Wednesday, July 10, 2013

WTO - World Trade Organization : Lamy stresses need to overcome skills gaps in developing countries

It is a great pleasure for me to sit together with Guy Ryder in Room W, the same room where six years ago the first joint ILO-WTO study was launched.
The working relationship between the two organizations is both robust and dynamic.
Robust because the WTO and the ILO collaborate regularly. After the first book launch in 2007, we launched a second co-publication in 2009 and yet another one in 2011. In 2013, we are partnering in an event organized by the ILO in the context of the Fourth Global Review of Aid for Trade to discuss "skills", a topical and critical matter for the world economy.

Dynamic because the nature and the focus of our partnership has evolved to adapt to changing needs. After publishing two books authored by staff of the two Secretariats, we ventured into collaboration on an edited volume with contributions by external academics. We worked together in the context of a broader inter-agency collaboration led by the OECD: the International Collaborative Initiative on Trade and Employment. And in 2010, the WTO, ILO, OECD and the World Bank were tasked to prepare a report on the relationship between trade, growth and employment for the G-20 Summit meeting in Seoul.
Today, we are focusing on a new potential area of collaboration: "skills for competitiveness". Skills are an area of work the ILO is very active in. Competitiveness is something that is high on the agenda of every agency involved in trade and development, as well as a priority for the WTO and ILO members. Workforce skills are a fundamental determinant of companies' and countries' competitiveness. Given the strong link between skills and competitiveness, it makes sense for the ILO and the WTO to join forces in this technical area.
Skills determine countries' ability to move into new export markets and to absorb new technologies. Not surprisingly, therefore, one of the chapters of the 2011 ILO-WTO co-publication highlighted that skills are a determinant of economic growth. That chapter also found that the contribution of skills to growth is greater the more open economies are. I am a firm believer - contrary to conventional wisdom which often highlights natural resources and the presence of extractive industries as a measurement of wealth - that the wealth of developing countries is in their people. I see people as the main resource which developing countries have - an investable, flexible and evolving resource. Upgrading skills is an important component of this investment in people.
The Fourth Global Review of Aid for Trade focuses on global value chains. In preparation for the Review, the OECD and the WTO have jointly conducted a monitoring exercise. That exercise aimed at assessing the main barriers developing country firms face when entering or moving up value chains. For the context of today's side event on "skills and competitiveness", the WTO has analysed the data collected through this exercise in order to get a better understanding of the role of skills in raising the competitiveness of small and medium-sized enterprises (SMEs) and in making it possible for them to successfully integrate and move up value chains.
The survey confirms that skills are a major supply side constraint for SMEs. Labour force skills are highlighted as a main constraint by about 45 per cent of developing country suppliers in the tourism, textiles and apparel and ICT value chains and by 38 per cent of suppliers in the agro-food chain.
Both workers and small and medium-sized firms in developing countries face serious resource constraints when it comes to investing in education and training. The capacity of SMEs to find employees that constitute a good 'fit' for the company will therefore critically depend on the quality of the national education system and the vocational education and training system. Those systems need to be able to provide school leavers and graduates with the knowledge, skills and attitudes in demand by employers. They also need to be flexible enough to adapt to global markets characterized by rapid technological change and high levels of innovation.
Technical assistance in the area of education and training can therefore have strong impacts and deliverables in providing SMEs in developing countries with access to necessary skills. The simple equation is that the greater their access to the right skills, the greater their chances to enter or move up global and regional value chains.
Technical assistance towards education and training is not considered part of the traditional definition of 'Aid for Trade' according to the parameters that we commonly use. Yet, evidence from the OECD-WTO monitoring survey suggests that where labour skills development are delivered as an element of Aid for Trade support, they are effective in helping local suppliers to connect to or to move up value chains. Further efforts towards coordinating and directing assistance towards skills upgrading focused on strengthening the role of developing country suppliers in value chains should therefore be encouraged.
The ILO has a long standing history in providing technical assistance in the area of vocational education and training. The trade community can greatly benefit from a stronger collaboration with the ILO and other agencies active in the area of education and training. The importance of deeper coherence between trade policies and policies in the area of education, skills and innovation was also highlighted in the report by the panel which I convened last year to look at the future of trade.
I want to thank Guy Ryder and Chris Evans-Klock and her team for having brought not only ILO but also OECD and World Bank expertise on the issue of skills and competitiveness to the WTO. I also thank Ms. Petri Gornitzka for chairing this meeting and for her suggestion to look at issues of skills and competitiveness within the work of the Enhanced Integrated Framework. I fully expect that the discussion and results from this debate today will help move the understanding and appreciation of how overcoming existing skills gaps in developing countries can help them draw enhanced benefits from their participation in the multilateral trading system.
Thank you.

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