-order cognitive and behavioral skills demanded in Vietnam’s labor market does not mean that the system needs wholesale reform. Instead, it needs careful adjustments, building on its strong features. Building stronger cognitive and behavioral skills will require (a) more schooling, with full-day instruction and expansion of access to secondary educa- tion; (b) better schooling, with a curriculum, teaching methods, and assessments that foster the development of higher-order cognitive and behavioral skills in students; and (c) greater involvement of parents and communities in schooling. All three requirements are particularly important to help students from disadvan- taged backgrounds catch up. The move to full-day schooling presents many opportunities to broaden the curriculum and find time to build on strong foun- dations through exposure to a wider range of learning experiences. More Schooling Improving cognitive foundation skills among Vietnam’s next generation will require that children spend more time in school. First, education careers need to be extended through increasing the progression rates from primary to lower secondary and from lower secondary to upper secondary. Second, the tuition time in primary education needs to be extended through introducing full-day schooling. More schooling carries additional costs, which need to be covered by the government or parents or both. A decline in the number of students offers an opportunity to rebalance public spending toward the new priorities of expanded secondary education and full-day schooling. More students need to enroll and complete general secondary education. As figure 4.6, panel a, demonstrates, gross enrollment rates for lower secondary education are broadly on par with Malaysia, the Philippines, and Thailand but are below those in China and significantly below those in the Republic of Korea, where lower secondary education is universal. Even though Vietnam is trailing Korea on upper secondary gross enrollment rates today, Vietnam is aiming to do as well as Korea in the future. To provide some orientation: Vietnam’s combined upper and lower secondary net enrollment rate in 2010 stood at 72 percent—the equivalent of Korea’s in the early 1980s (see figure 4.6, panel b). At that time Korea’s share of employment in professional and technical occupations, which require at least secondary education, was roughly similar to Vietnam’s today. Its considerable expansion of employment in these occupations was associated with expansions in secondary enrollment. Expanding secondary enrollments requires an expansion in the supply of secondary schooling and a strengthening of demand by easing the financial con- ­ straints of less well-off households. Progressing to lower and upper secondary Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 116 Cognitive and Behavioral Foundation Skills in the General Education System Figure 4.6  Gross and Net Secondary Enrollment Rates in Vietnam and Neighboring Countries a. Gross enrollment rates, 2010 100 90 80 70 60 Percent 50 40 30 20 10 0 m nd s sia p. a ne in Re na ay la Ch pi ai et a, al ilip Th Vi re M Ph Ko Lower secondary enrollments Upper secondary enrollments b. Net secondary enrollment rates , 1975–2010 100 90 80 Percent 70 60 50 40 1975 1980 1985 1990 1995 2000 2005 2010 Korea, Rep. Vietnam Source: World Bank EdStats (http://datatopics.worldbank.org/education/). Note: In panel a, Philippines data are from 2009. In panel b, 1995 data for Vietnam are from 1998, and 2005 data are from 2004. education involves considerable costs to households. This involves both a direct cost and the indirect cost of not earning income on the labor market. Figure 4.7 ­presents the private cost of education by level of education and by type of expenditure in 2010. At around 4.2 percent of overall household expen- diture, the private cost of upper secondary is large and significantly larger than for primary education (around 1.7 percent) and lower secondary (around 2.5 percent). The shares of private expenditures are broadly similar across Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 117 Figure 4.7 Private Spending on Secondary Education, 2010 5,000 5.0 Percent of household expenditure devoted to education 4,500 4.5 4,000 4.0 3,500 3.5 Vietnamese dong, thousands 3,000 3.0 2,500 2.5 2,000 2.0 1,500 1.5 1,000 1.0 500 0.5 0 0 rest t t dle est st hest t dle est t hest dle hest l l est l Tota Tota Tota ores ores s ores e e Rich r Rich r Rich Mid Mid Mid Poo Poo Poo r ric r ric r ric r po r po r po Nea Nea Nea Nea Nea Nea Primary school Lower secondary school Upper secondary school Other School tools Uniforms Tuition Extra classes Textbooks Contributions Percentage of household expenditure Source: World Bank staff estimates based on VHLSS 2010 data. Note: VHLSS = Vietnam Household Living Standards Survey. household wealth quintiles, but the poorest households spend significantly less than richer households in absolute terms, with expenses on tuition, contribu- tions, and extra classes making the biggest difference. Larger expenses for formal tuition and contributions at the upper secondary level likely reflect that upper secondary schools are fewer in number than lower secondary schools and are located on average farther away, which imposes transport and boarding costs that may be unaffordable to less well-off households. Formal tuition is not the main driver of private spending, and tuition exemp- tions alone do not offset all private costs. In addition to tuition, households must pay for books, equipment, and uniforms, which suggests that only waiving the tuition for children from poorer households may not be sufficient to encourage their higher enrollment at secondary levels. International experience shows that well-targeted and adequate cash transfers for poor households, conditional on a child’s school enrollment or attendance, can help to offset direct and opportunity costs associated with schooling and thereby expand the demand for secondary Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 118 Cognitive and Behavioral Foundation Skills in the General Education System education (Grosh et al. 2009). And targeting resources to the poor, particularly to the hardest-working children, can help to expand enrollments and raise learn- ing outcomes. Recent evidence from a scholarship program in Cambodia showed that scholarships that were allocated based on a combination of income-based and merit-based targeting mechanisms had the highest impact on test scores (Barrera-Osorio and Filmer 2013). Wealthier parents already demand more schooling than is formally provided, which is evident in the prevalence of extra classes. Parents pay for their children to attend regular core academic lessons typically by their own teachers after school hours. Vietnam’s policy of socialization builds on parents’ financial contri- butions toward education, including complementing publicly funded half-day provision in primary education. Traditionally, many children in urban areas in Vietnam have participated in informal extra classes that are taught in the afternoons. Extra classes are not only a Vietnamese phenomenon; they are encountered across several countries in East Asia. But they are prominent in Vietnam: in 2010 parents of 33 percent of primary students and 49 percent of lower secondary students reported some expenditure on coaching sessions for academic ­ subjects (VHLSS 2010). The actual number of children whose parents pay for extra classes may be much higher. For example, in the 2009 Young Lives survey, 70 percent of 14- and 15-year-old students attended extra classes, and extra classes amounted to an average additional 10 hours of instruction per week, representing 27 percent of total instructional time. Extra classes are problematic in several ways. First, if they focus on the same academic material that is part of the formal half-day curriculum (coaching ses- sions for compulsory subjects), as opposed to activities such as arts or sports that can help build behavioral skills, they risk consuming precious tuition time that could be allocated for alternative activities. Second, extra classes are often infor- mal and not regulated. They place teachers in an undue position of power in relation to parents. There is evidence that many parents are asked to make unofficial payments to schools and teachers (World Bank 2012a; CECODES, VFF-CRT, and UNDP 2013). Third, richer households are able to spend much larger amounts on extra classes (see figure 4.7), and extra classes are mainly an urban phenomenon. The risk, therefore, is that extra classes may deepen inequal- ities in learning, as opposed to bridging them. Fourth, extra classes serve exams, which reward heavy preparation in terms of memorization and model answers, but which are not demanding in terms of creativity and critical thinking. Changing the nature of exams, especially those that act as gatekeepers, may help change some of the practices around extra classes. Expanding formal full-day schooling may well be the best strategy to limit extra classes. MOET has attempted to regulate the provision of informal extra classes, but with little apparent effect. An alternative to regulating extra classes is to expand formal full-day schooling to reduce the time available for teachers to offer private tuition and to help make up for the revenue loss related to forgone extra classes. An expansion of full-day schooling can be financed by a mix of budgetary and private resources. Well-off parents who currently finance extra classes for their Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 119 children could be asked to provide formal cofinancing to schools for full-day schooling as opposed to informal payments to teachers who provide extra classes. The shift toward ensuring full-day primary schooling has already begun, but does not yet cover the whole country. The incidence of formal extra classes in rural settings is lower than in urban settings, and a significant share of children at primary level remains in half-day provision. This is why MOET is promoting the expansion of formal full-day schooling and has launched a program to expand full-day schooling in primary schools in the 35 poorest provinces with support from the School Education Quality Assurance Program (SEQAP) cofinanced by Belgium, the United Kingdom, and the World Bank. A foreseen increase of tuition time under full-day schooling to at least 30 instructional periods by 2015 and 35 by 2020 would allow Vietnam to catch up with international standards (Cerbelle 2013).3 A decline in student numbers in general education may open fiscal space to further expand full-day schooling and enrollments at the secondary level. Vietnam is beginning to undergo a dramatic demographic transition with declining cohort sizes among the young and expanding among the old. According to Vietnamese census data, the size of the population cohort below the age of 15 declined by 17 percent between 1999 and 2009. Data from the annual census of primary schools from the District Fundamental School Quality Level Audit (DFA) presented in figure 4.8 show that the number of students in primary schools declined by 11 percent between 2005 and 2010. Fewer students need fewer teachers, so the number of teachers has also declined, although by a smaller percentage. While managing a decline in ­ student numbers is challenging, it may open fiscal space. Excess teachers can Figure 4.8 Changes in the Number of Teachers and Students in Primary Schools, 2005–10 0 –2 –4 Percent change –6 Teachers –8 –10 –12 Students Source: World Bank staff estimates using District Fundamental School Quality Level Audit (DFA) 2005 and 2010 data. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 120 Cognitive and Behavioral Foundation Skills in the General Education System be reallocated to help deliver full-day schooling, or savings from a smaller teaching workforce can be reallocated to pay remaining teachers for longer instruction times. Beyond reallocating resources within primary education, the demographic decline may free up resources for expanding schooling at the secondary level, including progressively abolishing tuition fees at the sec- ondary level and enhancing financial support to students from poor families. Better Schooling What matters is not just more schooling but more quality schooling with a curriculum and teaching methods that foster the formation of higher-order ­ cognitive and behavioral skills. Vietnam already has a successful education sys- tem that performs well in imparting core basic cognitive skills. This is also true for children from disadvantaged backgrounds who do not appear to be falling further behind in primary education. How to make schooling in Vietnam better, therefore, is not an obvious proposition, but the Vietnamese authorities are already embarking on a reform aimed at making schooling better—through a modernized, competency-based curriculum, more student-centered teaching methods, and enhanced competency of the teaching workforce. Children from disadvantaged backgrounds are likely to benefit disproportionately from such reforms. Curriculum Vietnam’s current general education curriculum is more focused on teaching content and knowledge rather than on developing higher-order cognitive and behavioral skills in students. Vietnam’s general education curriculum, which was adopted in 2000, sets out, among other goals, to strengthen students’ ability to cooperate and self-study and to apply knowledge in practice as objec- ­ tives of education activity. MOET, however, acknowledges that these goals do not go far enough to meet today’s needs. According to the ministry, the prob- lem with the current curriculum is that it focuses too much on content and knowledge and not enough on providing self-study skills, the practical applica- tion of knowledge, and the development of the cognitive and behavioral skills (MOET 2010). A new general education curriculum is under development, providing a major opportunity to reorient the system. The XI Congress of the Communist Party in 2011 said the “Vietnamese education system should be fundamentally and comprehensively renovated in the coming years, aiming at standardization, mod- ernization, socialization, democratization, and international integration; renovat- ing the curriculum, contents, teaching, and learning methods; renovating the education management mechanism, building capacity for the teachers and train- ing managers.” In response, MOET has launched an ambitious process of devel- oping a new general education curriculum and new textbooks by 2015. It aims to define students’ essential competencies, which will then form the basis of educational objectives, standards, learning content, teaching methods, and assess- ment. The vision is to ensure the curriculum’s coherence from grade 1 through Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 121 grade 12, but with more broad-based content focus in basic education (primary and lower secondary) and more electives in upper secondary education. It should be nationally consistent but enable provinces to adjust a certain flexible share of the curriculum. It will define half-day provision but provide schools with guid- ance on how to arrange full-day provision. A strong emphasis is placed on mod- ernizing teaching methods and student assessment. Vietnam’s chosen direction for curriculum reform follows that chosen by other countries in East Asia and worldwide. In 1997 Singapore adopted the “Thinking Schools, Learning Nation” initiative, which aims to promote active learning and creative and critical thinking in schools. The initiative involved the explicit teaching of critical thinking and problem-solving skills, for example, through a new secondary school subject called knowledge and inquiry and a reduction of subject content (Tan and Gopinathan 2000). Korea’s new national curriculum places more emphasis on critical thinking skills and creativity than in the past. In both cases changes to assessment methods and approaches were criti- cal elements of the reforms. In Korea, university entrance exams use essays that test writing and logical thinking, and in Singapore university admission criteria were widened beyond secondary graduate certificate and an entrance examina- tion to results in project work in schools and extracurricular activities. Pedagogy and Teaching Methods Curriculum change and textbook reform are important steps, but the resulting changes in the teaching methods and instruction in the classroom are even more important. In other words, implementation matters most and requires enhancing the skills of teachers and school principals and parental involvement. Translating a new general education curriculum into concrete change in the classroom will, therefore, require modernization of teacher professional development, both in-service and pre-service, and sustained investment in its rollout across Vietnam’s ­ teacher workforce. Change will also involve the need to continue strengthening student assessment. Vietnam is already testing new teaching methods that are more geared toward developing cognitive and behavioral skills. MOET has begun introducing the model of Escuela Nueva from Colombia into primary schools in Vietnam on a pilot basis (see box 4.1) with the aim of informing the renovation of the general education curriculum, the teaching methods used, and how to manage its possible rollout. Teachers matter most for better schooling. Enhancing the competencies of the teaching workforce is the single most important investment to create the precon- ditions for the formation of higher-order cognitive and behavioral skills. The skills and abilities of the teaching workforce significantly affect the quality of learning in the classroom. Teacher education and qualifications have been found to be a positive and significant predictor of student achievement worldwide—and in grade 5 examinations in Vietnam (World Bank 2011; Rolleston et al. 2013). A well-qualified teacher workforce is likely better equipped to translate a chang- ing curriculum into the reality of changed teaching methods in the classroom. Because the aggregate teacher wage bill exceeds 80 percent of total education Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 122 Cognitive and Behavioral Foundation Skills in the General Education System Box 4.1 Vietnam Escuela Nueva Escuela Nueva is a model of organizing schools and classrooms in a way that enhances the teamwork. development of core cognitive and behavioral skills, such as problem solving and ­ It was launched in Colombia in 1975 by the Fundación Escuela Nueva, a Colombian nongov- ernmental organization (NGO), to help improve schooling outcomes among ­ children in dis- advantaged circumstances, and is now serving more than 5 million children across 16  countries worldwide. The Ministry of Education and Training (MOET) has adapted the model to the Vietnamese circumstances and is piloting the Vietnam Escuela Nueva (VNEN) in close to 1,500 primary schools across the country with financial support from the Global Partnership for Education (GPE). VNEN puts forward five key elements of innovative teaching: • Students at the center of the learning process, with encouragement and support to develop their own learning goals and with the necessary tools and resources to realize those goals • Cooperation and collaboration between small groups of learners that not only lead to higher academic achievement, but also promote independence, self-esteem, and interpersonal skills and relationships • Active and reflective learning methods that take place in a supporting classroom environ- ment, encourage student inquiry and discovery, provide problem-solving opportunities, and generate maximal cognitive engagement to students interspersed with adequate rest- ing periods • Linkages in students’ knowledge building as the basis of the pedagogical content—new infor- mation is integrated with existing knowledge structures, including the use of innate human inductive skills, to derive patterns and apply them to solve problems • Empowerment of the local community to ensure that school life is integrated with the child’s social and family life and that local cultural practices are valued in the school just as they are at home. These innovations mean that teaching and learning in VNEN are quite different from the traditional model currently in use in schools in Vietnam. The main visible difference is the seat- ing arrangement—children are seated in clusters of four or five students as compared to the row and bench seating in traditional classrooms. VNEN classrooms also contain more material to provide intellectual stimuli to the children—math and reading corners, a “tree of words” to depict different groups of words, and community maps. VNEN encourages parents and the community to take part in the life of the school—especially in ethnic minority areas, where parents and others come to school to pass on their traditions. VNEN follows the same general education curriculum as the traditional classrooms, but presents the curriculum in a way that will better engage the students. For example, teaching under VNEN includes a 3-in-1 learning guide (textbook, workbook, and guide together in one book) with more interactive exercises to complement the stories that make learning more fun and engaging for children. Teachers engage in less reading and writing on the board, and students spend more time on tasks. VNEN provides tools, such as materials, protocols, ­ box continues next page Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 123 Box 4.1  Vietnam Escuela Nueva (continued) and methods, that enable even teachers of an ordinary level of ability to provide an enriching learning experience. VNEN is planned to undergo a rigorous impact evaluation that will provide policy makers with in-depth information on success factors that could be expanded systemwide as part of the planned general education curriculum reform. Sources: Epstein and Yuthas 2012; World Bank 2012b. expenditures in Vietnam, improving what teachers do in the classroom is also the main investment into quality that the government can make. The quality of Vietnam’s teaching workforce is already an asset. The primary education teacher workforce has become significantly better qualified in recent years. Nearly 60 percent of all primary school teachers now hold a college or university degree—almost double the share of 2006. The share of teachers with only 9 or 12 years of academic schooling followed by 3 or 2 years of teacher training has also declined significantly (figure 4.9, panel a). Increased teacher qualification matters: evidence from the 2012 Young Lives School Survey sug- gests that high-performing schools have higher shares of teachers with a college or university degree. High teacher capacity is also evident in their capability to correctly assess their students’ abilities, which is critical to help them provide the support their students need. Data from Young Lives show a strong correlation between teacher ratings and mean test scores in mathematics for the same ­ students (figure 4.9, panel b). Moreover, teacher attendance in Vietnam is very high—another strong feature of the Vietnamese education system. The already high capacity and rising qualifications of the teaching workforce can be expected to provide a sound foundation for further professional development related to the new curriculum and teaching methods. Investing in in-service professional development to equip teachers with the skills to teach a renovated curriculum is one of the most important tasks for Vietnam’s education system in the coming years. Vietnam can build on an increasingly well-qualified teaching workforce at the primary level through the use of in-service professional development, but there is much to improve. First, the evidence from the DFA suggests that in-service professional development among primary teachers is limited and its use has been declining. Second, the content and methods of in-service professional development require modern- ization. The content will need to be reformulated in line with the changes that the new general education curriculum will bring. In reforming the method of delivery, teacher training needs to shift away from the traditional cascading model (MOET trains trainers who train other trainers to deliver training in the summer months) to a method of delivery in which capacities in provincial teacher training colleges are enhanced to provide more tailored programs all year round and with new teaching methods. A special emphasis will be required to equip teachers with the right skills and tools, especially those in the most Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 124 Cognitive and Behavioral Foundation Skills in the General Education System Figure 4.9 Primary Teachers’ Professional Training, and Correlation of Student Test Scores and Their Teachers’ Ratings a. Professional training completed 100 90 80 70 60 Percent 50 40 30 20 10 0 2006 2010 Pedagogical university 12 + 2 Below 9 + 3 Pedagogical college 9+3 b. Mean Young Lives test scores and teacher ratings 650 Mean Young Lives test score 600 550 500 450 400 1 2 3 4 5 6 7 8 9 10 Teacher rating Sources: Panel a, World Bank staff estimates based on District Fundamental School Quality Level Audit (DFA) data, 2006 and 2010; panel b, Rolleston et al. 2013. Note: 9 + 3 = 9 years of academic training followed by 3 years of teacher training; 12 + 2 = 12 years of academic training followed by 2 years of teacher training. challenging circumstances, such as those teaching in remote regions and those teaching students from ethnic minority backgrounds. Teacher training needs to focus not only on how to teach curriculum content but also on how to impart behavioral skills. Chapter 3 describes how behavioral skills are associated with learning success and the acquisition of cognitive skills. Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 125 Pupils with greater academic confidence make more progress, holding other factors constant (Yorke and Rolleston, forthcoming). An effective teacher in Vietnam, therefore, needs to be good at teaching mathematics, Vietnamese, and other subjects and to excel at helping students to build confidence and show good effort. Teacher effectiveness begins with attitude and motivation. Evidence from the 2012 Young Lives School Survey shows that teachers in high-­ performing schools had more confidence that their students would succeed (and not be hampered by their family backgrounds) compared to teachers in less well performing schools with respect to the learning prospects of children from disadvantaged backgrounds. Effective teachers were more likely to dis- agree with the statement that the amount a student can learn is primarily driven by family backgrounds and more likely to agree that a student’s home experi- ence can be overcome by good teaching (Rolleston et al. 2013). A teacher with a more fatalistic or discriminatory attitude is unlikely to be able to effectively foster behavioral skills such as academic confidence and effort by students. Explicitly influencing teacher attitudes in teacher training and professional development, therefore, is likely to raise teacher effectiveness. Assessment Beyond curriculum and teaching methods, student assessment needs to be aligned with the objective of fostering higher-order cognitive and behavioral skills. Once the curriculum and standards in general education are adjusted to better reflect higher-order cognitive and behavioral skills, the student assessment system needs to be equipped with the tools to help evaluate these skills in stu- dents, see how schools perform in imparting these skills, and to hold schools and local education authorities accountable for results. Efforts to promote the forma- tion of critical and creative thinking and behavioral skills in Singapore and Korea have involved changes to student assessment and university admission criteria. Educational assessment is firmly anchored in Vietnam’s general education system and consists of the three main categories of assessment. First, classroom assessments involve written and oral tests, and marked assignments and home- work are used in classrooms across the country with the objective of providing real-time feedback on students’ performance to inform teaching. Second, national examinations for making high-stakes decisions about students’ progres- sion to the next level in the education system are firmly established and widely accepted as a mechanism for selecting students for further education, both at grade 9 (in some provinces) and the school-leaving examination at grade 12 (the results of which are used mainly for entry to vocational and professional colleges), and the university entrance examination. Further tests are being con- ­ ducted according to provinces’ preferences and capacities. Third, Vietnam has conducted large-scale surveys of grade 5 (2001, 2007, and 2011) and grade 6 and grade 9 (2009), and in 2012 participated for the first time in PISA, which is organized by the OECD. The potential for using classroom assessments for improving student learning is not yet fully exploited. MOET has issued curriculum standards to guide Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 126 Cognitive and Behavioral Foundation Skills in the General Education System the design and structure of classroom assessments, but so far the evidence of the utilization of these standards in test development in practice is limited. Teacher capacity in using assessment techniques is one obstacle. Teachers often cite the difficulty in translating the standards into specific test items given that the standards are presented in a very general way. Instead, they often use text- books and teachers’ guides as the basis for devising tests. In upper secondary schools, teachers acknowledge that the tests they develop are heavily influenced by the structure and content of the high-stakes examinations (grade 12 gradu- ation and university entrance). Moreover, the results from classroom assess- ments and examinations are not routinely utilized in schools to guide quality improvements in teaching, including by effectively communicating results to parents. Further efforts to raise teachers’ capacity in using classroom assessment and improved monitoring and feedback to teachers on the quality of classroom assessments are necessary to make effective use of this important tool to pro- mote quality of teaching (World Bank 2009). The system of national examination is well established, but its potential could be leveraged more. The General Department of Testing and Accreditation (GDETA) manages national examinations and is accountable to MOET. The examination questions are based on an examination framework for each subject that tends to follow the relevant textbook in use in schools rather than the offi- cial curriculum. The grade 12 examination consists of multiple-choice questions only, while the university entrance examination also includes open-ended ques- tions. The university entrance examination is perceived as more rigorous and valid than the grade 12 test. There are no mechanisms in place, such as pilot testing or pretesting, to ensure the quality of the examinations. The quality of national examinations and public confidence could be enhanced by making pub- licly available high-quality, independent technical reports, and by introducing systematic and transparent mechanisms to ensure quality at key stages of the examination process, including training the GDETA staff on contemporary assessment practices. Quality could also be enhanced by independent research on the impact of national examinations, creating a permanent oversight committee, or conducting regular quality reviews (World Bank 2009). Large-scale national assessments are perhaps the weakest link in the system. Large-scale surveys at grades 5, 6, and 9 are not a formal element of the system. They have been conducted on an irregular basis with the financial and technical support from the World Bank and the Asian Development Bank (ADB). Although significant capacity has been built for the management of national assessments, the quality of the grade 5 assessment in 2011 was regarded as weak, underscoring the need to further enhance capacity. The principal constraint is that the national assessments have been ad hoc and not part of a system. They have typically been managed out of project management units and do not have an organizational “home” or a standard system built around them. Student assessment needs to become more varied and involve test items designed to assess higher-order cognitive skills such as creative thinking and problem solving. Students’ behavioral skills can be assessed by teachers and, as in ­ Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 127 some German states, be communicated regularly to parents in student report cards. More generally, student assessment should be reflective of the full curricu- lum, not just those things that can be easily tested, including through multiple- choice tests, such as mathematics. Multiple-choice tests have much to recommend them in a situation in which over a million students are being assessed, but the testing approach needs to be broadened if the quality of learning is to be improved. Students need to know that other abilities are also valued, such as being able to write, speak, and listen in language studies and being able to design and carry out experiments in science or projects in geography. The introduction of more open-ended questions would allow for greater emphasis on higher-order thinking and problem solving. More Involvement of Parents and Communities in Schooling A prominent role for parents in schooling is important for several reasons. First, parents have a strong interest in ensuring that their children receive a quality education. Providing parents with information and a forum to voice views and advise the school can make the school more explicitly accountable to them for their children’s learning progress. Second, much learning takes place at home, and the home environment is an important contributor to learning success. For example, the availability of a child’s own place to study at home has been found to be associated with higher learning achievement at grade 5 in Vietnam (World Bank 2011). Parents need to be aware of the learning process and con- tent in the school and how they can complement them by providing effective support to their children’s learning at home—after school and during the long summer vacations. Third, a greater involvement of parents and communities will help make instruction more reflective of local needs, traditions, and ­ contexts. It will also help build bridges where there are cultural and other gaps between school and home, for example, in the case of ethnic minority children who are taught by Kinh teachers. Finally, involvement in school can help raise parenting skills benefiting also any siblings not yet in school. The opportunities for formal parental involvement in schools beyond making financial contributions are limited in Vietnam. According to govern- ­ ment regulations, schools can establish a parents’ council for a class or the school as a whole, but where such councils exist they have little formal influ- ence. Councils can channel parents’ feedback to teachers on educational issues and allow parents to express their views to the principal on educational activi- ties or school ­ management. Legally, however, the parents’ council has very limited weight on influencing the operation and monitoring the performance of a public school. Moreover, school councils do not even have to include parents as members. In practice, the role of the parents’ council is often reduced to col- lecting parents’ voluntary contributions to the school. In cases of dissatisfaction, the only way for parents to be heard is via going to the provincial or district education authorities, according to the Law on Complaints. A greater role of parents in the school usually goes hand-in-hand with the transfer of more decision-making power from education authorities to the Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 128 Cognitive and Behavioral Foundation Skills in the General Education System school. But it is possible even within the current system of central standards and predominant decision making at the province level. Provinces and districts could cede certain decisions to schools that could be made with the involvement of parents. Schools could be entrusted with deciding the arrangements for full-day schooling, and parents could contribute to this decision making. Parents could advise on how to incorporate extra classes into the formal program and how to arrange afternoon activities under formal full-day schooling. Despite the differ- ent models of what roles to assign to parents and community members, it is agreed that parents also need sufficient information and capacity to be effective participants in school governance. Parental advice on some aspects of budgetary decisions, such as the use of school grants, is usually a first step in the direction of greater involvement. Vietnam has already taken some steps toward greater school-based management and enhancing the role of parents in primary and secondary schools. More could follow. The SEQAP project involves the use of school improvement grants that the school, rather than provincial or district authorities, can decide how to use. Parents could take part in the decision process. Schools participating in VNEN have the freedom to involve parents in the learning process and to contribute to learning content, for example, through introducing local ethnic minority tradi- tions in the program. Augmenting these first steps would be a logical next step. A greater involvement of parents and communities in schooling is possible even in disadvantaged communities. Vietnam’s experiences with SEQAP, VNEN, and earlier pilot projects employing ethnic minority teaching assistants show that greater involvement of disadvantaged parents and communities in schooling is possible and important for the educational process. Experience from rural com- munities in Pakistan shows how school report cards for parents in very low capacity contexts were successful in helping to raise achievement scores for ini- tially poor-performing schools (Andrabi, Das, and Khwaja 2009).4 Summary and Conclusion Vietnam’s general education system is well placed to transition to a new phase in education development from expanding access to deepening quality. After two decades of successful expansion in access to general education, greater emphasis now needs to be placed on ensuring that more children learn and acquire the higher-order cognitive and behavioral skills demanded in Vietnam’s labor market. Progress in this direction will require further expanding access to secondary education and expanding instruction time through full-day schooling, thereby also reducing the prevalence of informal extra classes. The reduction in student numbers due to declining age cohorts provides an opportunity. Budget resources can be freed up to cover additional costs associated with expanding enrollments in secondary education and full-day schooling, including progres- sively abolishing tuition fees at a secondary level. Second, more schooling should mean better schooling through a competency-based, as opposed to content-based, general education curriculum, coupled with the right teaching Skilling Up Vietnam  •  http://dx.doi.org/10.1596/978-1-4648-0231-7 Cognitive and Behavioral Foundation Skills in the General Education System 129 methods to stimulate creative and critical thinking in primary and secondary students. Enhanced in-service teacher training capacity will be critical to school ­ equip Vietnam’s teaching workforce with the capabilities to make a new curriculum a reality in all classrooms in the country. Third, a greater involve- ­ ment and outreach to parents will help them to hold the school more explicitly accountable for children’s learning success and to make sure that children get possible learning support at home. the best ­ Annex 4A: In Depth Results from the 2012 Programme for International Student Assessment Vietnam participated in the PISA for the first time in 2012. Vietnam’s 15-year-old students performed significantly above their peers in many much wealthier OECD countries. It also showed a significantly smaller share of low achievers (defined as performance below level 2 of the PISA mathematics scale) than the OECD average, and its results appear to be less driven by socioeconomic and cultural background than in many other participating countries (OECD 2013). Because PISA assesses the competencies of 15-year-olds in school, it excludes the relatively large share of Vietnam’s early school-leavers, who are dispro­ portionally from poor and disadvantaged backgrounds and who often perform less well than the average. Table 4A.1 presents the results of PISA 2012 in mathematics, reading, and science. Table 4A.1 PISA Assessments of Vietnamese 15-Year-Olds and Their Peers in OECD and Other Economies, 2012 Mathematics Reading Science Percentage of Percentage of top Mean score in low achievers performers Mean score in Mean score in PISA 2012 (