New Research Links Vocational Education to SME Competitiveness

PMC Research has published a new policy brief titled “Vocational Education in the Context of the DCFTA.” The research analyzes challenges in Georgia’s vocational education system which hamper growth in the competitiveness of SMEs and provides policy recommendations.

The research for the policy brief was conducted for the project “Civil Society Organizations Supporting Free Trade with Europe,” funded by the European Union and implemented by People in Need in partnership with PMC Research, the Rural Communities Development Agency, Atinati, Bridge, and the Georgian Alliance on Agriculture and Rural Development. The policy brief is based on individual interviews with representatives from vocation education and training (VET) institutions and other stakeholders, along with an evaluation of legislative acts, resolutions, and research reports prepared by other organizations.

In 2014, Georgia signed an Association Agreement with the European Union, which included the Deep and Comprehensive Free Trade Area Agreement (DCFTA). The DCFTA encompasses a liberalization of trade in both goods and services. To take full advantage of the agreement, the PMC recommends intensifying “cooperation between the Government of Georgia and the private sector.” Georgian producers, particularly small and medium-sized enterprises (SMEs) are now competing against increasing imported products from the EU. Georgian SMEs have struggled, however, to be competitive in the European market. The main challenges are a lack of “comprehensive information on international markets and the standards set by the DCFTA,” particularly for agricultural products, which must “make significant improvements” in terms of production techniques, standards, and equipment, “to meet the necessary food safety requirements,” according to the policy brief.

To increase the competitiveness of Georgian SMEs, researchers turned to VET institutions. By “enhancing the entrepreneurial culture,” the brief argues, SMEs can increase innovation, adaptability, and productivity. The brief says that 94% of all active enterprises in Georgia are SMEs, but the majority are involved in low value-added activities. Drawing off a single workshop organized by Germany’s Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) within the framework of the EU-funded "SME Development and DCFTA in Georgia " project, researchers maintain that “vocational education plays an important role in growing the competitiveness of the SME sector.”

The brief identifies many problems within the VET sector, including the failure of educational programs and curriculums to align with labor market demands, poor teacher training and the lack of a professional development system for teachers, low levels of participation of social partners and civil society organizations (CSOs), limited private sector involvement, and, perhaps subsequently, low attractiveness of VET programs to potential students.

Much of the policy brief focuses on the Entrepreneurship Module, introduced in 2015 as a mandatory component of VET education for students in the third, fourth, and fifth ‘stages.’ The Entrepreneurship Module has six components: business planning; business registration; business management; sales of products and services; simplified financial accounting; and HR management. The introduction of the module was well-intended but flawed, particularly as researchers identify inadequate teaching materials, the lack of a clear, comprehensive strategy for private sector cooperation, and continued low awareness among students of the DCFTA and the opportunities the agreement presents.

Researchers developed several recommendations to “increase productivity and motivation regarding entrepreneurship among graduates of VET institutions.” The major recommendations are: integrating information about the DCFTA into the Entrepreneurship Module, integrating collaborations with successful entrepreneurs (in particular exporters) into the Entrepreneurship Module, establishing a DCFTA information week at VET institutions, and developing a standardized communication approach with private companies. The brief recommends that CSOs get more involved by organizing DCFTA information sessions for VET students and seminars on value chain production.

PMC Research is the research arm of Tbilisi-based Policy and Management Consulting Group (PMCG), an international development consulting company focused primarily on transitional and developing countries.

The full policy paper is available here in English:

Last month, The Ministry of Education and Science released the results of a survey of 2016 graduates from Georgia’s technical and vocational education and training (TVET) institutes. The survey was commissioned more than a year ago to determine the effectiveness and quality of TVET programs. According to the survey, just 56.2% of 2016 graduates of professional educational programs are now employed. The employment rate is 0.2% higher than the rate reported by 2015 graduates when surveyed last year. The National Statistics Office of Georgia (GeoStat) says unemployment nationwide in 2017 was just 13.9% - making the 2016 TVET graduates less likely to be employed than the average Georgian.

Full survey results (only available in Georgian) can be found here:

By Samantha Guthrie

13 August 2018 15:41