Vocational education in China and its importance to the economy
Guiding their child’s entry into a top university is the primary goal of life of many Chinese parents. Their reasoning is not without merit: entrance to a university like Fudan can profoundly impact a person’s social status and lifetime earning potential. Children of lesser means, or those who fail in the gaokao, the grueling national exams that comes at the end of high school, will likely lead very different lives. But the focus on universities is beginning to change in favor of a greater role for vocational education.
Such practical market-driven education in countries like Germany sets the less academically-inclined on a path toward a comfortable middle-class existence and lifetime employment, but in China it has long been an afterthought. Not any more.
Chinese leaders have in recent years pledged strong support in developing and improving the sector. In 2015, Premier Li Keqiang stressed vocational education’s importance to the economy, calling for its rapid development and reform in order to train China’s 800-million-strong labor force in skilled work and thereby boost employment and productivity. The State Council vowed to increase the number of students in vocational educational institutions from 29.34 million now to 38.3 million by 2020.
There are ample reasons for why the development of Chinese vocational education is now especially important. The economy was once driven by low-end manufacturing, infrastructure investment and exports, but today, rising costs and a long, slogging economic slowdown have accelerated the need to transition to an economy based on services, consumerism and value-added production, thus avoiding the middle-income trap. To accomplish sustainable growth, China will need to invest in new technologies and a skilled productive workforce in its effort to modernize its manufacturing industry, a goal that has been widely promoted through the “Made in China 2025” plan.
And therein lies the problem. Though China’s labor force is massive, today there are fewer workers adequately skilled to fill the shifting demands of the job market. One of the biggest challenges companies face is in hiring and retaining skilled workers. In AmCham Shanghai’s 2015 China Business Report survey, 91% of companies said that “talent and capabilities” was a hindrance to their business. Extrapolating into the future, McKinsey research found that by 2020, Chinese employers will require 142 million more high-skilled workers (defined as those with university degrees or vocational training), 24 million more than China is likely able to supply at that point.
While university graduates last year reached a record high of 7.5 million, there is a mismatch in what employers want from their hires today and the skills that graduates can supply. The same McKinsey report found that workers often do not have the necessary technical training or skills that enable them to work effectively in teams, think critically and innovate. A second mismatch was found in geographical distribution. As more and more graduates test their ambitions in Shanghai, Guangzhou or Beijing, the supply of graduates in these top-tier cities has exceeded the demand. Conversely, a lack of skilled labor is evident in smaller cities.
A work in progress
Vocational education in China has undergone significant growth over the last 20 years, as has the entire education sector. According to government estimates, the number of students in vocational institutions (including secondary vocational schools and vocational colleges) grew to 28 million in 2014, double the number of students in 1996. Annual investment in the sector has also expanded, from RMB114 billion in 2006 to RMB345 billion in 2013, although the increase is still short of government plans. Vocational institutions have also expanded educational opportunities to more of the population, enrolling students from rural areas and low-income families, who would otherwise have had little opportunity to pursue continuing education in secondary schooling.
Since the 1980s, vocational colleges in China have partnered with foreign governments and institutions to improve training. Germany, with its gold standard dual vocational system, was the first cooperative partner, bringing in experts, funds and technical assistance through joint ventures with local institutions. Over the years, China has expanded partnerships with other countries such as Japan, Singapore, Australia and the United Kingdom.
The growth of vocational education has been significant, but so has the number of challenges it must overcome to improve. Its structure is fragmented, containing, broadly, lower secondary schools, upper secondary schools, vocational colleges and adult education, with no integration with general secondary or university education. While over 90% of vocational graduates are able to secure a job, their salaries are far below the average for all workers. Generally, vocational graduates are also unlikely to be promoted from the production line to management positions.
The sector also operates in a complex regulatory environment. Regulation of vocational higher education, for example, falls under the State Council, the National Development and Reform Commission, the Ministry of Education, Ministry of Finance, Ministry of Human Resources and Social Security, as well as a range of provincial and local government bodies. This makes it hard for institutions to innovate and adapt to a changing economy.
Moreover, many vocational institutes often lack the equipment and resources to teach practical applications, use narrow and outdated teaching materials and employ a teaching staff with limited industry experience.
“Chinese vocational education is in a period of change,” says Alexander Liu, CEO of Yucui Education Consultancy. “It used to be similar to that of universities. They are teaching lots of theoretical things and are not very practical.” He adds that many vocational teachers enter the field right from graduation, and therefore lack the working experience necessary to teach practical skills.
The government has recognized these issues and in recent years, local and regional authorities have begun pilot programs to address them, often partnering with international institutions.
The World Bank, for example, established a pilot program in partnership with the Guangdong provincial government designed to promote competence-based and demand-driven education reform. Guidelines for cooperation between schools and industry were established, teachers and administrators received training, and curriculum materials and textbooks were developed, among other operational improvements. Lasting from 2009 to 2015, the program resulted in a significant increase in graduates who passed skills certification exams and found employment, and the project was used to inform the development of national-level guidelines.
To motivate schools to improve and address the lack of systematic monitoring and accountability in vocational education, the international Electronic Industry Citizenship Coalition (EICC) and Stanford University’s Rural Education Action Program (REAP) partnered with the Henan government, creating a pilot credentialing program. Schools were assessed on quality and compliance standards to determine whether they could be credentialed schools. Credentialed schools in turn could receive preferential government funding and partnership with EICC members (which include IBM, Dell, Cisco, Ford and many others).
Pilot programs are just a first step. Liu stresses that China’s central government cannot be solely responsible for reforming the entire vocational sector. As the industry and economic needs of different regions vary widely, it is important for provincial governments to be directly involved to implement broader, lasting reforms.
According to Liu, while provincial governments have been slow, some individual vocational institutions have made great strides. “For almost every course, they will partner with companies within that industry to help them upgrade their curriculum, find good staff and give the students a chance to have some industry experience.”
One such participating company is TE Connectivity, a technology company that designs and manufactures smart connectors and sensors, which has long suffered from a talent shortage in technicians who have the skills necessary to turn engineering innovations into precision manufacturing solutions. They partnered with the Suzhou Industrial Park Institute of Vocational Technology’s (IVT) departments of precision engineering and electronics engineering, donating equipment and establishing an engineer-led workshop on advanced manufacturing, thus providing students with an environment simulating that of a manufacturing enterprise.
“What the students learned about in modern manufacturing was actually from the textbooks. But not so many students are offered the opportunity at college to operate a machine,” says Reggie Lai, the senior director of government affairs in Asia for TE Connectivity, speaking about the type of coursework often seen in vocational institutions.
To further arm students with the skills needed to succeed in industry, the company also offers a scholarship that includes an internship and one-on-one mentorship with their engineers. In addition, the head of TE Connectivity China sits on the board of IVT, which gives the company input on developing a curriculum that better suits industrial needs.
Lai believes that corporate partnerships with vocational colleges and universities not only improves the skills of would-be employees, but also fosters loyalty amongst existing staff. For TE Connectivity engineers who want to hone their skills, the company also maintains a long-distance master’s program with the Wuhan University of Technology on their campus in Suzhou. It takes a TE engineer approximately four to five years to complete the company-sponsored degree program. And these program participants will tend not to leave after four to five years of service with the company, says Lai.
Still, he acknowledges that vocational education has much room for improvement and regards one of the biggest challenges as being management of perceptions – both how vocational students look at themselves and how potential employers look at those students.
“Normally people will think, after high school I need to get admitted to a top university, then I’ll pursue a white-collar career,” he says. “So naturally people will see these students as less qualified compared to those who go to university. Sometimes these students have a similar perception of themselves too.”
At least for today, the golden ideal of higher education at an top-notch university is in no danger of waning. And while vocational education will certainly not solve China’s talent shortage, continued development of the sector can do a great deal to lessen the economic burden.