Analysis of the Skills Development Sector in Mexico. The World Bank Human Development Sector

Analysis of the Skills Development Sector in Mexico The World Bank Human Development Sector Draft for Discussion February 2013

Preface This document presents a summary of a ten month process undertaken by the World Bank to understand the disconnect between the skills development sector in Mexico including both the education and the training sectors and the needs of the Mexican labor market. It draws on existing quantitative data; institutional assessments; legal assessments; interviews with key Ministries and public sector Institutions, academics, and private sector employers and their unions; and discussions and debates with a working group comprised of a subset of the same representatives. The information was collected in the period March through July 2012, discussed with various groups, and summarized in this document. The document was shared with the working group in February 2013. It also served as input to the World Bank s Policy Note Labor Markets for Inclusive Growth. 1 The document was prepared by Ms. Paula Villaseñor, who carried out the work as an independent consultant for the World Bank. The document does not intend to be a comprehensive review of the skillslabor market sector. Instead, it provides ideas for discussion and debate as Mexico begins a new phase of leadership under President Peña Nieto. 1 In the Policy Note, and earlier draft of this document was entitled: Institutional and Organizational Analysis of the Sector of Skills Development in Mexico. 2

Introduction This document presents an institutional and organizational analysis of the sector of skills development in Mexico. The main goal is to identify possible barriers and organizational challenges for the effective development and certification of skills. In the economic literature, the concept of skills has a wide range of meanings, from capacities and abilities, to talent and competences. For simplicity, this document considers that skills are an important constituent of competences, in addition to knowledge and values. In Mexico, the sector of skills development refers to several actors and formal institutions, and may be broadly divided in academic education, vocational education, training for work, and teacher training. Currently, this sector is poorly coordinated and organized, with several actors performing the same duties in terms of regulation, provision and service delivery, using different languages, and working separately. In addition, the legal framework that supports this sector presents legal discrepancies, conceptual inconsistencies, and coordination deficiencies. Thus, the motivation of this document has to do with Mexico s multiple challenges in terms of poor quality education, school completion, low productivity, labor force dynamics, lack of training, and, at the same time, the lack of coordination between the authorities in charge of skills development. In this context, it is important to understand that skills development involve both a quantitative and qualitative challenge, in terms of the number of high-skilled workers that the economy needs today and will need in the future, and the expectations created by educational plans and contents. Therefore, this document is divided as follows: Section II presents Mexico s background in terms of education, labor productivity, skills formation, and sectorial coordination. Then, Section III describes the organization and coordination of actors involved in the sector of skills development, distinguishing between academic and vocational education, training for work, and teacher training. Subsequently, Section IV analyzes the legal framework that regulates the sector of skills development, including the latest education reforms that integrate a competence-based approach. Then, Section V explores the literature on skills and skills development, highlighting the most effective policies implemented in other countries. Finally, Section VII concludes and provides recommendations. Background Mexico faces several challenges in terms of education quality and skills development, youth employment opportunities, labor productivity, and sectorial coordination. This section presents the background for the institutional and organizational analysis of the sector of skills development. 3

Mexico still faces important challenges in terms of school completion... On average, Mexicans have 8.6 years of schooling, while other countries with similar development levels such as Chile have achieved over 10 years of formal education (Table 1). Indeed, in the past few decades, Mexico has carried out important efforts in terms of coverage, particularly in primary education, but still faces high dropout rates, mostly in upper secondary. For example, while 99 percent of children aged 6 are enrolled in 1 st grade or a higher academic level, less than half of adolescents aged 15 are enrolled in school (Table 2). In other words, for every 100 children enrolled in 1 st grade, only 46 of them will be able to enroll in 10 th grade (Mexicanos Primero 2011). Basically, the proportion of 25-to 35- year-old nonstudents with only primary education has diminished since 1998, but the same proportion with incomplete secondary education has actually risen over the same period (Table 3). Interestingly, the proportion of idle youth among the population aged 15 to 29 has declined since 1990 for both sexes, although this subgroup currently represents over eight million individuals excluded from education and employment opportunities (Table 4). Regarding the education level of Mexican workers, most primary sector workers either completed or abandoned their studies before the age of 14, while the majority of workers in the secondary and tertiary sector continued studying until the age of 15-17 or 18-22, respectively (Table 5). For the same reference population, the most common reasons for leaving school have to do with financial issues or school aversion (Table 6). Yet, the returns to education in Mexico are positive and high, particularly for higher education: while the difference between completing lower secondary and upper secondary, in terms of monthly income, is only 67 US dollars, the difference between completing high school and university is almost 690 US dollars (Table 7). and particularly in terms of education quality. Currently, Mexican students have very low achievement levels in mathematics in national standardized tests, as the overwhelming majority of them obtained either insufficient or elementary results, regardless of their education level (Table 8). At the international level, Mexican students also perform very poorly, not only in mathematics but also in science and reading, as evidenced by their latest results in the PISA test (Table 9). One of the most important contributions of PISA to student assessment is that this test not only evaluates knowledge but also the ability to use it in specific contexts (website of PISA), which means that Mexican students are not well prepared to compete with their international peers. This suggests that Mexican education authorities have managed to expand coverage, but they have done it somehow at the expense of quality. This context poses current and future challenges to its fast-growing young labor force. Life expectancy in Mexico has increased significantly in the past few decades, situating around 73 years for men and 78 years for women. As a result, the working life of Mexicans has also increased considerably. However, the working life of skills is much shorter. Currently, the average age of the population is only 26 years (STPS 2011). In 2020, the proportion of the population aged 14 to 64 will reach it maximum, offering an appealing window of opportunity for the country in terms of human resources (STPS 2011). Mexico s economically active population includes 44 million individuals, or 40 percent of the total population, out of which 67 percent are men and 52 percent work in the informal sector (STPS 2011). This suggests that women may be facing different types of barriers to access 4

labor markets. The total unemployment rate is rather low, reaching 5 percent approximately, but the youth unemployment rate is almost 10 percent due mainly to legal rigidities and coordination failures between the education and productive sector (STPS 2011). Mexico also faces productivity stagnation and labor rigidity. In the past three decades, labor productivity has stagnated, particularly in commerce activities, mainly due to a matter of skills and low wages (STPS 2011). For example, the average working income is approximately 7,500 Mexican pesos per month, or approximately 600 US dollars (STPS 2011). The most important economic activities, in terms of the gross value added per worker and their contribution to total labor productivity, are mining and electricity, followed by banking, finance and professional services, as well as transport and communications (Tables 10 and 11). The tertiary sector accounts for 61 percent of the total labor force, while the primary and the secondary sectors cover 14 and 24 percent respectively (Table 12). That is, 6 in 10 Mexican workers perform in service activities, mostly in wholesale and retail trade (Table 11). The majority of primary sector workers have lower levels of educational attainment, in comparison to the other two sectors, as 66 percent of them have only primary education, or no education at all (Table 13). In addition, as their education level increases, workers tend to perform in larger firms, suggesting that low-skilled workers are typically concentrated in micro and small enterprises (Table 14). On this matter, Mexico has experienced an important increase in the share of low-skilled services in employment, in contrast to a clear decline in primary sector activities (Figure 1). This evidence seems to support the hypothesis that low labor productivity in Mexico is strongly related to low levels of skills. Finally, firms operating in Mexico face considerable barriers to hiring and layoff, which jeopardizes productivity and competitiveness (STPS 2011). For the labor market, experience is currently more relevant than skills. During a series of personal interviews about the demand for skills in Mexico (Table 15), the majority of the private sector representatives that participated in this exercise mentioned that firms tend to favor experience over educational attainment when hiring workers. Typically, firms prefer reference based recruitment, or short-term contracts to prove workers competences. The reason is that most education certificates or diplomas provide evidence that the student took the training program or completed an education level; however, they do not necessarily guarantee that the student possesses the necessary competences for the employment position. Interestingly, the percentage of workers who perceive a better matching between their previous experience and current employment is much higher than the proportion of workers who consider that their current employment is consistent with their studies, regardless of their education level (Tables 16 to 19). Actually, some careers have a rather low percentage of graduates working in their corresponding field of studies, such as communications, marketing, and certain specializations in engineering (Table 20). In addition, workers find experience useful for acquiring the appropriate skills for their occupation, developing self-confidence at work, preserving employment and earning more (Tables 21 and 22). The overwhelming majority of workers have not participated in training programs, particularly in the primary sector. While an important fraction of workers can only certify 5

their last education level attained with a report card (Table 23), only approximately 37 percent of workers have received work training (Tables 24 and 25). These results are similar considering either the population that works and studies (PWS) or the population that only works (POW). The three main reasons for not receiving training have to do mostly with financial issues, lack of information, or simply the perception that initial training is sufficient (Tables 26 and 27). Typically, the type of workers that reported participating in training has to do mostly with education and with-collar workers, despite their sector of activity (Table 28). When trained, most workers are not certified. Typically, training takes place in the classroom, and tends to last less than 20 hours, regardless of the type of activity (Tables 29 to 31). Similarly, it is a colleague or supervisor, or the internal training, which regularly provides training (Tables 32 and 33). Usually, it is the supervisor who decides that the worker needs training, followed by the employee or human resources division (Tables 34 and 35). The government plays a very limited role in this matter in the secondary and tertiary sector. Among the main benefits of training, workers identify the ability to improve or certify their skills, as well as the possibility to improve the quality of their services or products (Table 36). However, most workers who receive training are not evaluated or certified at the end of the training course, particularly in the primary sector (Table 37). And, when given a printed proof, this is usually a simple diploma, not a competence-based certification (Tables 38 and 39). Actually, Mexico spends poorly in skills development... Typically, in the secondary and tertiary sectors, firms provide the most important financing source for training, while government participation only represents a small fraction (Tables 40 and 41). Indeed, the government only plays a relevant role in financing in the primary sector. Yet, training is rather expensive for firms, as the average cost of training per employee is approximately 381 US dollars, ranging from 112 US dollars in commerce activities to over 1,170 US dollars in financial services (Table 42). On the other hand, the annual budget for training in public work training centers (Centros de Formación para el Trabajo) has remained rather constant per student since 2007, at 4,963 pesos or 397 approximately US dollars (Table 43). Taking into account the federal budget (Presupuesto de Egresos de la Federación, or PEF) for education (Ramo 11), the public expenditure for skills development has increased considerably since 2007, particularly with respect to the Competence-Based Human Resources Training Program (Programa de Formación de Recursos Humanos con base en Competencias, or PROFORHCOM), and significantly in 2011 (Table 44). Still, public expenditure for teacher training in basic education has varied notably in the past five years, reaching its maximum in 2009. In contrast, considering the federal budget for labor and social welfare (Ramo 14), the public expenditure for skills development in training and productivity programs has diminished significantly, by approximately 75 percent since 2007, while the expenditure associated to the Employment Support Program (Programa de Apoyo al Empleo, or PAE) has been rather constant over the same period (Tables 45). Finally, the federal budget assigned to CONOCER has increased by over 40 percent since 2007, reaching 135 million pesos in 2012, which is roughly equivalent to 11 million US dollars(table 46). 6

and also ineffectively. It is worth mentioning that the totality of the expenditure on teacher training is purely administrative, without any focus on quality (Table 44). Similarly, the expenditure on adult education only represents approximately 1 percent of the whole education budget, regardless of this sector s needs (Table 47). In addition, the expenditure on vocational education, directly related to the National College for Technical Professional Education (Colegio Nacional de Educación Profesional Técnica, or CONALEP), is only linked to entry enrollment, not to continuous enrollment, posing challenges in terms of school completion (Table 15). Currently, public spending on CONALEP represents approximately 2 percent of the total budget for education, reaching 4 thousand million pesos, or 300 million US dollars (Table 48). Finally, most of programs associated with this sector do not have clear or specific goals, jeopardizing the effectiveness and transparency of public expenditure (Table 49). Mexican workers lack proper training in socio-emotional skills, especially in terms of working in teams. Basically, socio-emotional skills refer to the workers ability to lead, interact with their colleagues, adapt to different contexts, use their emotional intelligence, organize their work, and mostly to live according to a certain set of values, such as honesty and integrity. In Mexico, according to the different actors interviewed for this project (Table 15), the three most important yet difficult to find competences demanded by the private sector are the ability to work in teams, the ability to execute, and the capacity to solve problems. Other important skills mentioned refer to the ability to adapt, learn, and interact with others. However, for the poorest workers, the most important abilities identified by employers are mostly cognitive, such as basic mathematics and written skills, but also related to technology. Some studies conclude that Mexican workers need to improve their skills in issues such as customer service, service delivery, technology, and particularly in risk prevention (CONOCER: Reports 1 to 7). In Latin America, in general, the three most important competences for employers are teamwork, interpersonal communication, and interpersonal relationships, while the three hardest to find in labor markets refer to leadership, innovation and decision-making (Tables 50 and 52). Yet, these results correspond only to the opinions of large firms. In turn, the general opinion is that small and medium enterprises (SMEs) have not always a clear understanding about their needs in terms of abilities. Similarly, formal education, centered on memorizing, does not currently promote entrepreneurial abilities among students. Most actors interviewed identify a cultural problem regarding entrepreneurial abilities: in Mexico, the general perception is that being an entrepreneur is equivalent to being rich and somehow associated to exploiting workers. That is, the idea of being an entrepreneur has a rather negative connotation in social terms. Interestingly, according to the same interviews, street sellers do not perceive themselves as entrepreneurs, but rather as simple informal workers. As long as the formal education system does not adopt new pedagogical contents that promote entrepreneurial abilities or the vision that entrepreneurs play a key role in terms of employment creation, private sector representatives argue, this misconception will prevail. On this matter, considering that entrepreneurial activity accounts for Mexico s most important source of wealth, some private initiatives have tried to redefine the concepts of businessman, entrepreneur, enterprise, and entrepreneurship, such as the campaign named Pepe and Toño (Pepe y Toño) launched by the Communication Council (Consejo de la Comunicación). The goal of 7

this campaign is to change the general perception that only large companies are enterprises, and to create awareness that small and medium entrepreneurs generate 83 percent of Mexico s GDP and 8 in 10 jobs. The website of Pepe and Toño also provides guidance for enterprise creation. Indeed, education authorities and businessmen tend to work separately. One of the most interesting conclusions from the interview process with business sector representatives and government authorities is that both sectors speak different languages and have different goals (Table 15). While the government makes decisions at a slow pace, partly due to its institutional structure and administrative rigidity, the private sector is constantly evolving and adapting to new circumstances and technologies. In other words, while the sector of skills development is self-absorbed and lost in politics, the business sector has to deal with an extremely globalized and competitive world. Finally, the dialogue between both sectors has been intermittent and inconsistent over the years, resulting in coordination and information failures. Thus, Mexico has not managed to define a sectorial, regional and national skills development strategy depending on its most productive sectors. According to the different actors interviewed, because the business sector and the government tend to work separately, Mexico has not defined a regional or national development strategy aimed at identifying the sectors that offer the largest development potential, and investing in the appropriate skills to boost these sectors (Table 15). As a result, the sector of skills development has not adopted a regional vision for the promotion of specific abilities. Currently, in Mexico, the four sectors with the largest share in national GDP are tourism, logistics or transports and communications, construction and mining (Table 52). Construction, for example, has the largest share in total employment but the lowest level of employee productivity, while mining has one of the lowest shares in total employment but the highest level of employee productivity in the Mexican economy (Tables 53 and 54). Tourism shows high productivity in comparison to the other sectors at the national level (Table 53) but poor performance considering the results of developed economies (Figure 2), as the sector of information technologies (Figure 3). On this matter, the Boston Consulting Group (2011) identifies several strategic sectors where Mexico has a clear competitive advantage, such as medical tourism, aeronautical industry, automobile industry, and electrical appliances manufacturing, and recommends aligning efforts towards the development of highly-skilled human capital based on labor market needs. These arguments suggest that the Mexican labor market faces a skills mismatch, both in quantitative and qualitative terms. On the one hand, some of the actors interviewed for this project believe that, with the exception of certain profitable sectors such as mining, Mexico is not producing high-skilled jobs due mostly to the international financial crisis (Table 15). On the other hand, businessmen complain about the lack of highly skilled workers who can use their abilities effectively to make decisions, solve problems and interact socially. In fact, Mexican authorities and businessmen do not have a clear idea about the number of high school, vocational and university graduates that the labor market will require in the near future nor about the type of competences that the sector of skills development needs to promote. The only evidence available shows that there is a clear skills mismatch in four relevant sectors (tourism, business process operations, software development, and 8

automobile industry), particularly at low and high education levels, and that these trends will prevail in the next few years (Table 55). For example, only in the sector of business process operations, or BPO, there is excess supply of labor at low levels of education, but excess demand of labor at high levels of education. This section described Mexico s challenges in terms of schooling, skills, productivity, training, and collaboration between the education and productive sectors. The next section analyzes the organizational structure of the sector of skills development in Mexico. Organization of the Sector of Skills Development This section describes the organization of the actors involved in the sector of skills development (SoSD) in Mexico, differentiating between academic education, vocational education, training for work, and teacher training. Yet, skills development also deals with skills certification and thus this section considers as well the role of Mexico s certifying agency. In Mexico, the sector of skills development may be divided into academic education, vocational or technical education, training for work, and teacher training. Basically, academic education refers to general education, from initial education and preschool to university, and deals essentially with cognitive abilities. On the other hand, vocational or technical education refers to the different modalities in upper secondary that combine both academic and non-academic contents and prepare students for specific types of jobs or careers. Similarly, training for work refers to educational schemes that provide remedial education for disadvantaged individuals or training courses for workers that have completed lower secondary. Finally, teacher training has to do with the different institutional structures aimed at training teachers for different education levels. While the provision of academic and vocational education only depends on the Ministry of Education, the provision of training for work depends on several actors. Indeed, SoSD can also be divided into three main actors: the Ministry of Education, the Ministry of Labor, and the Business Sector. Interestingly, these actors group as well several small actors or operating divisions, and participate in different education schemes (Figure 4). For example, three different actors currently provide training for work, while only the Ministry of Education can provide or regulate general and education. Basically, the Ministry of Education participates in general and vocational education, training for work, teacher training and certification, while the Ministry of Labor only does in training for work and certification. Similarly, firms can only participate in training for work and certification. The Ministry of Education (Secretaría de Educación Pública, or SEP) is the only authority responsible for the regulation of general and vocational education in Mexico. 9

Organizationally, SEP is divided into five main operational areas: (i) basic education, (ii) upper-middle education, (iii) higher education, (iv) decentralized bodies, and (v) deconcentrated bodies (Figure 5). The Under Ministry for Basic Education (Subsecretaría de Educación Básica, or SEB) is responsible for initial education, preschool, primary and lower secondary school, and therefore the basis for academic education (Figure 6). SEB has three general divisions (Direcciones Generales or DG) in charge of curriculum development, indigenous education and education innovation respectively. Then, the Under Ministry for Upper-Middle Education (Subsecretaría de Educación Media Superior, or SEMS) deals with both academic and vocational education, but also with training for work. For example, within SEMS, the General Division for High School (Dirección General de Bachillerato, or DGB) is responsible for the provision of academic education, while the General Divisions for Training Centers (DGCFT) has to do with training for work. On the other hand, Marine Science (DGECyTM), and Industrial and Technological Education (DGETI) deal with vocational education. In addition, the Under Ministry for Higher Education (Subsecretaría de Educación Superior, or SES) is in charge of the coordination of tertiary education, and that of the National Council of Education Authorities (Consejo Nacional de Autoridades Educativas, or CONAEDU), which is responsible for the development of the national education system. SES is supposed to work closely with the National Association of Universities and Higher Education Institutions (Asociación Nacional de Universidades e Instituciones de Educación Superior, or ANUIES), a nongovernmental organization aimed at improving teaching, research and education at the university level. Finally, the education system benefits from the information provided by the National Center for Higher Education Evaluation (Centro Nacional de Evaluación de la Educación Superior, or CENEVAL), a non-governmental association aimed at developing and applying evaluation tools for knowledge, abilities and competences assessment, at all education levels. Upper middle education offers different modalities that provide either general or vocational education, but also training for work. Indeed, in Mexico upper middle education includes (i) general education provided by general upper secondary schools (DGB) and the National Autonomous University of Mexico (Universidad Nacional Autónoma de México, or UNAM); (ii) vocational education provided by DGETA, DGETI, DGECyTM, and the National College for Technical Professional Education (Colegio Nacional de Educación Profesional Técnica, or CONALEP), with mixed curriculum; and, (v) training for work offered by DGCFT. The last modality does not provide access to higher education. Before 2008, upper middle education was severely fragmented and lacked identity. Then, the Comprehensive Reform for Upper Middle Education (Reforma Integral de la Educación Media Superior, or RIEMS) allowed for the creation of a common high school graduate profile (Perfil del Egresado), regardless of the type of modality, whether general or vocational. Now, all high school students in Mexico receive a competence-based education through general and diversified courses. In the case of vocational education, the different modalities offer the possibility of lateral exits per semester that provide competence-based certificates even if the student did not complete the whole program. For example, a student may take two semesters of CONALEP, then abandon school, and still obtain a certificate for these two semesters. Training for work in upper middle education (DGCFT) is not part of the high school graduate profile but also provides a competence-based education. 10

In practice, the National Union of Teachers (Sindicato Nacional de Trabajadores de la Educación, or SNTE) intervenes in the decision making about teacher training and education plans and programs. Established in 1943, SNTE is compriesed of permanent, transitory, and interim workers at the service of education, from SEP, state or local governments, private firms, or decentralized/de-concentrated organizations. Its legal mandate is to study, protect and improve the common interests of education workers. Basically, the organizational structure of SNTE includes education workers from formal school, work training centers, and member organizations, and has municipal, regional, sectional and national representation. Currently, SNTE has over one million members, constituting the largest union in Latin America. The organization s power is not limited to protecting workers rights; it also intervenes in the decision making of education policy. For example, SNTE has the right to appoint school principals at the basic education level. Therefore, basic education in Mexico depends directly on SNTE (Figure 6). However, at the upper middle education level, teachers may belong to different unions. SEP is also in charge of several decentralized and de-concentrated bodies that promote skills development by providing academic and vocational education or training, such as Industrial and Technical Learning Centers (Centro de Enseñanza Técnica e Industrial, or CETIs). For example, the National Council of Education Promotion (Consejo Nacional de Fomento Educativo, or CONAFE) provides education schemes, such as community education, to individuals with no access to formal education; similarly, the CONALEP offers a vocational scheme for basic education graduates. In addition, the National Institute for Adult Education (Instituto Nacional de Educación para Adultos, or INEA) and the National Council for Standardization and Certification (Consejo Nacional de Normalización y Certificación de Estándares de Competencias, or CONOCER) are decentralized bodies of SEP (Figures 5 and 7). The National Council for Science and Technology (Consejo Nacional de Ciencia y Tecnología, or CONACYT) is responsible for science and technology policy in Mexico. Finally, it is worth highlighting that, although every federal entity in Mexico is responsible for providing its own education services, the education system of the Federal District depends directly upon SEP, as a de-concentrated body. In particular, the National College for Technical Professional Education (CONALEP) focuses on vocational education based on competence certification. In the past thirty years, CONALEP has contributed to the formation of technical personnel through six-month modules, each of approximately 35 hours per week. Although it has managed to increase its annual budget in the past few years, CONALEP has not been able to increase its enrollment, keeping it at 7 or 8 percent of students in upper-middle education (Table 15). Similarly, the National Institute for Adult Education (INEA) provides remedial education for the population aged 15 and over. INEA offers several types of education programs, from literacy teaching to lower-secondary school, as well as several educational modules for the unschooled, aimed at providing students with primary or secondary school diplomas and improving their performance at work, taking into account students age-related preferences and need. These modules belong to the Educational Model for Life and Work (Modelo Educación para la Vida y el Trabajo, or MEVyT), that also offers training for students aged 10-14, and bilingual education for indigenous people. Although MEVyt is 11

part of the agreements between INEA and the National Council of Education for Life and Work (Consejo Nacional de Educación para la Vida y el Trabajo, or CONEVyT) and supposed to promote education and training, it does not offer competence-based certificates. Thus, INEA s main objective is to reduce educational lags and improve learning abilities in adults. However, its annual budget is still very limited, representing approximately 1 percent of the total budget for education (Table 47). Two main divisions in SEP are worth mentioning in terms of educational contents: the General Division for Curriculum Development (Dirección General de Desarrollo Curricular, or DGDC), for basic education, and the Sectorial Coordination for Academic Development (Coordinación Sectorial de Desarrollo Académico, or COSDAC), for uppermiddle education, including vocational education and training for work (Figures 5 to 7). Any attempt to reform academic contents and management has to pass through these divisions. For example, COSDAC is in charge of designing and implementing the general framework for the establishment of a National Baccalaureat System (Sistema Nacional de Bachillerato, or SNB), and teacher training in upper secondary school. Currently, COSDAC is in charge of developing common curriculums based on the Competence-Based Human Resources Training Program (PROFORHCOM), which contributes to the implementation of RIEMS. COSDAC works with the Inter-institutional Committees for Vocational Education (Comités Interinstitucionales de Formación Profesional, or CIFPs), formed by SEMS, firms and teachers, to promote portability between existing modalities in upper secondary. Similarly, DGDC deals with the development of a common curriculum in basic education that promotes flexibility, at least in theory. In the past few years, the education system has developed a common curricula framework that promotes diversity, which means that each federal entity may decide its educational content; however, the Federation, represented by SEP, is responsible for approving state contents. Thus, the key challenge is to coordinate these divisions to integrate curricula decisions at different education levels. The Ministry of Labor and Social Welfare (Secretaría del Trabajo y Previsión Social, or STPS) also participates in the regulation and coordination of training for work.the mission of the STPS consists of strengthening labor policy and promoting labor conciliation for labor peace, which suggests that this ministry focuses on labor relations, not necessarily on skills development. STPS has two main divisions that deal with training regulation and coordination in Mexico: the Under-Ministry for Employment and Labor Productivity (Subsecretaría de Empleo y Productividad Laboral) and the Under-Ministry for Labor Inclusion (Subsecretaría de Inclusión Laboral). The first headship takes care of the administration of the National Service for Employment (Servicio Nacional de Empleo, or SNE), while the second is in charge of providing certain training programs for work, and registering training programs in Mexico (Figures 7 and 8). Every single training program in Mexico has to be registered by STPS, even if SEP has its own registry. STPS is also in charge of providing training certificates. However, the STPS does not use a competences framework to guide its program design, registration, or certification award processes. The 58 e-learning programs offered by Labor Inclusion are not based on a skills approach. The STPS training certificates only account for the number of hours that the student participated in the program, not the abilities he/she developed. 12

The National Service for Employment (SNE) aims to provide free customer service on employment opportunities, training, and scholarship opportunities, contributing to skills development. Created in 1978 and coordinated by STPS, SNE provides free costumer service through its 147 offices nationwide, such as employment information and services, vocational guidance, training for jobseekers, job fairs, employment mediation, employment newspapers, and financing for training. It also provides information through its website called Portal de Empleo. In particular, the program Bécate provides information and scholarships for different types of training, such as mixed training, on-the-job training, and training for self-employment. Currently, Bécate grants approximately 225 thousand scholarships. In addition, SNE provides career advice as well as information on the probability of employment per type of career (Table 21.a).The majority of customers that use SNE have lower-secondary education only. Nonetheless, the majority of actors interviewed for this project claimed that firms barely use the information services offered by SNE, highlighting the lack of coordination between business sector representatives and government authorities (Figures 7 and 8). According to STPS authorities, only in 2012, approximately 785,000 and 595,000 individuals have applied to a vacancy through Portal de Empleo and the 147 offices across the country, respectively (Tables 56 and 57). Among those who used the website, 56 percent are men; 47 percent are aged between 18 and 25; the majority have less than one year of labor experience; and over 25 percent have a college degree. Similarly, among those who used the services of employment bureaus, 59 percent are men; 48 percent are aged between 20 and 29; almost 32 percent have less than one year of experience; and 39 percent have only completed lower secondary. Interestingly, the number of applicants to both schemes has decreased since 2011. In both cases, the majority of vacancies registered are positions in the tertiary (service) sector, typically in medium or large firms (Tables 58 and 59). This number has also diminished since 2011. The Employment Observatory (Observatorio Laboral, or OLA) offers free information services about the characteristics and behavior patterns of the most representative careers and professions in Mexico. Also coordinated by STPS, the OLA delivers employment indicators for 62 professional careers, 34 technological careers, 20 technical careers, and 240 occupational groups at the national level, such as average monthly income per career, type of occupations per region and state, and percentage of women employed. Its main goal is to provide updated and reliable information on labor market trends, according to the results of the National Employment and Occupation Survey (Encuesta Nacional de Ocupación y Empleo, or ENOE), and the information pool of SNE. Moreover, OLA provides a labor mobility mechanism that is coordinated by the Mexican and Canadian governments, though which Mexican workers can access temporary employment opportunities in Canada, according to their professional experience, facilitating selection, recruiting and hiring without intermediaries. Although OLA is directly related to SNE, it is not necessarily closely linked to the local education and business sector (Figures 7 and 8). The business sector also offers training options but seldom in coordination with STPS and SEP.Certain large firms or industrial sectors have promoted the creation of technological universities to contribute to the development of necessary skills that cannot be found in labor markets. For instance, the Monterrey s Technological System (Sistema Tecnológico 13

de Monterrey) was created to meet the labor demands of firms and industries in Northern Mexico and currently offers different types of universities and programs, including extension schools and on-line education. Some firms have opted to provide their own shortterm training programs, in order to cope with the lack of skilled workers. Yet, most of these efforts are conducted independently, without coordination with government authorities. Typically, the productive sector is organized around associations, councils, chambers and confederations, but none of these has a clear role in terms of skills development with respect to SEP or STPS (Figure 7). Some of these associations and chambers refer to the National Confederation of National Chambers of Commerce (Confederación Nacional de Cámaras Nacionales de Comercio, Servicios y Turismo, or CONCANACO), the National Chamber of Transformation Industry (Cámara Nacional de Industria de la Transformación, or CANACINTRA), the Communication Council (Consejo de la Comunicación), the Coordinating Business Council (Consejo Coordinador Empresarial, or CCE), or the Mexican Association of Directors of Human Resources (Asociación Mexicana de Directores de Recursos Humanos, or AMEDIRH). According to the different interviews carried out with private sector representatives, firms prefer using private headhunters, such as Manpower, than SNE, in order to find skilled workers. Some non-governmental initiatives contribute to the promotion of skills development. For instance, Mexicanos Primero, a civil organization based in Mexico City and Morelia, Michoacán, actively advocates for quality education in primary and secondary school, contributing to improving education policy in Mexico. Another example is Inroads Mexico, a non-profit civil association created in 1996 that provides socio-emotional training for university students from low-income backgrounds, and links them to employment opportunities in large and successful firms. Finally, some initiatives aim to finance skills development, although they do it marginally, such as Bécalos, which provides financial aid for teacher training and low-income students enrolled in upper-middle and higher education. Therefore, the institutional organization of training for work depends on several actors, in contrast to academic education. Indeed, three main actors participate in the provision and organization of training for work: SEP, STPS and the business sector (Figure 7). However, the regulation of this scheme corresponds to SEP and STPS. The main challenge is reducing the lack of coordination between actors. Two key actors in this mapping are CONALEP and INEA, although the role of the latter is very limited for financial issues. Finally, while SEP and STPS are lost in negotiations and politics, the business sector spends resources in finding and hiring high-skilled workers. The Ministry of Social Development (Secretaría de Desarrollo Social, or SEDESOL) contributes to skills development, although marginally. SEDESOL delivers three main social programs that contribute to early childhood development, school completion, and self-employment, among the poorest of the poor. First, Oportunidades promotes school enrollment and completion in communities with extreme poverty, through conditional cash transfers. For example, since 2003, the program Jóvenes con Oportunidades provides financial incentives for upper-secondary school completion before the age of 22. So far, this program has benefited over 790 thousand youth. The program for Day-Care Centers 14

(Estancias Infantiles) offers financial support to working or student mothers, or single fathers, with children between the ages of 1 and 3 years and 11 months, from poor households, through subsidies for childcare. Finally, the program Productive Options (Opciones Productivas) offers financial support for the development of productive options or self-employment, as well as training and guidance. These efforts target the bottom of the pyramid specifically. However, SEDESOL does not necessarily work in coordination with SEP and STPS, particularly regarding initial education (Figures 6 and 7). Currently, the budget for Day-Care Centers and Productive Options represents approximately 3.6 and 0.6 percent of the total budget for social development, respectively (PEF 2011). Skills development also deals with teacher training, which depends on several actors. Teacher training consists of initial training, or teacher-training colleges, and continuous training, or teacher training policies (Figure 9). Both SEP and SNTE have the authority to determine teacher-training policies in primary and lower secondary. In fact, teacher-training colleges prepare teachers for formal education and depend on the National Pedagogical University (Universidad Pedagógica Nacional, or UPN). Since 1978, UPN s mission is to form education professionals to meet the requirements of the national education system, through 76 centers and over 200 academic venues nationwide. Currently, the average age of teachers in Mexico is approximately 50 years. According to some of the actors interviewed for this study, teacher-training programs are outdated and useless, lost in political struggles and interest, jeopardizing the education and training of entire generations, and the sector of skills development as a whole (Table 15). Thus, for initial training, the challenge is to redesign the contents of teacher-training colleges and teacher selection processes. However, for continuous training, the challenge has to do with Carrera Magisterial, a national program that provides economic incentives to basic education teachers through a horizontal promotion scheme, but does not incorporate the totality of teachers. Continuous training basically depends on the DG for Continuous Training at SEP (Dirección General de Formación Continua, or DGFC). In upper secondary, teacher training takes place according to the Program for Teacher Training in Upper Secondary (Programa de Formación del Docente de la Educación Media Superior, or PROFORDEMS) that is one of the strategic actions of RIEMS and focuses on adjusting teaching methodologies to a competence-based approach. Finally, skills certification is also directly related to skills development. Ideally, certification would refer to issuing diplomas or other type of written evidence (constancias) that certifies that the student has certain abilities, but in practice, the majority of Mexico s certification system simply certified that a student completed an academic degree or training program. For example, SEP issues certificates of completion or education diplomas, while STPS issues certificates of training program completion, including programs from a distance.these types of certificates are not always useful for the productive sector in the sense that students may have completed an educational degree or training program but not necessarily acquired the type of abilities demanded by employers. (Figure 10). CONOCER is the Mexican agency responsible for issuing competence-based certificates, which possess high security and transparency standards (Image 1).Basically, CONOCER promotes and coordinates the National System of Competences aimed at fostering 15

competitiveness and economic development (CONOCER 2012). The National System of Competences (Sistema Nacional de Competencias, or SNC) represents an instrument to foster competitiveness in different productive sectors, and consists of three main efforts: (i) management committees, (ii) instruments for the transfer of knowledge and information, and (iii) evaluation and certification structure. Indeed, CONOCER was created in 1995, then suspended in 2003 and eventually reintroduced in 2005, to support SNC. Its governing body includes nine government entities, including SEP and STPS, four business-sector representatives, and five associations that represent workers interests. Despite some initial conflicts between SEP and STPS to obtain the presidency of CONOCER, it is the Minister of Education who holds this position. In general terms, CONOCER provides technical assistance to firms and federal entities so that these can set Management Committees (Comités de Gestión por Competencias) aimed at defining competence-based standards, as well as evaluation and certification procedures, depending on the type of productive sector. Since CONOCER belongs administratively to SEP, it has limited powers to make decisions. Different stakeholders, from the government, the education and business sector, integrate the Management Committees assisted by CONOCER. Their goal is to set up competencebased standards in order to strengthen human capital and raise competitiveness, and to decide upon the type of organizations that will evaluate and certify workers competences, based on these standards. CONOCER helps these stakeholders to form the committees (Figure 10), to organize themselves, and to present a proposal to CONOCER. So far, over 10 productive sectors are included in the Competence-Based Human Resources Training Program (Programa de Formación de Recursos Humanos con base en Competencias, or PROFORHCOM), such as commerce, automobile industry, mining, telecommunications, tourism and construction. CONOCER has contributed to the expansion of management committees, and to the definition of competence-based standards (Figures 11, 12 and 13). In addition, CONOCER has three national registries that promote the transfer of knowledge and information for better labor market performance: (i) the National Registry of Competence-Based Standards (Registro Nacional de Estándares de Competencia, or RENEC); (ii) the National Registry of Individuals with Certified Competences (Registro Nacional de Personas con Competencias Certificadas, or RENAP); and (iii) the National Registry of Competence-Based Training Courses (Registro Nacional de Cursos de Capacitación Basados en Estándares de Competencia, or RENAC). The RENEC promotes national comparability between competences that can be certified by CONOCER, as well as the establishment of quality standards in the execution of labor functions in different productive sectors. So far, RENEC has registered 137 competence-based standards (Table 60). Similarly, RENAP accounts for the registration of over 320,000 individuals with at least one competence-based certification, constituting an information tool for employers. In turn, RENAC gathers the different training courses that are based on competence standards in order to facilitate information flows and access to these courses. CONOCER also promotes the accreditation of Evaluation and Certification Entities (Entidades de Evaluación y Certificación, or ECEs) from the business, labor, and education sectors aimed at evaluating and certifying competences among Mexican workers. So far, CONOCER has validated 81 ECEs, particularly from the public education sector (Figures 14 and 15). In total, CONOCER has issued 403,486 competence-based certificates since 1995 (Figure 16). 16

Last but not least, the Ministry of Economics (Secretaría de Economía, or SE) participates in the governing body of CONOCER but has unclear functions in terms of skills development. According to CONOCER, SE should focus on the development of strategic sectors and promote coordination between the education and productive sectors in order to determine the type of competences that Mexico needs to produce. For example, a recent study from the Boston Consulting Group (BCG) provided by CONOCER (BCG 2011) suggests that Mexico needs to focus on the creation of regional clusters in medical tourism, electrical appliances, aeronautics industry, and automobile industry. However, in practice, SE has very limited participation in the sector of skills development (Figure 7). The reason is that the organization chart of this ministry does not include a specific position for this matter. For example, while STPS has a General Division for Training, SE has not specified similar functions. Therefore, Mexico s skill development sector involves multiple actors with the same goal, and at the same time multiple goals within a single organization. Several conclusions emerge from the organizational analysis and the interview process: Coordination failures: On the one hand, the sector of skills development is poorly organized and coordinated, since too many actors perform the same role, in terms of regulation, governance, service delivery, financing, and certification (Figure 17). Regarding academic education, it is not clear whether SEP or the SNTE is the governing authority, which poses several challenges for skills development and teacher training at least in basic education. Regarding training for work, the fact that STPS and SEP participate in the regulation of this educational scheme creates confusion and incertitude among firms. In practice, firms barely use the National System for Employment (SNE), as they prefer their own information sources. On the other hand, the sector of skills development is poorly related to the labor market needs. Part of the reason is that SEP has a slower reaction capacity, due to its own institutional and administrative constraints. Information failures: The concept of training is used widely but does not necessarily have the same meaning in every context. For example, INEA offers training programs for adults but these do not have the same quality or goals as the programs provided by STPS. The fact that both SEP and STPS can provide training diplomas creates inefficiencies and confusion. In turn, vocational education contributes to skills development but lacks from prestige, partly due to the poor quality of programs available. Despite government efforts to inform decisions on careers and promote employment, the business sector and government authorities tend to work separately. Communication failures: Some of the efforts to approach the business sector and government authorities have failed due to communication and cultural issues. Communication initiatives tend to fail when taking place at medium-level positions, facing cultural aversion for new methods of collaboration. Thus, any attempt to bring both sectors closer has to begin at high-level positions. 17

This section described the organization of actors involved in the sector of skills development in Mexico, differentiating between the different educational schemes offered. The next section explores the different laws and documents that support SoSD. Legal Framework This section analyzes the legal framework that regulates and contributes to the development of the sector of skills development in Mexico. Basically, three main laws regulate the sector of skills development, competences definition and certification: (i) the Federal Labor Law, (ii) the General Education Law, and (iii) the Organic Law of the Federal Public Administration. Yet, other documents also support this legal framework (Figure 18). The Federal Labor Law (LFT) dates from 1970 and sets all the labor norms associated with the work relationships established in Article 123 of the Mexican Constitution. This law states that only individuals aged 16 and over can offer their labor services, as well as individuals between the age of 14 and 16 that have completed compulsory education (Articles 22-23). This means that by law training for work can only take place after compulsory education. The LFT also states in Article 153-A that employees have the right to be provided with training from their employer in order to increase their living standard and productivity, according to the training plans and programs defined by the employer, the workers union, and approved by the Ministry of Labor (STPS). Similarly, employers have the obligation to provide their employees with training and, in some cases, take on the corresponding expenses (Article 132 XIV and XV). Specifically, employers may outsource or provide training, within or outside the firm, or may adhere to the general systems established by the STPS (Article 153-B). However, when dealing with training for work, the LFT tends to use the concept of adiestramiento, which isnot a well-defined concept or set of activities. Interestingly, for the LFT, training is aimed at improving the skills of employees, without defining the concept and scope of skills. By law, the STPS is in charge of authorizing and registering every institution or school willing to provide training for work in Mexico (Article 153-C). Other actors, such as CONOCER, keep a similar registry, but only the STPS has the legal mandate to do so. The LFT establishes that every firm shall have Training Mixed Commissions (Comisiones Mixtas de Capacitación y Adiestramiento), formed by an equal number of workers and employers representatives, and that the Ministry of Labor may convene the formation of National Committees for Training per type of sector or activity, formed by employers, unions and workers (Articles 153 I-K). However, these Commissions are not related at all to the Management Committees promoted by CONOCER, and their goal is not clear de jure or de facto. 18

The LFT also regulates the National Service for Employment (SNE), whose administration belongs to the Ministry of Labor and whose mission is to link the supply with the demand of skilled labor (Article 537) by providing free information, guidance and intermediation services, as well as financial and training support. The SNE has 165 offices all over the country (according to STPS officials) and mainly assists low educated youth. The General Education Law (LGE) regulates the education provided by the State -at the federal, state and municipal level- their decentralized organizations, and private organizations with proper recognition or authorization (Article 1). The LGE establishes that compulsory education covers preschool, primary, lower and upper secondary school (since 2012), which means that academic education, not training, takes place throughout these academic levels. It also states that education shall contribute to the development of knowledge abilities, innovation and scientific attitudes, universal values, and positive attitudes towards work (Article 7), but it does not specify the types of abilities that the national education system should develop in Mexican students. In addition, the LGE grants to the Ministry of Education (SEP) exclusively the ability to set the content of education plans and programs, from preschool to secondary education; plan and program the national education system; regulate a national training and skills development system for primary and secondary school teachers; regulate and coordinate the registry of students, teachers, institutions and academic centers; and, among others, regulate a national testing system that allows for student transition between types of education (Article 12). However, it is not clear how this occurs in practice. Indeed, even though, since the early nineties, the Federal Government has undertaken important decentralization efforts in the education arena, the federal entities still have limited power, if any, to determine the content of their academic programs, which means that they cannot promote the formation of certain skills that are important for their regional development. The LGE considers, as well, the promotion of other types of education schemes, such as childhood development centers, education services for school dropouts, and distance learning systems (Article 33). Yet, most of these schemes are aimed at reducing educational lags with regards to the regular system, not at forming particular skills or competences. For example, according to the LGE, adult education is addressed to individuals aged 15 and over with no primary or secondary education, and supposed to provide certain type of training for work, although imprecise (Article 43). Article 45 does state that training for work shall promote the acquisition of knowledge, abilities or skills to perform a productive activity but it does not provides a definition for each concept. On the other hand, Article 47 establishes that the content of education plans shall include the acquisition of knowledge, abilities, capacities and skills depending upon the academic level. Thus the LGE regulates the many different education schemes that exist in the country, which are mostly intended to compensate for education inequalities in terms of access, not to provide individuals with a set of competences over their career lifespan. The LGE also regulates the process of skill certification regarding training programs (Article 45). However, the meaning of certification in the Law is not very rigorous, as it may refer to written documents that only certify attendance or educational attainment, not necessarily competences for work (Figure 10). Thus, education institutions may issue 19

certificates, diplomas, academic degrees, validated by SEP in accordance with education plans and programs, that do not necessarily mean something for the labor market in terms of education quality and performance ability. Currently, the Law expects SEP to set the norms and criteria for academic validation. Therefore, the Law does not directly consider CONOCER for this matter. However, the General Rules and Criteria for the integration of the National System of Competences define the rules for competence-based certification. Published in 2009, these Rules (Reglas CONOCER 2009) establish that CONOCER shall constitute a trusteeship aimed at developing the National System of Competences, according to the General Law of Education, Article 45 in particular, as well as the Normalized System of Labor Competences (Sistema Normalizado de Competencia Laboral, or SNCL) and the Labor Competence-Based Certification System (Sistema de Certificación de Competencias Laborales, or SCCL). Thus, this official document defines the concepts of competencebased certification, certificates, labor competences, and Management Committees, as well as other concepts. For example, a competence-based standard is a labor competence-based technical norm, applicable nationwide, that will constitute, in terms of results, a reference for the evaluation and certification of labor competences, and that will describe the set of knowledge, abilities, skills and attitudes mentioned in Article 45 of LGE. Finally, the Organic Law of the Federal Public Administration (LOAPF) establishes the goals, functions and powers of every Mexican Ministry involved in skills development. Article 38, for example, indicates that the Ministry of Education (SEP) is responsible for organizing, supervising, and developing preschool, primary, secondary, higher, professional normal, urban, rural, technical, industrial, commercial, and adult education, as well as providing academic validations. Likewise, Article 40 establishes that the Ministry of Labor (STPS) is in charge of fostering work productivity, promoting training development, and setting, operating and supervising the National Service of Employment (SNE). Finally, Article 34 lays down the competences of the Ministry of Economics (SE), which have to do mainly with international commerce and industrial policy. Interestingly, the LOAPF does not foresee any type of sectorial planning regarding skills development, in terms of linking the education sector to the needs of the productive sector. Still, other legal documents support the process of skills development in Mexico, in terms of quality in basic education. For example, the Partnership for Quality Education (Alianza por la Calidad de la Educación or simply Alianza), signed by the Federal Government and the Union of Education Workers (SNTE) in May 2008, provides a legal framework for transforming Mexico s education system. The Alianza considers the professionalization of teachers and education authorities, and the reform of contents, approaches and subjects in primary and secondary education, including learning English since preschool. One of the agreements reached by the Alianza has to do with competences certification, but mostly in terms of improving teaching and transparency. A crucial one is the Comprehensive Reform for Basic School (Reforma Integral de la Educación Básica, or simply RIEB), which is materialized in Agreement No. 592 (Acuerdo 592), an official document that reviews the organization of basic education in Mexico. Some of the actions related to RIEB include forming Advisory State Committees 20

(Coordinaciones Estatales de Asesoría y Seguimiento, or CEAS), evaluating the content of academic plans and textbooks in science and mathematics (a study conducted by New York University), or setting up skills standards for goal-oriented learning processes (following a proposal by the Institute of Education of the University of London). Above all, Acuerdo 592 manages to put an emphasis on skills development and provide a definition for competences, curriculum standards and expected learning: competences refer to response capacity and include abilities, knowledge, and values and attitudes; curriculum standards describe and assess academic performance; and expected learning has to do with students expected outcomes in terms of knowledge, abilities, and values. Yet, these concepts are difficult to implement in practice. Specifically, RIEB articulates academic contents and learning from preschool to lower secondary and integrates a competence-based approach. The main goal of RIEB is to form citizens from a set of five competences for life: (i) continuous learning; (ii) information management; (iii) situation management; (iv) social interaction; and (v) social life (Table 16). These competences translate into four academic fields for basic education, namely: (i) language and communication; (ii) mathematical reasoning; (iii) understanding of the natural world; and, (iv) personal development and social interaction (Table 15). These fields are based on knowledge, abilities, and values, or competences. The advantage of RIEB is that it recognizes the importance of preschool and the need to integrate and articulate the academic curricula of different education levels. In other words, thanks to RIEB, basic education has a single academic plan. Officially, the implementation of RIEB began in 2011, which means that the first generation of students with a competence-based formation will graduate in 2023 (Table 15). In addition, some legal documents support the process of skills development in uppermiddle education. For example, Agreement No. 444 (Acuerdo 444), signed in 2008, recognizing that high-school Mexican students need to acquire a series of competences for their personal development (not professional), establishes a set of competences that the education system has to provide in high school. These competences can be classified in generics, disciplinary and professional, but only the last category is specifically conceived to meet the demands of the labor market. Even so, professional competences are defined merely as an individual s ability to execute. On the other hand, Agreement No. 286 (Acuerdo 286), signed in 2000, defines the proceedings to grant official validity to the knowledge and abilities that individuals can acquire through different channels, including autodidactic. In particular, this document recognizes the accreditation of the set of knowledge equivalent to upper secondary, which grants the possibility to obtain a high school certificate. In particular, the Comprehensive Reform for Upper-Middle Education (Reforma Integral de la Educación Media Superior, or RIEMS), which consists of several inter-ministerial agreements such as Acuerdo 444, seeks to create a National Upper Secondary System (Sistema Nacional de Bachillerato, or SNB) by building a compentece-based common curriculum framework; defining and recognizing the supply of education services in upper secondary; professionalizing education services; and providing competence certification. The RIEMS highlights the advantages of a competence-based approach in education, particularly in terms of students ability to fully develop in different contexts during their 21

lifetime. On this matter, PROFORHCOM, which started in 2010 and is now in its second implementation phase, aims to support the implementation of RIEMS based on four key factors that are crucial for the development of a competence-based system: (i) the organization of curriculum for competence portability; (ii) the development of generic, disciplinary and professional competences; (iii) competence-based teacher training; and, (iv) the participation of the productive sector in the definition of competences. The coverage of PROFORHCOM is national, benefiting mostly upper-middle education students and workers in the most productive sectors of the Mexican economy. Specifically, PROFORHCOM seeks to improve the quality and pertinence of vocational education and training for work, and to consolidate the National System of Competences (NSC), highlighting the relevance of CONOCER for this matter. Yet, the missing link of RIEMS and PROFORHCOM is how to effectively link competence-based education with the productive sector, and how CONOCER can promote the development of NSC. On the other hand, the numerous proposals for labor reform barely include issues related to training and tend to focus on labor flexibility exclusively. While labor market characteristics and dynamics have undergone a full transformation worldwide, the current labor legislation in Mexico dates from 1970, a period in which Mexico s economically active population reached only 14 million people, and focuses on the contractual relationship between employers and workers. It neither addresses the problem of productivity, nor does it emphasize the need for proper training. For example, the LFT encourages system promotion based on seniority (escalafón ciego) instead of productivity, and ignores the notion of decent work provided by the International Organization of Labor (ILO), according to which workers shall receive continuous training to increase their productivity and wellbeing. None of the proposals for labor reform adopt a skill-based approach (STPS 2010 and 2011). Finally, while the 2007-2012 sectorial program for employment includes some goals related to skills development and mismatch, the sectorial program for education does not include any specific goal on this matter. The 2007-2012 National Development Plan (Plan Nacional de Desarrollo 2007-2012) includes strategic and sectorial programs for every Ministry, including SEP and STPS. The sectorial program for STPS intends to promote labor market conditions aimed at creating formal jobs and linking efficiently labor supply and demand. The corresponding indicator for this goal refers to the number of individuals that find employment at the SNE. Yet, the sectorial program for SEP does not consider any specific type of goal or indicator related to competences, as defined by RIEMS. Therefore, Mexico s legal framework for skills development consists of three main laws and several official documents. The main conclusions of the legal analysis are: o Legal discrepancies: The first legal discrepancy deals with the creation and purpose of training commissions: while the LFT promotes the creation of training commissions within firms, and training committees per economic sector, the General Rules that account for CONOCER s raison d être seek to encourage the creation of Management Committees aimed at developing competence-based standards. The problem is that these committees have nothing to do with the commissions and committees established by the LFT. Thus, the existing legal 22

framework seems to promote inefficiencies and duplicities. The second discrepancy is that, according to the LFT, employers must provide workers with training, while the NSC is based on the employers good will to form training committees. o Conceptual inconsistencies: Indeed, the LGE talks about knowledge, abilities, capacities and/or skills, sometimes mixing these concepts, without a clear definition for them, while the LFT does not consider a competence-based training at all. Similarly, the LGE focuses on the promotion of different education schemes aimed at reducing educational lags, not necessarily at developing skills. The RIEMS represents an important effort to transform the education system through a competence-based approach, but it does not clarify how it is going to achieve it. o Coordination deficiencies: Perhaps the most important legal constraint for the sector of skills development is the lack of coordination between the three main laws that support this sector. Indeed, the LOAPF sets the scope and limitations of the ministries involved in skills development, but it does not consider any type of intersectorial collaboration or articulation. In addition, while RIEB and RIEMS represent important efforts in terms of education quality and skills development, there is no coordination between the reforms, which means that what students learn during basic education is not necessarily developed in upper-middle education. Similarly, RIEB is not very well articulated at the state level, posing several challenges in terms of implementation. This section analyzed the different laws and documents that support SoSD. The next section explores the different meanings of skills and documents the different types of skills policies implemented in other countries. Skills and Skills Policy This section reviews the different meanings of skills according to the economic literature, as well as the different strategies in skills development implemented in other economies. In the economic literature, the concept of skills has a wide range of meanings, from capacities and abilities, to talent and competences, highlighting the multiplicity of human skills (Heckman 2008). Regardless of the shade of meaning, the concept of skills development has become fundamental for lifelong learning versus school completion. From a philosophical perspective, capabilities refer to fundamental freedoms, or an individual s capacity to lead the type of life he or she values, and that makes sense to value. For the literature on economic development, capabilities depend on five instrumental freedoms, namely political freedoms, economic facilities, social opportunities, transparency guarantees, and protective security, which complement and mutually reinforce each other, highlighting the interconnections between the expansion of individual capabilities and 23

economic development (Sen 1999). For example, education deprivation can also imply marginalization from economic activity or political participation. Yet, there is a wide debate on the set of capabilities that individuals are entitled to, considering that fundamental freedoms are not only related to income, but also to opportunities to lead a normal life (Sen 1999). Thus, the concept of capabilities poses a challenge in the sense that they cannot always be separated or ranked in order of priority. For the Organization of Economic Cooperation and Development (OECD), the concepts of skill and competence are interchangeably: skills are the bundle of knowledge, attributes and capacities that enables an individual to successfully and consistently perform an activity or task, whether broadly or narrowly conceived, and can be built upon and extended through learning (OECD 2011a). Several factors can influence the stock of skills, from people leaving initial education or re-entering the labor market, to retirement, migration and childbearing (OECD 2011a). For the OECD, skills development represents several advantages, such as higher labor productivity, higher wages, better technology adoption, more innovation, healthy lifestyles and wellbeing. That is why, as the organization suggests, any skill policy has to be designed within a framework that incorporates a short-term and a long-term perspective. For Manpower, in turn, skills are an important constituent of talent, in addition to knowledge, attitudes, values and competences. That is, for this workforce services provider company, talent has a cognitive and attitudinal approach that involves both knowing about and knowing how (Manpower 2008): Knowledge refers to the information that is processed and internalized to give meaning to specific situations. In turn, abilities have to do with the type of skills, either technical or soft, that can be acquired or developed through training and experience. Thus, skills are the ability to implement knowledge in certain contexts. Then, attitudes and values include good disposition and abstract beliefs about desirable goals that go beyond concrete behavior. Finally, competences refer to the set of personal characteristics that allow an individual to optimally execute his or her functions at the workplace. For Manpower, the advantage of this definition is that competences can be observable and measureable. Therefore, competences are superior skills that involve an attitudinal component. Essentially, this innovative definition seeks to meet the criteria imposed by new types of jobs that require certain characteristics such as motivation and leadership. This competence-based approach is particularly useful since, in the productive process, individuals may perform different types of activities that require different types of skills, from routine manual, non-routine manual, and routine cognitive to non-routine analytical and non-routine interactive work (Manpower 2008). While routine activities involve memorizing and accumulating data, repeating actions, traditional learning, and hierarchy and obedience, analytical and interpretative activities require reasoning, spontaneity, goaloriented assessment and evaluation, autonomy and interactive learning. Thus, according to Manpower, this new approach implies that (i) governments will need to provide the necessary infrastructure to facilitate an effective connection between new types of work activities and competitiveness; (ii) education institutions will have to replace traditional contents, tools and learning models for a new skill formation process; (iii) employers will have to approach and open up to learning institutions; and, (iv) individuals will have to take 24

on an effective commitment towards continuous learning, responsibility and selfimprovement. Similarly, for SEP, skills are an important constituent of competences, as stated in RIEB and RIEMS. Indeed, for SEP, skills represent the ability to implement knowledge in specific contexts, and competences include knowledge, skills and values. In particular, for CONOCER, competences are the set of knowledge, abilities, skills and attitudes that are necessary to carry out different work activities (Reglas CONOCER). Interestingly, according to Mexico s National System of Competences (SNC), a labor competence refers to the set of knowledge, abilities, skills and attitudes defined by Article 45 of LGE that an individual requires to perform effectively at the workplace (Reglas CONOCER). Nonetheless, as pointed out in the previous section, LGE does not clarify the distinction between abilities, skills and/or competences, frequently mixing these notions. On the other hand, for SEP, talent is defined as the capacity to execute an activity above the average or expected level (Table 16). Therefore, talent means to excel in certain activity, which is why SEP has special programs for talented children, in addition to competence-based curriculum. Yet, for STPS, skills are not clearly related to competences, as its mission is to focus on employment promotion, conciliation, and regulation. The lack of coordination with SEP and the business sector in terms of training and certification may contribute to this unclear and divergent vision of skills. As previously stated, not even the different labor reform proposals promote a competence-based approach for training. In general terms, skills provide a more practical and goal-oriented concept than pure educational attainment. Indeed, new ways of learning and teaching are emerging every day in response to a constantly changing world; however, what really matters is the way that skills, whether they are old or new, are learned and practiced in everyday life (Trilling and Fadel 2009). Therefore, defining the type of skills that a particular society has to develop involves planning and understanding labor market needs. According to the specialized literature in the field of learning, the 21 st century skills can be placed in three useful categories: (i) learning and innovation skills, which refer to critical thinking and problem solving, communications and collaboration, as well as creativity and innovation; (ii) digital literacy skills, or information, media and ICT literacy; and, (iii) career and life skills, which have to do with flexibility and adaptability, initiative and self-direction, leadership and responsibility, among others (Trilling and Fadel 2009). In this sense, a skills mismatch refers to the inability of skills development systems to meet effectively and immediately the urgent needs of individuals and enterprises, both currently and in the future (OECD 2011a). That is why understanding the needs of the labor force is essential, both from the perspective of the supply side and the demand side of the labor market, which attribute the mismatch to education and training inadequacies, and the employers inability to identify and correct for mismatch (OECD 2011b). However, these approaches are not necessarily mutually exclusive. Several factors may explain the development of a skills mismatch, such as temporary circumstances that eventually lead to an adjustment of the production process; technological change; occupational mobility, particularly among younger and more highly educated workers; poor signaling and 25

imperfect information on the likely performance of potential employees; labor market segmentation; and, barriers against mobility between segments (OECD 2011b). The concept of skills mismatch can also be applied in four areas: (i) between the demand and supply of profiles with knowledge, abilities, attitudes and concrete values; (ii) between individuals expectations and opportunities offered by employers; (iii) between skills development strategies and employers needs in terms of development and training; and, (iv) between a country s incentives for production, research, development, education and training, and the permanent formation of talent (Manpower 2008). For this reason, the OECD encourages using the concept of skills mismatch, rather than education mismatch. The main difference is education mismatch deals mainly with educational attainment and years of schooling, which are easy and cheaper to measure, while skills mismatch includes the possibility for skill gain or loss after the highest education level attained as well as quality issues across similar programs and qualifications (OECD 2011b). Indeed, on the one hand, qualifications are not always good indicators of skills, and, on the other, employees may engage in adult education or training at different points in life, increasing their own skills stock, even if they completed the highest educational level (OECD 2011b). Thus, the skills mismatch is a more solid concept to understand the dynamics around skill gain or loss on the supply side, and the changing content of jobs on the demand side (OECD 2011b). Although measuring the skills mismatch is not a simple task, particularly when considering socio-emotional skills, some studies suggest that there is a strong association between high-quality teachers and socioemotional abilities among poor students (IADB 2012). (Cognitive) skills development has a direct effect on economic growth, in contrast to educational attainment, emphasizing the importance of knowing how. The literature suggests that developing economies, particularly in Latin America, such as Mexico, have had reasonable school attainment, measured in number of years of schooling, but very poor student achievement in international tests, indicating that what really matters is not the number of years students spend in school but the quality of educational and academic contents, which is why cognitive skills are extremely important for long-term growth (Hanushek and Woessmann 2009). In this context, PISA aims to evaluate education systems worldwide by testing not only the knowledge of 15-year-old students from participating countries, but also their ability to use knowledge for problem resolution. Latin American students tend to perform poorly in standardized tests because they are unable to translate knowledge into problem resolution. Again, for the Mexican case, one of the most frequent results of the different interviews carried out with important actors from the sector of skills development (Table 16) is that Mexican workers lack problem solving skills. Thus, in addition to quality education, lifelong learning becomes crucial for skills development. Indeed, lifelong learning refers to all forms of learning, whether formal, non-formal or informal, from childhood to retirement, that take place at different learning sites, where learning represents the constructive conversion of information and experience into knowledge, insights and skills (Bund-Länder Commission 2004). Therefore, the economic literature remarks that learning no longer takes place in school exclusively, but during the lifetime of individuals, recognizing that (Bund-Länder Commission 2004): 26

o In childhood, learning is particularly intensive, laying the basis for lifelong learning, education opportunities and chances to succeed in life. In this period, skills development policies must target parents as well. o During adolescence, skills development is particularly important and takes place mostly in schools, which is why lifelong learning needs to focus on schools during this age cohort. o In young adults, education and training are affected by labor market entry, which is why lifelong learning strategies must focus on networking and different types of learning, such as informal learning, self-directed learning, and skills development. In this context, networking means coordination with employers. o In adults, lifelong learning is constantly influenced by career change, breaks and interruptions, highlighting the relevance of self-directed learning, modularization, and flexibility. o For older adults, self-directed learning may contribute to compensate for skills deficits, as preserving skills is more important than developing new ones. Thus, a key question is when and where to develop different types of skills, depending on the age range and degree of marginalization. For Mexicanos Primero, an inherent function of good quality education systems is to compensate for the lack of skills development within the household. That is why the sector of skills development in general and the education system in particular need to offer different types of schemes, depending on age groups, preferences, employment condition, and based on a competence-based approach that is able to meet expected results. In other words, a system that provides certitude for the labor market in terms of specific, measurable and demonstrable standards and results. For other relevant actors in education, skills development in general, policy making, or business activity (Table 15): o Socio-emotional abilities, values and attitudes, such as honesty, character, leadership or self-confidence, need to be promoted within the household and in school, from preschool, conforming to specific results-based criteria. o Cognitive or generic skills must be formed and developed in primary school so that students can develop and integrate constant learning into their lives and work activities. Indeed, primary education needs to set the basis for mathematical and reasoned thinking, comprehensive reading, and effective writing. Then, secondary education can reinforce these skills. o Technical and work skills can be developed throughout formal education from a competence-based approach, but they are mostly promoted in the work place. These refer to specific skills that allow workers to perform specific duties according to the employer s needs. Without proper cognitive or generic 27

skills, developing work skills at the work place may be insufficient. However, alternative schemes can also train workers to either compensate for their lack of skills or improve their stock of skills to increase their productivity. o Business skills are currently absent in educational contents in Mexico, which is why formal education, particularly at the primary level, needs to incorporate an innovation and entrepreneurial approach in order to identify and encourage potential entrepreneurs. Mexico faces a cultural problem in the sense that entrepreneurs are conceived as wealth accumulators that oppress the poor, not as employment generators. o The development of skills for low-income and marginalized workers belongs to a comprehensive human capital policy aimed at forming new generations of workers and promoting employment access and social inclusion for disadvantaged individuals. Typically, workers from low-income backgrounds lack the most basic cognitive and generic skills, which prevent them from finding and maintaining employment, exacerbating their economic condition. o The development of skills for individuals with disabilities needs to recognize that physical disabilities do not necessarily imply cognitive or intellectual disabilities, which means that individuals with physical disabilities may possess superior skills that may be wasted without the government support to promote their employment. Several types of policies and initiatives, from school completion to coordination, may effectively promote skills development, using a remedial or preventing approach. (Table 61). These measures may focus on school completion, educational attainment, education quality, employment services, job matching, and entrepreneurship. On this matter, the conceptual framework for skills development proposed by the World Bank, named STEP Skills Toward Employment and Productivity- may help policymakers to design comprehensive and adaptive systems to build skills, pulling together five interlinked steps (Figure 19) for productivity and economic growth (World Bank 2010). The following measures are based on the STEP framework or similar references: o Early childhood development programs: Improving the early environments of disadvantaged children may change their adult outcomes (Heckman 2008), which is why focusing on nutrition, stimulation, and basic cognitive skills can have very high payoffs in the future (World Bank 2010). Examples of this type of interventions include the Perry Program and the Abecederian Program (Heckman 2008). Yet, ECD programs need to be part of an inclusive lifelong learning system (World Bank 2011) that coordinates every education level since initial education. o Education quality: Educational attainment does not guarantee learning (Hanushek and Woessmann 2009), which is why education systems that are based on clear learning standards, administrative autonomy, transparency, and teacher training can ensure that all students learn (World Bank 2010). 28

Developing countries such as Mexico have conducted important efforts aimed at expanding coverage, sometimes at the expense of education quality o Conditional cash transfers for school completion: Household human capital investment decisions may be heavily influenced by gender issues and income levels, which is why conditional cash transfers can promote school completion among disadvantaged youth, particularly at the upper secondary level, such as the Bolsa Familia program in Brazil, and the Avancemos program in Costa Rica (ILO 2010). In Mexico, since 2003, Jóvenes con Oportunidades, a constituent scheme of Oportunidades, has benefited over 790 thousand individuals from the first two income deciles who managed to complete upper secondary school before the age of 22, in order to avoid school abandonment during the transition from lower to upper secondary. Before 2009, this scheme offered four official alternatives and a fifth unofficial one: (i) the possibility to continue studying and access higher education; (ii) to start a business; (iii) to buy a place to live; (iv) to buy health insurance; or, (v) to save the money for other purposes. While the student completes high school, his or her mother continued receiving economic support from Oportunidades. At the end of his or her studies, the student received the amount of $4,500 Mexican pesos in total, depending on the alternative he or she had chosen. Since 2009, this scheme no longer offers alternatives and simply delivers a final transfer of approximately $4,400 Mexican pesos per student. Basically, every youth from a family that receives Oportunidades is eligible for this scheme. o Technical and vocational education: Technical and vocational education represent an excellent alternative to promote pre-employment skills development (World Bank 2010), in addition to academic education. Technical and vocational education programs tend to be highly diverse in terms of their entry requirements and contents (World Bank 2010), but also to the future possibilities they offer, including access to higher education. An interesting example is Singapore s Institute of Technical Education (ITE), an integrated system for pre-employment training and post-secondary education, which depends on the Ministry of Education and provides career and technical education, contributing to the development of national occupational skills certification standards for competitiveness (ITE). o Youth training and employment: Youth unemployment is usually higher than general unemployment, which is why government intervention can help young workers to find and maintain employment, particularly during economic crisis (ILO 2011b). For example, the Plan 250mil program in Colombia was designed in 2009 to provide 250 thousand individuals aged 16 to 26, unemployed, undereducated and in poverty conditions, with training for work and employment (ILO 2010). Similarly, in Argentina, the program named Jóvenes con Más y Mejor Trabajo was created in 2008 in order to promote labor and social inclusion among individuals aged 18 to 24, with a series of integrated actions, such as vocational workshops and courses, competence-based certification, and internships (ILO 2010). 29

o Educational technology: Technology-based education can actively contribute to learning by reinforcing curricula, enhancing communication and bridging gaps in access to quality education (IADB 2011). South Korea s initiative to replace traditional textbooks with interactive digital textbooks, or tablets, offers a great example of an integrated intervention based on teacher training and rigorous certification processes to control for the quality of e-learning programs (IADB 2011). Yet, it is worth mentioning that the Korean incorporation of ICTs in education is the result of government commitment and coordination (IADB 2012). o Entrepreneurship and innovation: Innovation requires forming entrepreneurial skills and connecting people and ideas, which is why transforming education contents and promoting the development of innovation spaces may contribute to boost creativity, entrepreneurship and economic growth (World Bank 2010). An interesting example is the Chilean government initiative to support groups of researchers, laboratories, and private industries to undertake collaborative research in economic domains with very high potential (World Bank 2010). Yet, this type of initiative requires, again, plenty of coordination, organization, and government commitment. o Information services: Despite its efforts to invest effectively in skills development, an economy can still face a skills mismatch due to information failures, which is why an effective measure to improve the matching of skills and jobs is the provision of employment services, such as intermediation and counseling, vocational workshops, and ICTs for information exploitation (World Bank 2010). For instance, in Argentina, since 2005, under the support of the Ministry of Labor Employment and Social Security, the Municipal Employment Bureaus, or Oficinas Municipales de Empleo, facilitate the interaction between employment policy and labor market opportunities, benefiting over one million people (ILO 2010). o Skills certification: Skills certification, particularly competence-based certification, is an important incentive for skills development and match. For this reason, several Latin American countries, such as Argentina, Brazil, and Chile, in addition to Mexico, have opted for the implementation of programs or agencies aimed at promoting standard-based skills certification, particularly in sectors with high economic potential (Kappaz and Siegel 2002). Another interesting example is the General Education Development (GED) program, implemented in 1942 in the United States, which provides school dropouts with official certificates that are equivalent to high school diplomas (Heckman 2008). Currently, approximately 14 percent of total high school certificates in the United States are issued through this program (Heckman 2008). o Private initiatives: In addition to national skills policies, several private initiatives promote skills development, particularly among disadvantaged 30

children, such as the Khan Academy, a non-profit educational organization that provides on-line high quality education through micro lessons in several subjects, or KIPP Public Charter Schools (i.e. Knowledge is Power Program), which represent a national network of free, open-enrollment, collegepreparatory public schools dedicated to prepare students in underserved communities for success in college and in life, focusing on leadership, commitment and results. These examples provide an interesting approach on the different ways to promote skills, particularly in low-income environments. Moreover, some countries have opted for skills development as a national economic strategy, based mainly on political commitment, sectorial coordination, and forecasting. The International Labor Organization (ILO) states that adequate education and skills can improve employability, productivity, and economic growth, at all levels of development, and, precisely for this reason, countries need to design and implement effective national policies, plans or strategies for skills development (ILO 2011a). According to ILO, both developed and developing economies face a series of challenges for skills development, such as limited involvement from social partners, poor quality and relevance of training, limited access to training opportunities, and weak system coordination, which is why the implementation of a national skills development policy may bring coherence, facilitate coordination and planning, adjust institutional arrangements, and encourage political commitment (ILO 2011a). Ireland, Singapore, South Korea, and the United Kingdom constitute a range of examples on the definition and implementation of a national skills strategy (Table 56). For example, Ireland s national strategy for skills development is based on a network of interlinked organizations and an institutional framework that enables effective policy coordination between skills, industrial, labor market, and research policies (ILO 2011a). Indeed, the Expert Group on Future Skills Needs (EGFSN), set up in 1997 by the government, and formed by representatives of government departments, social partners, scientific and research institutions, as well as education and training authorities, is in charge of monitoring every economic sector to identify and anticipate skills shortages, by working closely with the National Training and Employment Authority (FAS) and the different ministries related to skills development, including education and enterprise development, trade and employment (Figure 20). The interesting aspect of this strategy is that the government recognized the need for state intervention in education and training, particularly for the low skilled and marginalized, and set specific targets to move from a no policy change scenario to a skills balance for the new knowledge economy (EGFSN 2007). The key for Ireland s successful skills strategy consists of effective coordination and legal framework, constant and timely distribution of information, as well as government commitment. Singapore s national strategy is also based on tight coordination between skills and economic growth strategies, focusing on intermediate skills (ILO 2011a). As in the Irish case, several ministries participate in the skills development process, particularly the Ministry of Manpower, the Ministry of Education, and the Ministry of Trade and Industry, through the Economic Development Board (EDB), its main operational unit (OECD 2009a). The EDB is in charge of promoting synergies between economic development and 31

skills formation and thus identifying new key clusters of industry for the development of a knowledge economy (OECD 2009a). More importantly, Singapore s strategy follows a multi-faceted and top-down logic, with EDB guiding information production and distribution, the Ministry of Manpower developing and updating a skills map to anticipate potential shortages, and the Singapore Workforce Development Agency (WDA) leading the formation of skills through three important programs: skills conversion program, skills upgrading, and enhanced employability of lower skilled (OECD 2009a). Universities are also required to participate in this dynamic by providing information about the employment and wages of their graduates (OECD 2009a). It is worth noting that Singapore s strategy focuses on the role of the workplace as key driver of skills development (OECD 2009a), and on the role of the education system for the development of intermediate skills (ILO 2011a), which suggests that without a solid education base, skills strategies may end up being ineffective. In sum, Singapore s strategy consists of government commitment and coordination, skills forecasting, and constant information distribution. South Korea s upgrading of skills as national strategy deals mainly with the promotion of high quality education, the adoption of new technologies, and the coordination of industrial and human capital policies. South Korea is the most cited reference in terms of educational coverage and attainment, as only in 1960 it was considered much less developed than most Latin American countries, including Mexico (IADB 2011). Indeed, education has been at the center of South Korea s long-term development strategy and closely linked to the needs of the labor market, taking into account the importance of aligning priorities and the role of technology for the development of 21 st century knowledge society (IADB 2011). The core of this education approach lies in teacher training, particularly on ICTs to meet the needs of technology-based instruction, certification process to control for the quality of learning contents, and information systems to guide the strategy (IADB 2011). In addition, the private sector has played a major role in skills development, thanks to the government support in the form of tax exemptions, subsidies and loans (CEI 2010). Interestingly, it is the Ministry of Education who is in charge of overseeing and coordinating all human resource development, providing the government with a leading role in the coordination of skills development, but making sure to form social partnerships to meet the needs of the industrial sector (CEI 2010). In sum, the South Korean model focuses on the combination of general education and in-plan training as the fastest channel to improve skills, not necessarily in vocational education, therefore providing interesting policy implications for other countries (CEI 2010). The United Kingdom centered its national strategy for skills development on a social partnership for policy monitoring. The UK Commission for Employment and Skills (UKCES), formed by representatives of small and large enterprises, trade unions and the voluntary sector, is the public body in charge of raising skills levels to help boost entrepreneurial activity, create more jobs, and encourage economic growth (ILO 2011a, and UKCES). Set up in 2008, UKCES monitors the performance of the skills system, from clear achievement targets, significant budget allocations, strong collaboration, regular meetings, and constant policy adjustments (ILO 2011a). The partnership working around UKCES consist of collaborating with partners across the UK to develop an authoritative evidence base, to pool expertise and to maximize the influence of research and labor market intelligence over policy and practice, favoring strong links with researchers, policy makers 32

and practitioners (UKCES). The key take-away of the British experience is that setting clear and strategic goals contributes to sharing and updating information, monitoring and adjusting policy, and prioritizing outcomes. The international experience offers a wide range of policies and strategies for skills development, from strong government intervention to social partnerships, from intersectorial coordination to centralized leadership. Yet, the International Labor Organization proposes a series of principles for the design and consolidation of national skills policies and strategies (ILO 2011a), such as: o Promoting shared responsibilities, through public-private partnerships, the strengthening of workplace learning, and the employment of a sector-based approach. o Improving the matching of skills, through integrating strategies, skills forecast, and employment services. o Integrating skills in broader policies, through coordination with employment and productivity policy. o Providing equal opportunities, by improving information on disadvantaged groups, and adjusting training programs. o Encouraging social dialogue, by involving key stakeholders in the national strategy, and promoting research, consultation and leadership. o Focusing on monitoring and evaluation mechanisms, considering that it takes time for a new policy to produce the expected results. This section reviewed the different meanings of skills in the economic literature, and described the most important interventions aimed at developing skills and reducing the skills mismatch. Finally, the next section concludes and provides public policy recommendations for the Mexican case. Conclusions & Policy Recommendations This section concludes and provides policy recommendations for Mexico. The main conclusion of the institutional and organizational analysis of the sector of skills development is that Mexico currently faces: Poor education quality, measured in terms of school completion, particularly in uppermiddle education, teacher training, performance on international standardized tests, and educational contents, plans and programs, which tend to focus on memorizing. 33

Productivity stagnation, particularly in the tertiary sector, which accounts for 61 percent of the total labor force, partly due to poor skills development, labor market rigidities, and barriers to hiring and layoff. Demographic challenges, in terms of the proportion of the population aged 14 to 64, which will reach its maximum in 2020, the growth rate of the younger cohorts, the proportion of idle youth, women in particular, and the increase in life expectancy, elements that entail further investment in skills development. Education challenges in terms of the large number of individuals who are already excluded from education and training opportunities, and the new generations that join the labor force every year and the education potential that they represent. Poor access to training opportunities, mostly due to financial reasons, lack of information, misguided perceptions, weak government participation, ineffective public expenditure patterns, or firms inability to anticipate their requirements in terms of skills, SMEs in particular. High opportunity costs in education and training, measured in terms of the small income gains from completing upper-secondary school versus completing lower-secondary school; the misalignment between education or training programs and labor market s needs; the availability of inflexible and irrelevant training programs and schemes; or the lack of financing opportunities for both employers and employees. Informality and invisibility of the training sector, which primarily occurs in firms through on the job training, which is not monitored, measured, or certified. Poor entrepreneurial culture, considering the general perception that only rich and powerful businessmen are entrepreneurs, and the lack of pedagogical contents that promote entrepreneurial abilities and attitudes among children and adolescents. Little consensus on the definition and scope of skills, in the organizational and legal sphere, ranging from abilities and capacities to competences and talent, but also on the concept of training and its implications. Organization challenges, at the sectorial level, both within organizations and between organizations, with several organizations performing the same role; a single organization dealing with many goals, from regulation and service-delivery to financing and governance; or, too many organizations performing multiple activities with unclear goals. Information and coordination failures, both within organizations and between organizations, taking into account the lack of consensus on what skill mean; the mismatch between the information obtained and produced by the government on labor market trends and the needs and dynamics of the business sector; and the challenges to align the different government agencies involved in skills development and achieve concrete results. 34

Communication failures, both within and between organizations, particularly between the government and the business sector, mainly due to different work cultures and attitudes, especially in medium-level positions, but also to widespread distrust and an tendency to work separately. Legal discrepancies, between the most important laws, regulations and agreements that articulate the sector of skills development, which promote duplicities, inefficiencies, and conceptual inconsistencies, jeopardizing the coherence of education and training policy. Poor monitoring, both internal and external, in terms of skills development, teacher training, and certification, and thus difficulties to achieved the established objectives and produce the expected results. Misaligned incentives, considering the preferences of the education sector for a rather academic approach and those of the business sector for a more practical formation that includes socio-emotional abilities, as well as the political interests involved in the sector of skills development. Lack of leadership in terms of defining strategies and priorities, organizing actors, establishing specific goals, reconciling the business sector and the government, and mostly defining and pursuing a national development strategy based on skills development. Weak political commitment to join the global knowledge society due to the different interests involved and the organizational challenges of this sector. Thus, the analysis concludes that Mexico is neither properly nor sufficiently investing in skills development and that the government needs to perform a more proactive and leading role for this matter. Considering that a large proportion of the labor force has low education levels, that new generations join labor markets every year, and that firms face difficulties to anticipate their required skills, the recommendations may be classified as remedial and strategic: Remedial Proposals The fact that Mexican workers tend to have low levels of skills, either cognitive or attitudinal, does not mean that they cannot be rehabilitated and reintegrated into the labor market. An interesting approach, provided by Mexicanos Primero, consists of thinking about integrating people with physical disabilities into society: if a person does not have legs, it does not mean she cannot move; it only means that she needs additional support and different methods to move, recognizing that she can still actively participate in society. Therefore, the question that policy makers need to address is how to integrate or reintegrate low-skilled individuals into the labor market? Generate detailed information on idle youth and school abandonment: Create surveys and databases on the characteristics, dynamic, and causes of this phenomenon, and monitor its trends. 35

Develop remedial training programs based on competences: In collaboration with the business sector, establish a series of expected results in terms of skills and develop training contents according to these goals. The objective is not to graduate more individuals from high school, but rather to provide them with specific skills for work. These programs may also be accompanied by a system of apprenticeships. Also, provide skills conversion programs that target workers who have been or may be displaced due to economic restructuring (OECD 2009a). Provide flexible and affordable training schemes: Through short length programs with result-oriented contents, and government financing, reorganize training schemes, such as the ones provided by INEA and CONALEP, in terms of continuous enrollment and expected results for the labor market. It is not only a matter of spending more but also about spending better. Focus on youth training: Considering the proportion of idle youth in Mexico and the lack of opportunities for this population group, provide specific training or workshops for individuals aged between 16 and 18, who typically lack socio-emotional and entrepreneurial abilities, and experience. An interesting model is the one provided by Inroads, which focuses on low-income students. Also, institutionalize and strengthen a system of apprenticeships. Realign incentives for firms: Following the Korean example, provide financial support for firms in the form of tax deductions or loans, in order to promote on-the-job training and internships. Improve information availability and services: Strengthen the role of SNE and link it to the business sector by improving the information it contains and provides. Since, technology, social networks, and the Internet play an important role in information dissemination, this measure should not necessarily represent large further expenditure. Also, obtain information from public and private universities, and training schemes and centers, on the percentage of graduates in employment and average wages per type of career and studies. These measures are relatively inexpensive and easy to implement in the short run. Strategic Proposals In addition to implementing remedial measures, Mexico needs to think carefully about its long-terms goals in terms of education, skills, productivity, competitiveness and development, and thus to design a national strategy for skills development. Therefore the key question for policy makers is how to effectively foster a national skills development strategy? Recognize the need for government intervention: Following the Irish example, the Mexican government needs to recognize that workers and firms do not always participate in education and training, and thus the need to move from a no policy 36

change scenario to the new knowledge based economy (EGFSN 2007), by taking on a leading and proactive role. Every year that Mexico hesitates about this transition represents multiple human resources wasted. Still, recognizing the need for government intervention also requires regaining governance in the education sector, at the expense of political interests. The main goal is to generate close synergy between economic development and skills formation (OECD 2009a). Reach consensus on the definition and implications of skills and skills policy, which requires establishing a common terminology and language in the field of skills and skills policies for comparative analysis and policy evaluation (OECD 2011), and, in the Mexican case, in particular, reviewing the legal framework for skills development. Designate or create a leading and autonomous agency: Currently, SEP, STPS and CONOCER, as a component body of SEP, participate in the sector of skills development. Since too many actors have a saying in education and training, in uncoordinated ways, a single agency needs to take on the leadership and the responsibility of conducting, reorganizing, transforming, promoting and monitoring skills policy. CONOCER represents an interesting effort in terms of normalizing and certifying competence-based standards but has been subject to organizational challenges, budget issues, low commitment, and legal constraints, getting lost in politics and administrative changes. The proposal is to create a new and autonomous agency, that reports to the Presidency, focuses on the promotion of skills development at the national level, involves all relevant stakeholders, reorganizes the regulation and provision of training, concentrates and produces information and registries on skills and employment trends, conducts and monitors the skills development strategy, and takes on coordination, taking into account the needs of the business sector and Mexico s strategic economic sectors. This proposal involves modifying the legal framework, reaching consensus on the definition of skills, and reassessing the functions of the different ministries and public agencies involved. Generate modern information sources, on current and anticipated skills shortages, labor market trends and wages, per type of career and sector, at the local, regional, and national level, for the business sector, the government, and current and future workers. An interesting reference is Korea s Education and Research Information Service (KERIS), which focuses on the development, research and proposal of education and training policies, from an ICT approach (IADB 2011). The recommendation is to link the existing National Employment Service (SNE) to the new agency to ensure more effective coordination with the business sector. In addition, create and provide information on skills requirements and recruiting protocols, especially for SMEs. This information can be easily provided on line. Currently, large firms are more successful at anticipating their skills needs and human resources protocols, but SMEs have very little guidance or support. Set specific indicators and targets: An a-priori condition for the development of a national skills strategy is that the country knows where to go and what goals to achieve. Establishing indicators enables the government, or the corresponding agency, to coordinate efforts to achieve specific and measurable results, and monitor the 37

intermediate process. The OECD (2012) proposes defining a series of key questions and creating the corresponding indicators, such as: what is the level and distribution of skills in the population; how is the educational attainment of the population likely to evolve in the future; what are the changes in terms of sectorial composition and skills demand in the economy; what are the specific skills shortages/gaps in specific sectors; how are costs related to skills development shared; what is the percentage of the population at risk ; what is the incidence and composition of part-time employment; what are the main reasons for part-time work and inactivity across groups; or how many workers have competence-based certification. Align these targets with strategic sectors: Mexico has managed to identify strategic development sectors, at the regional and national level, such as medical tourism, aeronautical industry, automobile industry, and electrical appliances production (BCG 2011). However, the education sector is not aligned to the current and future needs of these sectors, jeopardizing their development potential and economic impact. Creating information sources and building indicators that take into account the needs of the industry and the business sector in general can contribute to efficient resource allocation. This measure involves readdressing the role of SE in terms of sectorial planning and collaboration. Adopt a lifelong learning culture, considering the increase in life expectancy, which requires fully transforming the education sector, redefining educational contents, promoting the ability to learn and analyze in different settings, ensuring a fair start for disadvantaged children through the consolidation of ECD programs, and expanding the availability of training programs and financing options at latter stages in life. A key question is how to adapt the educational component of the Oportunidades program to this lifelong learning culture and skills strategy. Promote quality of VET, by transforming the availability and quality of current training programs, promoting flexibility and portability within and between schemes, improving the quality of vocational education, and expanding access at different stages during the work life. In this context, it is crucial to integrate consultation between firms and vocational education authorities to consolidate the system (OECD 2009b). A crucial actor in this transition is the Under Ministry for Upper-Middle Education, which is currently responsible for the provision and regulation of academic and vocational education in upper secondary. The RIEMS represents an important effort to define a competence-based framework for education and training but it has not managed to reorganize the different educational schemes provided at this level. Specifically, financing for training should be based on entry and exit enrollment, particularly in CONALEP. Finally, the proposal also includes dropping STPS s provision of training services, and instead strengthen its regulatory, certification (of worker competences), and accreditation (of training programs/institutions) roles. Provide financial support for school completion and training: Following the trend of other Latin American countries, and considering that school abandonment mostly takes place in 10 th grade, the government needs to expand access to conditional cash transfers 38

for upper-secondary school completion, and scholarships or financial aid for higher education. Materialize and consolidate teacher training: Any recommendation to improve and consolidate the sector of skills development has to include proposals on initial and continuous teacher training. As long as Mexico does not invest in teacher training programs, any effort to transform education contents will be ineffective. South Korea, for example, centered its national skills strategy on teacher training, focusing on ICTs and labor market needs (IADB 2011). Mexico could begin by forming new generation of teachers, and thus transforming teacher colleges. Focus on coordination: Once the government knows where to go and what results to achieve, the core of the national strategy for skills development needs to be outcomebased coordination, and consequently monitoring. The different examples analyzed in the previous section provide a single conclusion: the success of national strategies depends on sectorial coordination, whether promoted by the government or social partnerships. The implementation of a new agency can increase and improve coordination between stakeholders, from the private sector and the government, depending upon its institutional framework. Improve communication with the business sector: The main difference between education policy and skills strategy is the link between education and labor markets, and thus the involvement of the business sector. Improving communication with the business sector requires above all political commitment, consistency, and continuity, and thus defining specific functions and protocols for this matter. According to the different interviews held, communication needs to begin with high-ranking officials, in order to avoid cultural barriers and adverse attitudes towards change. Fight apathy: Mexico lags behind in the transition to a knowledge-based society, mainly due to lack of political commitment and interest. Basically, stakeholders are waiting for others to act, but no one is willing to take the lead. A possible way to unleash collaboration and chain reactions is to begin with the implementation, monitoring, and evaluation of a pilot skills project or policy in a specific field or sector with clear goals and expected results. Once this policy manages to create interest and attract attention, propelling the national strategy will be much easier. The main message is to raise the opportunity cost of the status quo, which can only be done by getting the system moving. Short Term Recommendations Based on the previous proposals, Mexico should focus on the following actions in the short run: Reach consensus on the definition of skills and competences, which requires the participation of several stakeholders, such as SEP, STPS, and the productive sector. This will allow setting key objectives and expectations in terms of skills development. 39

Both RIEB and RIEMS include a competence-based approach but the legal framework still lags behind. Modify the legal framework, in order to (i) foster coordination and collaboration between SEP, STPS and SE, and (ii) establish a common terminology on skills and competences. The existing institutional arrangements deal with different definitions of skills and do not consider inter-ministerial collaboration. A key measure is to define the role of SE in the national skills strategy. Promote coordination and coherence between RIEB and RIEMS, in terms of contents and expected results. Although both reforms include a competence-based approach, they are not currently articulated, which may jeopardize student formation. This means coordinating basic education with upper middle education in terms of the type of graduate profile that the education system wants to develop. Set key indicators and targets on skills development for the medium and long run, in order to align efforts, achieve specific and measurable results, and monitor progress and delays. This data should be aligned to labor market needs, and regional and national development goals. In particular, following the strategy proposed by the OECD (2012), developing detailed information sources on idle youth and school abandonment is very useful for the design of appropriate public policy for providing the youth with education and employment opportunities. However, setting indicators for the long run will make sense if the actors responsible for skills development, such as SEP, STPS and in different ways SE, collaborate and coordinate their objectives. Improve information services on labor markets and education returns, such that individuals have a better understanding of the expectations they face in function of their level and type of studies. For example, SEP and universities could publicly provide information on the number of graduates per type of modality, their employment condition, and their level of income. Similarly, the SNE should improve the format and contents of the information on careers, wages, and labor market needs. Currently, the agencies in charge of developing information services have conducted important efforts in this sense but they lack coordination, particularly with the business sector. Improve the quality of vocational modalities by linking their budget to specific goals and indicators, such as the number of graduates per semester and program and their employment condition, in order to develop the necessary incentives to invest in human resources in these modalities. Adjusting their annual budget to these objectives will entail consequences for them in terms of efficiency and management. Improve and expand remedial education, not only for the youth but also for loweducated adults, by adjusting the mission of INEA to a competence-based approach. Currently, INEA needs more resources to provide more individuals with education opportunities, but it also needs to reset its goals and methodology to the objectives of RIEB and RIEMS. In particular, RIEMS does not include proposals to attract and reinstate recent school dropouts. 40

Provide financial support to prevent school abandonment, particularly in upper secondary, which is the most affected level, but also in higher education. This means expanding the coverage of CCTs in upper secondary and expanding financial aid for post-secondary education in accredited institutions, considering that only approximately 13 percent of Mexicans complete higher education. Focus on teacher training and development, to boost their skills throughout their working lives. Considering that the average age of teachers in Mexico is 50 years, this means promoting continuous training but also redefining the plans and contents of teacher colleges, following a competence-based strategy. Finally, improve communication with the business sector to create a national strategy for skills development, by creating a national commission that deals with these issues, includes representatives from different sectors, and meets regularly. 41

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Appendix Tables and Figures Table 1 Average Years of Schooling Country Years Norway 13.9 United States 13.3 Korea 12.0 OECD average 11.9 Finland 11.2 Chile 10.6 Mexico 8.6 Brasil 6.6 Source: Mexicanos Primero (2011). Table 2 Percentage of Population per Schooling Level and Age Schooling Level at Simple Age Percentage Enrolled in 1st grade or higher at age 6 99.0 Enrolled in 6th grade or higher at age 11 82.5 Enrolled in 7th grade or higher at age 12 77.0 Enrolled in 9th grade or higher at age 14 66.9 Enrolled in 10th grade or higher at age 15 49.6 Enrolled in 12th grade or higher at age 17 27.4 Source: Mexicanos Primero (2011). Table 3 Percentage of 25-to 35-Year-Old Nonstudents at Various Education Levels Education Level 1998 2000 2002 2004 2005 2006 2008 Primary incomplete 18 16 15 14 14 14 14 Primary complete 20 20 19 17 16 18 16 Secondary incomplete 31 33 33 39 37 37 37 Secondary complete 16 16 17 14 15 15 15 Tertiary 13 13 15 16 17 17 18 Source: World Bank (2012). 47

Table 4 Evolution of Idle Youth Aged 15 to 29, 1990-2012 Percentage Millions 1990 2000 2010 1990 2000 2010 Total 37.91 31.58 28.97 9.08 8.68 8.59 Total Men 16.91 13.62 14.21 1.95 1.79 2.05 Women 57.38 48.06 43.00 7.13 6.89 6.50 Total 32.91 27.67 25.87 5.88 5.83 5.91 Urban Men 14.71 11.94 13.37 1.25 1.20 1.49 Women 49.51 42.08 37.8 4.63 4.63 4.42 Source: Arceo-Gómez and Campos-Vázquez (2011). Table 5 Age of Worker at School Completion/Dropout (percentage) <=12 years 9.6 12-14 years 22.4 15-17 years 27.0 18-22 years 23.2 23-25 years 8.5 > 25 years 9.2 Unspecified 0.1 Total workers 38,469,298 Source: MECE-ENOE (2009-3Q). 48

Table 6 Main Reasons for Leaving School (percentage) There was no school/ school was too far 2.6 Insecurity to attend school 0.1 Study was not useful 0.5 Discrimination or violence in school 0.1 Failure, suspension or expulsion 1.1 She/he did not like school or studying 13.9 Insufficient money 32.1 Need to bring money home 18.5 Household activities 1.1 Family reasons 2.2 Family migration 0.5 Illness or accident 0.4 Pregnancy or marriage 5.7 Physical or mental problems 0.1 There was no specialization 0.2 Completed her/his professional studies 11.9 Achieve his/her academic goals 4.4 Other 4.7 Total number of workers 38,469,298 Source: MECE-ENOE (2009-3Q). Table 7 Average Monthly Income per Schooling Level, 2008 Level Income Income Difference (Mexican pesos) (US dollars) (US dollars) Primary 4,122 368 -- Lower secondary 5,354 478 110 Upper secondary 6,106 546 67 Undergraduate degree 13,807 1,234 688 Graduate degree 51,891 4,636 3,403 Source: Mexicanos Primero (2009) for amounts in Mexican pesos. Amounts in US dollars were computed using the average exchange rate for 2008: 11.1925 pesos/dollar according to Mexico s Central Bank (www.banxico.org.mx). 49

Table 8 Achievement Levels in Mathematics in ENLACE 2011 (percentage) Level Insufficient Elementary Good Excellent Primary 13.9 53.5 24.4 8.2 Lower secondary 54.0 30.9 11.0 4.2 Upper secondary 35.1 40.2 16.7 8.0 Source: Mexicanos Primero (2011). Table 9 Mexico s Achievement Levels in PISA 2009 (percentage) Level 0-1 2 3 4 and Over Science 47.3 33.6 15.8 3.3 Mathematics 50.8 28.3 15.6 5.4 Reading 40.1 33.0 21.2 5.7 Source: Mexicanos Primero (2011). Economic Activity Table 10 Mexico s Labor Productivity per Economic Activity Gross Value Number of Added* Workers ** Labor Productivity*** Agriculture, livestock, forestry, hunting and fishing 337,429,020 6,680,105 51 Mining and electricity 554,063,571 384,675 1,440 Manufacturing 1,654,275,295 7,096,036 233 Construction and housing 591,580,928 3,618,327 163 Wholesale and retail trade 1,507,515,850 9,131,822 165 Tourism 227,995,272 3,139,511 73 Transports, communications and postal services 1,027,833,867 2,247,678 457 Banking, finance and professional services 1,796,838,249 3,117,994 576 Social services 678,123,438 3,759,818 180 Other services 282,337,290 4,985,140 57 Government and international organizations 359,560,787 2,317,856 155 Total 9,017,553,567 46,478,962 194 * Thousand pesos, at constant prices of 2003. ** The data excludes 337,035 workers in unspecified activities. *** Thousand pesos per worker. Source: ENOE (2011-3Q) and INEGI. 50

Economic Activity Table 11 Mexico s Labor Productivity per Economic Activity (percentage) Participation in Total GDP Participation in Total Employment 1 Contribution to Total Labor Productivity Agriculture, livestock, forestry, hunting and fishing 3.7 14.4 3.7 Mining and electricity 6.1 0.8 6.1 Manufacturing 18.3 15.3 18.3 Construction and housing 6.6 7.8 6.6 Wholesale and retail trade 16.7 19.6 16.7 Tourism 2.5 6.8 2.5 Transports, communications and postal services 11.4 4.8 11.4 Banking, finance and professional services 19.9 6.7 19.9 Social services 7.5 8.1 7.5 Other services 3.1 10.7 3.1 Government and international organizations 4.0 5.0 4.0 Total 100.0 100.0 100.0 1. The data excludes 337,035 workers in unspecified activities. Source: ENOE (2011-3Q) and INEGI. Table 12 Distribution of Workers per Economic Sector Sector Number of Workers Percentage Primary sector 6,680,105 14.3 Secondary sector 11,099,038 23.7 Tertiary sector 28,699,819 61.3 Unspecified activities 337,035 0.7 Total labor force 46,815,997 100.0 Source: ENOE (2011-3Q). 51

Table 13 Workers Educational Attainment (percentage) No education 4.9 Pre-primary 0.0 Primary 26.9 Lower-secondary 28.1 Academic university-preparatory 16.7 Teacher training subsystem 1.0 Professional technical education 4.9 Professional 15.9 Master's degree 1.3 Doctorate 0.2 Unspecified 0.1 Number of workers in the economy: 46,815,997 Source: ENOE (2011-3Q). 52

Table 14 Employment by Educational Attainment and Firm Size in the Economy (percentage) No Educational Attainment Establishment Micro Small Medium Large Unspecified Other No education 6.5 2.4 1.0 0.7 0.3 13.5 8.7 Pre-primary 0.1 0.0 0.0 0.0 0.0 0.2 0.0 Primary 37.0 24.0 13.7 13.0 9.4 45.4 43.4 Lower-secondary 31.9 31.0 23.9 28.0 26.8 25.3 30.9 Academic university-preparatory 13.6 20.8 19.5 22.8 21.8 8.7 10.2 Teacher training subsystem 0.2 0.4 4.6 0.5 0.7 0.3 0.1 Professional technical education 3.7 5.4 6.7 7.6 7.7 1.3 3.2 Professional 6.7 15.0 27.9 24.7 29.6 5.1 3.3 Master's degree 0.2 0.8 2.5 2.1 3.0 0.3 0.0 Doctorate 0.0 0.1 0.2 0.5 0.7 0.0 0.0 Unspecified 0.1 0.1 0.1 0.0 0.1 0.0 0.1 Total workers 10,140,735 8,830,770 6,941,950 4,466,459 3,754,743 7,935,619 2,427,865 Total workers in the economy: 46,815,997. Source: ENOE (2011-3Q). 53

Table 15 List of Interviews Held Organization Name Position Centro de Investigación y Docencia Económica (CIDE) Sergio Cárdenas Researcher Vice-President of International Miguel Toro Cámara Nacional de la Industria de Affairs and Commerce Transformación (CANACINTRA) Sub Director of International Esperanza Nava Affairs and Commerce Centro de Estudios Económicos del Sector Luis Foncerrada General Director Privado (CEESP) Javier Gala Director of Special Projects Confederación Nacional de Cámaras de Comercio, Servicios y Turismo Eduardo García General Director (CONCANACO) Consejo de la Comunicación Pablo González President Deputy General Director of Magali Soria Certification Consejo Nacional de Normalización y Director of Institutional Relations Certificación de Estándares de Alfredo Garza and Diffusion Competencia (CONOCER) Director of Certification Ana Laura Zevallos Programs and Projects Consultants Raúl Talán Inroads Mexico Carl Rianhard President Mónica Flores General Director Manpower Alina Landa Public Relations Manager Carlos Soto Talent Manager Oscar Sosa Director of Talent Management Mexicanos Primero Claudio X. González President David Calderón General Director Noemí García General Director for Curriculum Development Secretaría de Educación Pública (SEP) Bernardo Cisneros General Director of Work Training Centers Claudia Nateras General Coordinator of PROFORHCOM Luz Argelia Paniagua General Director of Training Gerardo de la Torre Director of Productivity Rodrigo Cárdenas Director of Institutional Relations Secretaría del Trabajo y Previsión Social Chief of Advisors of Labor Roberto Ortiz (STPS) Inclusion Beatriz Pulido Director of Technical Training Carla Bustillos Director of International Cooperation Universidad Iberoamericana Sylvia Schmelkes Researcher Valora Consulting Carlos Mancera Partner Source: own elaboration. These interviews were held between March 28 and June 11, 2012. 54

Figure 1 Changes in Sector Shares of Employment in Mexico between 1996-99 and 2006-09 (percentage) Low Skilled Services High Skilled Services Manufacturing Primary Activities 8 3 2 7 Source: World Bank (2012). Table 16 Matching between Studies and Current Employment (percentage) Yes 83.0 No 17.0 Total 38,469,298 *Question: do you consider that your current work is consistent with your studies? Source: MECE-ENOE (2009-3Q). Table 17 Matching between Experience and Current Employment (percentage) Yes 93.7 No 6.3 Total 38,469,298 *Question: do you consider that your current work is consistent with your experience? Source: MECE-ENOE (2009-3Q). 55

Table 18 Matching between Schooling and Current Employment per Schooling Level (percentage) No education 91.0 Pre-school 86.7 Primary 90.7 Lower-secondary 84.1 Academic university-preparatory 72.4 Teacher training subsystem 90.5 Professional technical education 72.0 Professional 78.0 Master's degree 95.4 Doctorate 96.3 Unspecified 89.4 Total workers 38,469,298 Source: MECE-ENOE (2009-3Q). Table 19 Matching between Experience and Current Employment per Schooling Level (percentage) No education 98.4 Pre-school 93.8 Primary 96.7 Lower-secondary 93.5 Academic university-preparatory 91.0 Teacher training subsystem 95.7 Professional technical education 89.5 Professional 91.6 Master's degree 98.1 Doctorate 98.1 Unspecified 94.6 Total workers 38,469,298 Source: MECE-ENOE (2009-3Q). 56

Table 20 Skills Match per Type of Studies Number of Graduates Percentage of Match Accounting 659.8 68.18 Management 652.1 49.45 Law 629.9 68.41 Computer Science Engineering 378.2 61.56 Primary Education Teaching 343.4 92.32 Industrial Engineering 249.7 59.36 Medicine 200.9 90.11 Psychology 195.4 72.51 Architecture 174.5 78.22 Mechanics Engineering 147.1 60.04 Civil Engineering 160.1 73.38 Communications 168.9 54.59 Agronomy 145.6 46.40 Electronics Engineering 112.9 61.08 Nursing 140.9 76.73 Odontology 113.3 78.48 Preschool Teaching 104.6 89.93 Education Sciences 134.7 87.60 Pedagogy 104.4 79.72 Marketing 94.2 52.16 Physical Medicine 77.8 95.68 Chemical Engineering 84.7 72.12 International Commerce 80.4 35.63 Economics 79.4 54.89 Graphical Design 82.7 72.69 Veterinary Medicine 73.2 66.73 Tourism 78.4 42.49 Social Work 51.8 60.12 Biology 47.0 73.57 Chemistry 56.9 76.37 Electrical Engineering 49.1 59.08 Upper Secondary Teaching 44.1 82.03 Physical Education and Sports 55.4 80.75 International Affairs 47.1 72.07 Electromechanical Engineering 31.2 54.39 Mathematics 28.3 76.27 Foreign Languages 30.7 78.84 Special Education Teaching 26.5 92.78 History 20.4 62.70 Nutrition 19.8 72.96 Chemical Sciences 22.2 62.11 Philosophy 16.7 68.34 Plastic Arts 17.6 63.80 Source: Servicio Nacional de Empleo (SNE). 57

Table 21 Usefulness of Labor Experience (percentage) Better planning of tasks 8.0 Have knowledge and skills appropriate to their occupation 28.0 Have more confidence at work 26.6 Perform more complex tasks 5.6 Improve interaction with employees, customers or suppliers 7.9 Reduce accidents at work 1.4 Perform various tasks 15.4 Other 0.4 He/she has not gained enough experience 6.6 Total workers 38,469,298 Source: MECE-ENOE (2009-3Q). Table 22 Main Benefit of Labor Experience (percentage) Promotion at work 9.0 Earnings increase 21.9 Start or improve own business 12.5 Preserving employment, business or activity 41.6 Change of corporate spin 0.5 Other 5.1 Experience is useless 9.3 Total workers 35,931,106 Source: MECE-ENOE (2009-3Q). Table 23 Type of Document that Certifies the Worker s Most Recent Level of Studies Approved (percentage) Diploma 14.9 Certificate 52.3 Report card 25.4 Other 7.4 Total workers 38,469,298 Source: MECE-ENOE (2009-3Q). 58

Table 24 Participation in Job Training Programs: Population that Works and Studies (PWS) (percentage) Yes 35.2 No 64.8 Total 43,606,596 Source: MECE-ENOE (2009-3Q). Table 25 Participation in Job Training Programs: Population that Only Works (POW) (percentage) Yes 37.0 No 63.0 Total 38,469,298 Source: MECE-ENOE (2009-3Q). Table 26 Main Reasons for Not Participating in Training Courses: PWS (Percentage of total category value unless otherwise indicated) 1. Lack of resources 13.8 2. Information on related programs unknown 25.0 3. Initial training is sufficient 25.9 4. Lack of availability of training courses 4.5 5. Company Policy 6.4 6. Other 19.4 7. The worker does not know 5.0 Total workers 28,270,163 Source: MECE-ENOE (2009-3Q). 59

Table 27 Main Reasons for Not Participating in Training: POW (percentage of the three most common answers) Lack of resources 14.2 Lack of information about related programs 24.9 Initial training is sufficient 25.9 Total workers: 24,073,391. Excludes 166,216 workers in unspecified activities. Source: MECE-ENOE (2009-3Q). Table 28 Participation in Job Training Programs per Sector and Activity: PWS (percentage of positive responses) Professionals, technicians and artists 69.6 Education workers 87.8 Managers 71.9 White-collar workers 62.6 Blue-collar workers 29.7 Retail and wholesale workers 27.5 Transport operators 44.6 Personal services workers 24.7 Security guards 61.0 Agricultural workers 7.9 Unspecified 100.0 Source: MECE-ENOE (2009-3Q). Total employment considered: 38,469,298. Table 29 Type of Most Recent Training Course Taken: PWS (percentage) Classroom 98.2 Internet 1.3 Other distance-teaching mode 0.2 Mixed 0.2 Total workers 15,336,433 Source: MECE-ENOE (2009-3Q). 60

Table 30 Type of Most Recent Training Course Taken: POW (percentage) Classroom 98.3 Internet 1.3 Other distance-teaching mode 0.2 Mixed 0.1 Total workers 14,229,691 Source: MECE-ENOE (2009-3Q). Table 31 Length of Most Recent Training Course Taken: POW Number of hours Percentage 0 20 51.2 21 40 26.0 41 60 7.1 61 100 5.5 101 300 7.2 > 300 2.5 Unspecified 0.5 Total workers 14,229,691 Total workers: 14,229,691. Source: MECE-ENOE (2009-3Q). 61

Table 32 PWS: Who Provided Most Recent Employee Training (percentage) A training institute 16.8 A public university 4.5 A private university 4.2 An organization to which you belong 4.9 An independent instructor 9.3 Equipment or product supplier 7.4 Internal training area 28.8 A colleague or supervisor 17.1 Another person or institution 6.7 The worker does not know 0.3 Total workers 15,336,433 Source: MECE-ENOE (2009-3Q). Table 33 POW: Who Provided Most Recent Employee Training (percentage) A training institute 16.8 A public university 4.2 A private university 4.1 An organization to which you belong 4.8 An independent instructor 9.5 Equipment or product supplier 7.5 Internal training area 28.9 A colleague or supervisor 17.3 Another person or institution 6.6 The worker does not know 0.3 Total workers 14,229,691 Source: MECE-ENOE (2009-3Q). 62

Table 34 PWS: Who Decided Employee Training? (percentage) The employee 24.4 The worker s supervisor 38.2 The human resources division 17.4 The Committee on Development and Training 2.9 Company-Employee Agreement 6.4 Recommendation by external consultant 1.2 Another division of the company 1.5 Government s decision or support 4.9 Collective agreement 1.6 Other 1.5 The worker doesn t know 0.0 Total workers 15,336,433 Source: MECE-ENOE (2009-3Q). Table 35 POW: Who Decided Employee Training? (percentage) Primary Sector Secondary Sector Tertiary Sector The employee 23.7 18.6 25.6 The worker s supervisor 31.9 43.0 36.9 The human resources division 8.8 21.0 16.9 The Committee on Development and Training 0.9 3.3 2.9 Company-Employee Agreement 8.8 7.8 6.2 Recommendation by external consultant 0.8 2.0 0.8 Another division of the company 0.8 1.4 1.7 Government s decision or support 20.5 1.9 5.2 Collective agreement 2.7 0.6 1.9 Other 0.9 0.5 1.9 The worker doesn t know 0.3 0.0 0.0 Total workers 416,805 3,212,662 10,536,848 Source: MECE-ENOE (2009-3Q). Total employment considered: 15,336,433. 63

Benefit Table 36 Main Benefit of Most Recent Training Course (percentage) Primary Sector Secondary Sector Tertiary Sector Change jobs/ get a job 5.5 3.9 3.8 Start a business 4.3 3.4 3.2 Keep his/her current job 13.2 13.6 12.5 Get a promotion/ a wage increase 4.9 7.0 6.4 Increase skills/ certify Skills 13.4 12.8 15.9 Specialize in his/her core area 20.4 18.6 21.2 Improve service/product quality 12.0 13.7 19.0 Meet business needs 5.1 11.0 7.1 Facilitate the use of new technologies 1.9 4.6 3.2 Increase production or sales 3.3 1.1 1.5 Reduce working accidents 4.6 6.6 2.5 Another 3.2 1.6 1.3 He/She has not received any benefit 7.4 1.5 1.9 He/She does not know 0.7 0.6 0.6 Total workers 416,805 3,212,662 10,536,848 Total workers: 14,229,691. Source: MECE-ENOE (2009-3Q). Table 37 The Employee Was Evaluated at the End of the Training Program (percentage) Primary Sector Secondary Sector Tertiary Sector Yes 59.9 78.8 81.0 No 40.1 21.2 19.0 Total number of workers 416,805 3,212,662 10,536,848 Source: MECE-ENOE (2009-3Q). Total workers: 14,229,691. 64

Type of Document Table 38 Type of Document that Certifies Participation in Most Recent Training Program: PWS (percentage) Primary Sector Secondary Sector Tertiary Sector Certification 8.4 9.1 10.3 Record of job skills 10.5 17.3 18.3 Record of attendance 18.1 18.8 22.6 Diploma 22.3 25.1 25.6 Other 1.0 0.6 0.9 None 39.1 29.0 22.1 The worker does not know 0.6 0.2 0.1 Total workers 447,276 3,359,452 11,462,113 Source: MECE-ENOE (2009-3Q). Total employment considered: 15,336,433. Type of Document Table 39 Type of Document that Certifies Participation in Most Recent Training Program: POW (percentage) Primary Sector Secondary Sector Tertiary Sector Certification 7.4 9.3 10.1 Record of job skills 10.9 17.3 18.2 Record of attendance 19.2 18.9 22.6 Diploma 20.6 25.0 26.2 Other 1.1 0.6 0.9 None 40.2 28.8 21.9 The worker does not know 0.6 0.2 0.1 Total workers 416,805 3,212,662 10,536,848 Source: MECE-ENOE (2009-3Q). Total employment considered: 14,229,691. 65

Table 40 PWS: Financing Source for Most Recent Training Course (percentage) Self financed 14.8 Government program 11.8 Employee s contributions 0.2 Chamber, union or guild 2.1 Non-governmental organization 0.7 The Enterprise 67.7 Other 2.2 The worker does not know 0.4 Total workers 15,336,433 Source: MECE-ENOE (2009-3Q). Table 41 POW: Financing Source for Most Recent Training Course (percentage) Self financed 14.8 Government program 11.6 Employee s contributions 0.3 Chamber, union or guild 2.1 Non-governmental organization 0.6 The Enterprise 68.1 Other 2.2 The worker does not know 0.4 Total workers 14,229,691 Source: MECE-ENOE (2009-3Q). 66

Type Table 42 Time and Cost of Training per Type of Industry and Employee in Mexico Hours per Cost Cost (US dollars) Year (Mexican pesos) Technology 12 3,133 252 Financial services 30 14,586 1,173 Aviation and transport 14 7,002 563 Services 43 2,147 173 Manufacturing 207 9,782 787 Energy 65 2,500 201 Consumption 34 1,632 131 Commerce 67 1,387 112 Sciences 12 2,537 204 Real State 32 1,899 153 Average 5 4,740 381 Source: De Antuñano (2011). Cost in US Dollars based on average exchange rate for 2011 by Banco de México (12.43 pesos per dollar). Year Table 43 Federal Budget for Work Training Centers, 2007-2011 Number of Students Enrolled in WTC Total Budget (millions of pesos) Expenditure per Student (pesos) 2007 373,971 1,847 4,938 2008 405,933 1,937 4,772 2009 423,487 2,111 4,985 2010 454,987 2,003 4,402 2011 468,241 2,324 4,963 Source: Courtesy of SEMS. 67

Table 44 Public Expenditure in Skills Development: Education (million pesos) Objective Fiscal Year Administrative Investment Total 2007 70.7 186.7 257.4 2008 73.4 249.4 322.8 PROFORHCOM 2009 2.0 245.4 247.4 2010 1.9 257.2 259.1 2011 0.0 243.8 243.8 2012 0.0 537.6 537.6 2007 236.4 0.0 236.4 2008 416.6 0.0 416.6 Teacher Training 2009 617.4 0.0 617.4 2010 516.7 0.0 516.7 2011 578.7 0.0 578.7 2012 379.3 0.0 379.3 Source: PEF (2007-2011). This data corresponds to the administrative sector of education (Ramo 11). Table 45 Public Expenditure in Skills Development: Training for Work (million pesos) Objective Fiscal Year Administrative Investment Total 2007 24.4 201.4 225.8 2008 104.8 55.0 159.8 Training and 2009 212.7 0.0 212.7 Productivity 2010 87.9 0.0 87.9 Programs 2011 57.3 0.0 57.3 2012 56.2 0.0 56.2 PAE 2007 0.0 1,027.7 1,027.7 2008 658.3 486.4 1,144.7 2009 1,102.6 407.9 1,510.5 2010 781.0 634.1 1,415.1 2011 614.7 754.4 1,369.1 2012 467.9 555.0 1,022.9 Source: PEF (2007-2011). This data corresponds to the administrative sector of labor and social welfare (Ramo 14). 68

Table 46 Federal Annual Budget for CONOCER, 2007-2012 Year Budget (thousand pesos) 2007 96,194 2008 94,116 2009 113,146 2010 101,354 2011 130,910 2012 135,016 Source: Courtesy of CONOCER. Table 47 Public Spending on Adult Education (INEA) Share in Education Budget (percentage) Total Expenditure in INEA (million pesos) 2007 1.20 1,819.0 2008 1.17 2,035.5 2009 1.04 2,095.9 2010 0.88 1,863.3 2011 0.91 2,092.4 2012 0.91 2,296.0 Source: PEF, 2007-2012. Table 48 Public Spending on CONALEP, 2007-2011 Share in Education Budget (percentage) Total Expenditure in CONALEP (million pesos) 2007 2.18 3,327 2008 2.10 3,657 2009 2.77 5,571 2010 2.72 5,745 2011 1.76 4,071 Source: Courtesy of CONALEP. 69

Table 49 Budgetary Programs for Skills Development in Mexico, 2010 (millions of pesos) Program Budget Stated Objective Technical education service delivery 36,407 No Higher education service delivery 21,344 No Enciclomedia 4,655 No Upper middle education service delivery 4,656 No Program for the initial and basic education of rural and indigenous populations 2,480 Yes Actions against educational backwardness in initial and basic education (CONAFE) 1,728 No Adult Education 1,640 No Expansion of upper middle education 1,616 No Digital skills for all 532 No Continuous training for basic education teachers 480 No Tele-secondary education 392 No Source: CEESP (2012). Table 50 Essential Competences for Employers in Latin American * Competences Percentage Teamwork 78 Interpersonal communication 73 Interpersonal relationships 69 Decision making 66 Negotiation 57 Leadership 55 Creativity/innovation 54 Managerial 54 Implementation 51 Written communication 50 Source: Manpower (2008). *Percentages refer to the proportion of employers who mentioned every competency. 70

Table 51 Hard-to-Find Competences in Latin American Labor Markets* Competences Percentage Leadership 38 Creativity/innovation 36 Decision Making 35 Negotiation 33 Managerial 32 Implementation 28 Teamwork 25 Interpersonal communication 24 Interpersonal relationships 23 Written communication 21 Source: Manpower (2008). *Percentages refer to the proportion of employers who mentioned every competency. Table 52 Share of Sectors in National GDP (percentage) Sector 2005 2006 2007 2008 2009 Tourism 7.6 7.5 7.3 7.5 7.0 Business Process Outsourcing 0.2 0.2 0.3 0.3 0.4 Software Development 0.3 0.3 0.4 0.5 0.6 Mining 5.8 5.6 5.4 5.3 5.5 Construction 6.7 6.9 6.9 7.0 7.0 Automobile 3.0 3.0 3.2 3.0 2.6 Logistics 7.3 7.3 7.3 7.3 7.2 Source: CONOCER (Reports 1 to 7). Table 53 Share of Sectors in Total Employment (percentage) Sector 2005 2006 2007 2008 2009 Tourism 4.5 5.2 5.1 5.1 5.0 Business Process Outsourcing 0.2 0.2 0.3 0.3 0.3 Software Development 0.2 0.3 0.3 0.4 0.4 Mining 1.1 1.0 1.1 1.2 1.3 Construction 13.2 13.8 14.1 14.7 13.7 Automobile 1.3 1.3 1.3 1.2 1.0 Logistics 5.9 5.9 5.9 5.9 6.0 Source: CONOCER (Reports 1 to 7). 71

Table 54 Employee Productivity per Sector (thousands of Mexican pesos) Sector 2005 2006 2007 2008 2009 Tourism 457 415 431 422 370 Business Process Outsourcing NA NA NA NA NA Software Development NA NA NA NA NA Mining* 1,137 1,158 1,074 960 922 Construction* 106 106 107 105 109 Automobile NA NA NA NA NA Logistics (Transports) 260 269 271 270 258 National Average* 210 214 218 220 215 Source: CONOCER (Reports 1 to 7). Note: NA = not available. * At 2003 prices. Table 55 Skills Mismatch per Sector: Difference between Labor Supply and Demand (thousand of workers) Education 2008 2010 2012 2014 2016 2018 Basic 1.2 0.8 2.1 1.6 2.5 2.6 Tourism* Intermediate 0.8 0.7 1.1 1.3 1.3 1.4 Higher -0.2-0.3-0.2-0.1-0.1-0.2 Basic 4.2 18.7 22.0 13.8 14.6 15.6 BPO Intermediate -0.9 5.1 5.6 4.2 4.6 5.0 Higher -3-3.4-4.9-2.2-2.4-2.6 Software Development Automobile Industry Basic 3.9 6.1 7.0 5.8 6.3 6.9 Intermediate 0.0 0.7 0.7 1.5 1.7 0.3 Higher -0.4-0.5-0.8-0.3-0.4-0.4 Basic 13.3 0.7 0.9 1.4 1.7 1.7 Intermediate 6.3-0.7-1.5-0.3 0.0 0.1 Higher 8.8-1.3-2.6-0.5-0.4-0.2 Source: CONOCER (Reports 1 to 7). Note 1: a positive difference (surplus of workers) means that supply is greater than demand. Note 2: the data only takes into account an average scenario for demand. *It only applies to the State of Quintana Roo. 72

$ 100 $ 80 $ 96.9 $ 88.5 $ 82.7 Figure 2 Employee Productivity in Tourism (thousand US dollars) $ 79.0 $ 70.5 $ 60 $ 59.3 $ 40 $ 25.9 $ 24.2 $ 20 $ 6.0 $ 6.0 $ 5.9 $ 0 USA Italy France Germany Spain United Kingdom MEXICO Global Average Brazil Chile China Source: CONOCER (Reports 1 to 7). $ 100,000 $ 80,000 $ 87,166 Figure 3 Employee Productivity in IT (thousand US dollars) $ 60,000 $ 40,000 $ 20,000 $ 29,768 $ 23,725 $ 18,902 $ 0 Australia Ireland MEXICO India Source: CONOCER (Reports 1 to 7). 73

Figure 4 The Organization of Mexico s Sector of Skills Development Academic Education Vocational Education Training for Work Teacher Training Certification SEP SEP SEP SEP SEP STPS STPS Firms Firms 74

Figure 5 Organization of Mexico s Ministry of Education (SEP) Ministry of Education (SEP) Union of Education Workers (SNTE) Basic Education (SEB) Curricula Development (DGDC) Educational Innovation (DGDGIE) Indigenous Education (DGEI) Upper Middle Education (SEMS) Academic Development Sectorial Coordination (COSDAC) Work Training Centers (DGCFT) Marine Science and Technology (DGECyTM) Higher Education (SES) University Education Technological Education Education Professionals Polytechnic Universities Decentralized Bodies Industrial Technical Learning Center (CETI) IPN Research Center (CINVESTAV) Graduates College (COLBACH) Technical Professional Education National College (CONALEP) De-concentrated Bodies National Polytechnic Institute (IPN) Education Services for the Federal District General Baccalaureate (DGB) National Pedagogic University National Council for Education Promotion (CONAFE) Industrial Technological Education (DGETI) Technological Universities Education Authorities National Council (CONAEDU) Institute for Adult Education (INEA) Standardization and Certification Council (CONOCER) 75

Figure 6 Organization of the Divisions of SEP Involved in Academic Education Ministry of Education (SEP) Union of Education Workers (SNTE) Basic Education (SEB) Upper Middle Education (SEMS) Higher Education (SES) Decentralized Bodies De-concentrated Bodies Curricula Development (DGDC) Educational Innovation (DGDGIE) Indigenous Education (DGEI) Academic Development Sectorial Coordination (COSDAC) General Baccalaureate (DGB) University Education Education Professionals National Pedagogic University Education Authorities National Council (CONAEDU) IPN Research Center (CINVESTAV) National Council for Education Promotion (CONAFE) Institute for Adult Education (INEA) National Polytechnic Institute (IPN) Education Services for the Federal District Ministry of Social Development (SEDESOL) 76

Figure 7 Organization of Actors Involved in Vocational Education and Training for Work in Mexico Productive Sector Ministry of Labor (STPS) Ministry of Education (SEP) Union of Education Workers (SNTE) Labor Productivity Labor Inclusion Upper Middle Education (SEMS) Higher Education (SES) Decentralized Bodies De-concentrated Bodies Association and Chambers Unions of Workers Training Programs Enterprise Universities NGOs National Employment Service (SNE) Employment Observatory (OLA) Ministry of Social Development (SEDESOL) Work Training Program Registration Academic Development Sectorial Coordination (COSDAC) Work Training Centers (DGCFT) Industrial Technological Education (DGETI) Marine Science and Technology (DGECyTM) National Pedagogic University Education Professional Technological Education Polytechnic Universities Technological Universities Education Council (CONAEDU) Industrial Technical Learning Center (CETI) Graduates College (COLBACH) Technical Professional Education National College (CONALEP) Institute for Adult Education (INEA) Standardization and Certification Council (CONOCER) National Polytechnic Institute (IPN) Council of Education for Life and Work (CONEVyT) Ministry of Economics (SE) 77

Figure 8 Organization of Mexico s Ministry of Labor and Social Welfare for Social Development for Skills Development Ministry of Labor (STPS) Labor Employment and Labor Productivity Labor Inclusion Planning, Evaluation and Sectorial Policy Occupational Risks Prevention Coordination of the National Employment Service (SNE) General Division for Training Coordination of the Employment Observatory (OLA) 78

Figure 9 Organization of Actors Involved in Teacher Training in Mexico Union of Education Workers (SNTE) Ministry of Education (SEP) Basic Education (SEB) Upper Middle Education (SEMS) Higher Education (SES) De-concentrated Bodies Teacher Training Academic Development Sectorial Coordination (COSDAC) Academic Formation Human Resources Technological Education Human Resources National Pedagogical University (UPN) Work Training Centers (DGCFT) Human Resources Education Professionals Human Resources General Baccalaureate (DGB) Human Resources University Education (Unclear) Industrial Technological Education (DGETI) Marine Science and Technology (DGECyTM) (Unclear) (Unclear Technological Universities Polytechnic Universities (Unclear) (Unclear) Teacher Training College (ENSM) 79

Figure 10 Certification Process for Skills Development in Mexico Ministry of Labor (STPS) Certifies completion of training programs Certifies completion of technical education and vocational training NO Skills-Based Approach Ministry of Education (SEP) Certifies educational attainment in the general academic system Academic Abilities Private Sector CONOCER National System of Competences (SNC) Management Committees Competence- Based Registries Skills-Based Approach Evaluation and Certification Entities (ECEs) 80

Image 1 Example of Competence-Based Certificates Issued by CONOCER Courtesy of CONOCER. 81

Figure 11 Cumulative Number of Management Committees per Year Figure 12 Distribution of Management Committees per Sector 100 80 60 40 20 13 16 34 72 99 11 10 8 71 Productive Sectors Government Sector Education Sector Social Sector 0 2007 2008 2009 2010 2011 Source: CONOCER (2012). Source: CONOCER (2012). Figure 13 Cumulative Number of Competence-Based Standards Developed 160 157 120 109 79 80 45 40 25 0 2007 2008 2009 2010 2011 90 80 70 60 50 40 30 20 10 0 13 22 Figure 14 Accreditation of ECEs 32 44 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 56 69 81 Source: CONOCER (2012). Source: CONOCER (2012). 82

50 40 Figure 15 Proceeding ECEs per Sector 42 Figure 16 Total Number of Competence-Based Certificates Issued 251,260 250,000 210,517 200,000 30 150,000 149,445 20 10 0 14 Business Sector 4 Labor Sector 9 Private Education Sector Public Education Sector Source: CONOCER (2012). Source: CONOCER (2012). 12 Government Sector 100,000 50,000 0 12,036 71,430 2007 2008 2009 2010 2011 83

Table 56 Main Characteristics of Applicants to Portal de Empleo Characeristics 2011 % 2012 % Total 1,714,540 100.0 784,858 100.0 Gender Men 955,456 55.7 440,707 56.2 Women 759,084 44.3 344,151 43.8 Age Group 16 to 17 16,995 1.0 8,149 1.0 18 to 25 828,569 48.3 372,528 47.5 26 to 30 405,757 23.7 190,959 24.3 31 to 35 201,217 11.7 95,036 12.1 36 to 40 123,277 7.2 56,506 7.2 41 to 45 70,655 4.1 31,712 4.0 46 to 50 39,320 2.3 16,924 2.2 51 to 55 19,043 1.1 8,761 1.1 56 to 60 6,955 0.4 3,147 0.4 61 and oler 2,752 0.2 1,136 0.1 Professional experience None 140,675 8.2 52,470 6.7 6 m to 1 year 364,631 21.3 197,167 25.1 1 to 2 years 285,211 16.6 29,548 3.8 2 to 3 years 214,622 12.5 28,748 3.7 3 to 4 years 148,102 8.6 60,159 7.7 4 to 5 years 139,340 8.1 96,590 12.3 5 years and over 409,295 23.9 21,001 2.7 Unspecified 12,664 0.7 299,175 38.1 Education level Illiterate 4 0.0 6,841 0.9 Able to read and write 2,567 0.1 127 0.0 Primary 15,622 0.9 29,718 3.8 Lower secondary or vocational 201,586 11.8 95,342 12.1 Commercial career 45,619 2.7 10,534 1.3 Technical career 162,803 9.5 46,582 5.9 Technical professional 62,302 3.6 17,758 2.3 Upper secondary or vocational 400,593 23.4 118,231 15.1 High technical university 70,302 4.1 17,977 2.3 College 726,111 42.4 197,921 25.2 Masters 23,327 1.4 5,526 0.7 PhD 808 0.0 225 0.0 Unspecified 2,896 0.2 238,076 30.3 Source: courtesy of STPS. 84

Table 57 Main characteristics of Applicants to SNE's Employment Bureaus Characteristics 2011 % 2012 % Total 866,558 100.0 594,444 100.0 Gender Men 517,465 59.7 354,257 59.6 Women 349,093 40.3 240,187 40.4 Age group 14-19 96,743 11.2 61,040 10.3 20-24 227,985 26.3 157,506 26.5 25-29 185,875 21.4 127,954 21.5 30-34 124,594 14.4 86,002 14.5 35-39 91,902 10.6 60,474 10.2 40-44 65,788 7.6 47,693 8.0 45-49 36,504 4.2 26,465 4.5 50-54 19,647 2.3 14,812 2.5 55-59 9,351 1.1 7,020 1.2 60-64 4,242 0.5 3,074 0.5 65-69 2,031 0.2 1,418 0.2 70 74 982 0.1 591 0.1 75 and older 914 0.1 395 0.1 Professional experience None 196,044 22.6 153,592 25.8 6m to 1 year 278,126 32.1 188,462 31.7 1 to 2 years 149,050 17.2 92,451 15.6 2 to 3 years 79,947 9.2 52,982 8.9 3 to 4 years 40,316 4.7 26,121 4.4 4 to 5 years 20,793 2.4 13,437 2.3 5 years and over 102,282 11.8 67,399 11.3 Education level Illiterate 2,512 0.3 2,958 0.5 Able to read and write 8,070 0.9 5,562 0.9 Primary 67,932 7.8 46,468 7.8 Lower secondary and vocational 331,053 38.2 232,660 39.1 Commercial career 45,272 5.2 30,125 5.1 Technical career 18,454 2.1 11,662 2.0 Technical professional 13,115 1.5 8,506 1.4 Upper secondary and vocational 220,884 25.5 151,585 25.5 High technical university 10,001 1.2 6,460 1.1 College 147,334 17.0 98,099 16.5 Masters 1,851 0.2 1,296 0.2 PhD 80 0.0 63 0.0 Unspecified Source: courtesy of STPS. 85

Table 58 Vacancies Registered at Portal de Empleo per Economic Sector and Firm Size Sector and firm size 2011 % 2012 % Total 2,760,681 100.0 583,977 100.0 Primary 3,182 766 0.1 Industrial 209,163 7.6 33,468 5.7 Tertiary 2,485,729 90.0 546,007 93.5 Unspecified 62,607 2.3 3,736 0.6 Micro 487,836 17.7 117,864 20.2 Primary 1,346 Industrial 28,879 1.0 2,736 0.5 Tertiary 450,543 16.3 114,673 19.6 Unspecified 7,068 0.3 455 0.1 Small 666,798 24.2 104,158 17.8 Primary 861 Industrial 33,751 1.2 5,156 0.9 Tertiary 621,174 22.5 98,007 16.8 Unspecified 11,012 0.4 995 0.2 Medium 583,021 21.1 192,506 33.0 Primary 343 Industrial 27,968 1.0 12,442 2.1 Tertiary 548,204 19.9 179,601 30.8 Unspecified 6,506 0.2 463 0.1 Large 1,023,026 37.1 168,683 28.9 Primary 632 Industrial 118,565 4.3 13,134 2.2 Tertiary 865,808 31.4 153,726 26.3 Unspecified 38,021 1.4 1,823 0.3 Source: courtesy of STPS. 86

Table 59 Vacancies Registered at Employment Bureaus per Sector and Firm Size Sector and firm size 2011 % 2012 % Total 743,951 100.0 516,861 100.0 Primary 5,507 0.7 5,166 1.0 Industrial 108,073 14.5 73,734 14.3 Commerce 118,697 16.0 76,715 14.8 Services 511,674 68.8 361,246 69.9 Micro 189,772 25.5 131,793 25.5 Industrial 13,189 1.8 10,310 2.0 Commerce 27,459 3.7 18,230 3.5 Services 149,124 20.0 103,253 20.0 Small 169,716 22.8 115,922 22.4 Industrial 16,664 2.2 11,010 2.1 Commerce 19,182 2.6 13,122 2.5 Services 133,870 18.0 91,790 17.8 Medium 130,386 17.5 87,034 16.8 Industrial 36,939 5.0 24,649 4.8 Commerce 29,670 4.0 17,252 3.3 Services 63,777 8.6 45,133 8.7 Large 248,570 33.4 176,946 34.2 Industrial 41,281 5.5 27,765 5.4 Commerce 42,386 5.7 28,111 5.4 Services 164,903 22.2 121,070 23.4 Source: courtesy of STPS. 87

Table 60 Registration of Competence-Based Standards in RENEC Sector Number of Standards Number of Standards in in RENEC Process of Incorporation Commerce 21 1 Professional and Technical Services 20 Tourism and Restaurants 14 Social 15 Construction and Real State 11 Agricultural and livestock 10 Financial 10 ICTs 9 2 Transports 7 Sports 1 Cooperative Society 1 Education and Training 6 Water 4 2 Public Administration 4 SNC Functions 3 Logistics 2 Electrical Energy 1 Public Security 12 Food Processing 1 TOTAL 137 20 Source: CONOCER (2012). 88

Figure 17 Actors in SoSD per Type of Responsibility SEP SNTE STPS Productive Sector Regulation Governance Service Delivery Financing Certification 89

The General Law of Education (LGE) Figure 18 Legal Framework for Skills Development Regulates the education provided by the State, decentralized bodies and private organizations Grants to the Ministry of Education the ability to set the contents of education plans and programs Regulates the training system for primary and secondary school teacher Regulates the process of certification The Federal Labor Law (LFT) Regulates the contractual relationship between employers and workers Sets labor norms Grants the Ministry of Labor the ability to register and authorize every training program in the country Regulates the National Service for Employment The Organic Law of the Federal Public Administration (LOAPF) Sets the powers, responsibilities and goals of every Mexican Ministry Other Legal Documents Labor reform initiatives Agreement 592 for the organization of basic education Agreeement 444 for the creation of a National Upper Secondary System Documents related to the Comprehensive Upper-Middle School Reform (RIEMS) 90

Table 61 Skills Development Policies per Type and Country Approach Country Year Name Executor Key Measures Reference Skills development as national economic strategy Skills development Ireland 1997 Singapore 1990 South Korea 2001 National strategy National strategy National strategy Expert Group on Future Skills Needs (EGFSN) National Training and Employment Authority Ministry of Manpower Ministry of Education Chile 2010 NA Enseña Chile National Policy on Skills Development Ministry of Labor and Employment (MOLE) Interconnection of skills, industrial, labor market and research policies, organizations and institutional frameworks Sector monitoring Identification of current and future skills shortages Strengthening of polytechnics Implementation of the SPRING program to promote workplace learning Emphasis on intermediate skills Implementation of agencies for skills recognition and development Human resource development coordination Focus on human resources development as core strategy for national development Concentration of human resource development policies in a single agency Teaching socio-emotional abilities Emphasis on high-skilled teachers Elaboration of a national policy on skills development Consultative approach involving multiple partners Involvement of stakeholders Inclusion of several issues: ILO (2011a) ILO (2011a) CEI (2010) IADB (2012) India 2009 o Governance issues ILO (2011a) o Certification and information systems o Lifelong learning o Equity and access o Financing of skills development South Korea 2001 Master Plans Ministry of Creation of the National Education IADB (2011) 91

and 2006 II and III Education, Science and Technology Information System Emphasis on multiple platforms into education Replacement of traditional textbooks for digital books Development of a global partnership for ICT in education Teacher training in technology Implementation of a certification process to control for the quality of e-learning programs Skills Certification Argentina 1999 Brazil 1998 Chile 1999 Mexico 1996 Workers Skills Certification Program Development of Skills Standards and Certification System for the Tourism Sector Labor Competency Certification Program Skills Standards and Certication Ministerio de Trabajo, Empleo y Seguridad Social Instituto de Hospitalidade Fundación Chile CONOCER Development and use of skills standards in four sectors: printing/graphic arts, metallurgy, automobile mechanics and confectionery trades Definition of new occupational classifications Focus on skills for the tourism sector Development of skills standards, training curricula, evaluation instruments, and certification Establishment of rules for certification Focus on the mining, construction and tourism sectors Development of a national system of skills standards certification Development and testing of standards for job functions identified as priorities by the sector Training with standards-based curriculum Focus on the construction sector Certification of competencies and individuals Certification of high-school level academic skills for school dropouts Kappaz and Siegel (2002) Kappaz and Siegel (2002) Kappaz and Siegel (2002) Kappaz and Siegel (2002) United States 1942 GED Program American Council on Education Heckman (2008) Inclusion of South Africa 2010 National Skills Sector Education Focus on racial issues in accessing and ILO (2011a) 92

disadvantaged groups Youth formation and employment Argentina 2008 Chile 1990 Joven Colombia 2001 Public services Argentina 2005 Conditional cash transfers for education completion Early childhood development Development Strategies (NSDS) Jóvenes con Más y Mejor Trabajo Jóvenes en Accion 2009 Plan 250 Mil Oficinas Municipales de Empleo Brazil 2009 Bolsa Familia Costa Rica 2007 Avancemos United States 1962 Perry Program and Training Authorities (SETAs) Ministerio de Trabajo, Empleo y Seguridad Social SENCE (Ministerio del Trabajo y Previsión Social) Departamento Nacional de Planeación Servicio Nacional de Aprendizaje Ministerio de Trabajo, Empleo y Seguridad Social Ministério do Desenvolvimento Social e Combate a Fome Viceministerio de Desarrollo Social HighScope Educational Research Foundation obtaining skills Focus on youth social inclusion Formation for unemployed youths aged 18 to 24 years with no primary or secondary education Vocational workshops Professional formation courses Certification of primary or secondary studies Combination of education, demanddriven, job training and internships for youth aged 21 or younger In-classroom and on-the-job training to disadvantaged youths aged 18 to 25 Professional formation for low-income, unemployed youths aged 16 to 26 years in urban Provision of employment services Promotion of youth access to employment Conditional cash transfers for low-income adolescents aged 16 to 17 years for school completion Promotion of adolescent and youth formal secondary education through conditional cash transfers Preschool education (cognitive and noncognitive skills) for disadvantaged black children ILO 2010) ILO (2011b) Attanasio et al (2008) (ILO 2011b) ILO (2010) ILO (2010) ILO (2010) ILO (2010) Heckman (2008) 93

Figure 19 Implementing STEP as an Integrated Set of Programs Across Workers Life Cycles 5 Facilitating labor mobility and job matching Preschool Age School Age Youth Working Age Apprenticeships, skills certification, counseling Intermediation services, labor regulation, social security portability 4 Encouraging entrepreneurship and innovation Fostering inquiry Universities, innovation clusters, basic entrepreneurship training, risk management systems 3 Building job-relevant skills Basic vocational training, behavioral skills Vocational training, higher education, apprenticeships, targeted programs Firm-provided training, recertification, reskilling 2 Ensuring that all students learn Cognitive skills, socialization, behavioral skills Second chance education, behavioral skills 1 Getting children off to the right start Source: World Bank (2010). Nutrition, psychological and cognitive stimulation, basic cognitive and social skills Social health and remedial education 94

Figure 20 Interconnection of Policies for Skills Development in Ireland Source: ILO (2011a). 95