Improving Competitiveness through Human Resource Development in China

The Role of Vocational Education

Min Min, Ying Zhu

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9781138625105
• eBook ISBN: 9780429862977
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book looks at the development of vocational education and training in China and how it is crucial to human resource development and improving competitiveness. It briefly outlines the contextual issues related to vocational education and training in China, the importance of vocational education and how China has been using vocational training to reduce the unemployment rate and raise its overall human capital.

1 Introduction

It has been 40 years since economic reform and opening-up was initiated in China. During this period, China’s industrial structure has been upgraded, leading to a surge in service sectors and hi-tech industries. The traditional blue-collar industries declined across the country, being increasingly replaced by a skilled and professional workforce in the areas such as accounting, automotive, finance and marketing, hospitality, IT and telecommunications. As shown by the official data, tertiary industries accounted for 24.6% of GDP in 1978 but increased to 51.6% in 2018 (National Bureau of Statistics, 2018).

The wave of globalisation has given companies in emerging economies unprecedented opportunities to reach global markets, allowing them to ‘leapfrog’ decades of technological developments in the West. ‘Path dependency’ is less important than people assumed and emerging economies such as China are moving up the value chain, willing to ‘raise their game’. Although China accounts for a steadily increasing share of world manufacturing, its low-cost competitive advantage is transitory and there is a growing tendency for China to move into high-skilled and high value-added production and services. This shift requires Chinese workers to have strong literacy, numeracy and problem-solving skills, skills in the use of technologies, social and emotional skills, and the capacity and motivation to learn and develop. Hence, there is a great demand for better education and training systems in China (Yao, 2019). Additionally, the prosperity of the nation is seen to rest on the skills, knowledge and enterprise of all individuals rather than on a few from the elite. Thus, the importance of investment in education at all levels has been emphasised. However, since skills development takes place outside the formal education system, particularly in vocational education, training institutions and within corporations, concerted efforts from the government, vocational institutions and private sectors are needed.

In China, all citizens must attend school for at least nine years, including six years of primary school and three years of lower secondary school, known as the ‘nine-year compulsory education’ (Zhu & Warner, 2013). Students can then choose to continue their study in upper secondary school for another three years, attend secondary vocational schools or enter the labour market. In this book, we want to focus on the students who attend secondary vocational schools. It is noteworthy that in 2017, over 7,490,000 students graduated from universities and the number for 2019 is estimated to be around 8,350,000. Although most were able to find jobs (91.6% in 2017), only 77.1% found full-time employment. As for vocational students, 92.1% of tertiary vocational graduates (3,516,448 graduates in 2017) and 96.7% of secondary vocational graduates (4,968,770 graduates in 2017) found full-time jobs (MyCOS, 2018). This is the first time that the percentage of vocational students exceeds that of university graduates in terms of obtaining full-time employment. The implication may be that enrolment in higher education (i.e. universities) is no longer an assurance of a job, given the more favourable employment rate of secondary vocational students.

Vocational education in China

Generally speaking, vocational education in China is provided at three levels: lower secondary, upper secondary and tertiary. Lower secondary vocational school is rare and mostly provided in remote regions. Upper secondary schools account for the major part of the Chinese vocational education system. There are 10,671 upper secondary vocational schools with 15,924,968 students and 1,388 tertiary vocational schools with 11,049,549 students (Ministry of Education of the People’s Republic of China, 2018). In terms of the number of students, the differences between secondary vocational schools and tertiary vocational schools do not appear significant (approx. 4,000,000 more in secondary vocational schools). However, the regional coverage of the secondary vocational schools is much wider because the Chinese government requires that each county has at least one secondary vocational school. Furthermore, during the four decades of reform and opening-up, China has experienced the largest and fastest urbanisation in the world. This rapid urbanisation would not have been possible without the help of a large workforce, mostly from rural areas. With the transformation to an urban society, people from rural areas need to be trained in order to obtain jobs in the urban areas. Considering the educational background of rural people, secondary vocational schools are more suitable and prepare them for such a ‘transformation’ (Yi et al., 2015). Additionally, providing opportunities for the disadvantaged population has become one of the major social development issues in China. Secondary vocational schools act as a means of inclusion, giving certain disadvantaged groups, such as those from poverty-stricken families and those with disabilities, access to schooling and job opportunities in the labour market. For these disadvantaged students, the system is an attractive plan as they receive exemption of tuition fees and can enter the labour market earlier than tertiary vocational students, who must spend three years in upper high schools and then three to four years in tertiary vocational schools.

Since initiating economic reform in 1978, China has had a remarkable period of rapid growth shifting from a centrally planned to a market-oriented economy and has experienced rapid economic and social development. The GDP growth has averaged nearly 10% a year, the fastest sustained expansion by a major economy in history and has lifted more than 800 million people out of poverty. Although China’s GDP growth has gradually slowed since 2012, it is still impressive by current global standards. In 2017, its GDP reached approximately 12.238 trillion, with a growth of 6.9% in comparison to 2.3% in the United States (The World Bank Group, 2017).

With regard to the total workforce on the supply side, China’s working-age population (15–59 years old) peaked at 925,000,000 in 2011 and has fallen every year since then, with a drop of 3,450,000 in 2012, 2,440,000 in 2013, 3,710,000 in 2014, and 4,870,000 in 2015. According to an estimate by the Ministry of Human Resources and Social Security, the working-age population is expected to see a sharp drop from 830 million in 2030 to 700 million in 2050 at a declining rate of 7,600,000 every year (National Bureau of Statistics, 2018).

With a shrinking workforce, labour costs increase. For a long time, the workforce in China entered the job market with a low educational background (i.e. lower secondary graduates or below) and became low-cost labour for the manufacturing industry. Today, university enrolments are increasing and fundamentally changing the quality and structure of the workforce since university graduates account for half of the newly increased workforce. Though the educational background of the workforce is being enhanced, the skill sets typically do not match market demand. This mismatch is illustrated in Tables 1.1 and 1.2, using data from Beijing, Anhui and Guangxi, which represent northern, central and southwestern areas respectively.

From these tables, it is obvious that the majority of current students are majoring in tertiary industries (81.22% in Beijing, 71.37% in Anhui and 66.86% in Guangxi). The figures are higher than the percentage contributed by tertiary industries to overall GDP (51.6% in China). In loose terms, these figures may indicate that the skills nurtured in schools do not translate proportionally into productivity. This low efficiency of transformation may be caused by a number of factors, one of which may be the programmes and courses determined by educational institutions without proper consideration of market demand. A detailed analysis of this aspect will be presented in the following chapters.

In addition, the turnover rate among young employees is high, with about one-third of graduates leaving their jobs within six months of graduation (MyCOS, 2018). Some of the graduates do not have clear plans for their careers and have unrealistic expectations of new jobs. Chasing higher salaries and better working conditions are two of the major reasons for young people shifting jobs.

Table 1.1 GDP and GDP of primary, secondary, and tertiary industries (hundred million RMB)

	Beijing	Anhui	Guangxi
GDP	19,500.60	19,038.87	14,378.00
GDP of primary industry	161.80	2,348.09	2,343.57
GDP of secondary industry	4,352.80	10,403.96	6,863.04
GDP of tertiary industry	14,986.50	6,282.82	5,171.39
Source: China Vocational Education Yearbook (2015).

Table 1.2 Number of current students in secondary vocational schools

	Beijing	Anhui	Guangxi
Majors in primary industry	1,704	5,733	5,948
Majors in secondary industry	18,627	128,528	97,918
Majors in tertiary industry	87,982	334,773	209,561
Total	108,313	469,034	313,427
Source: China Vocational Education Yearbook (2015).

Furthermore, although the government is increasing its subsidies to vocational education, its spending has long favoured general education over vocational education and training. Government spending per university student is around three times that spent on a tertiary vocational student. Subsidies for secondary vocational students are even less, thus affecting the education quality of vocational schools, especially secondary schools (Ministry of Education of the People’s Republic of China, 2018).

On the demand side, it must first be noted that China is transitioning from being the ‘world’s factory’ for low-end products to becoming a provider of high-end manufacturing and services. This has led to a greater demand for labour with upgraded skills and competence. Data from the Ministry of Human Resources and Social Security (2016) shows that skilled workers account for only about 19% of the entire workforce, with highly skilled workers constituting only 5%.

Second, although the manufacturing sector continues to be the main pillar of the Chinese economy as mentioned above, tertiary industries, especially modern services that deal with IT, software, accounting, marketing and customer management, are expected to grow in the foreseeable future and will need a substantial number of skilled employees and professionals.

Third, due to geographical and historical reasons, the eastern provinces of China enjoy a higher level of economic development than inland provinces and attract a larger pool of highly skilled workers, leading to an agglomeration of high value-added industries in these eastern provinces (Zhang & Rasiah, 2015). Due to the increased cost of land and labour and high-profit margins, these high value-added industries force out low value-added industries which consequently must relocate to inland provinces or neighbouring countries. Such an uneven development of industries leads to differing regional demands in terms of skilled workforce. In addition to the disparities in regional demand for highly skilled workers within the same industry, skills shortages vary across different company ownerships and sizes. In general, domestic private companies suffer severer shortages than foreign companies. Small- and medium-sized companies tend to experience intense skills shortages compared with larger ones.

It appears that China’s economy is robust and human capital is growing. However, the economic transformation and structural changes have resulted in increased skills shortages and mismatches. Demand and supply are dangerously skewed. Low-skilled workers are not ready for highly skilled and high value-added production, while the skills obtained through previous work and training are not those needed by new industries. Vocational education and training play a critical role in closing this skills gap and mismatch, thus justifying a detailed investigation.

Urbanisation and migrant workers

Urbanisation is one of the key strategies adopted by the Chinese government to boost domestic demand. During the process of urbanisation, China has been expanding its cities rapidly and building new urbanised centres in rural regions with the intention of modernising its countryside and narrowing income disparities. By the end of 2017, the number of China’s permanent urban population had reached 813,470,000, accounting for 58.52% of the total population. Since 2012, 101,650,000 rural people have beco...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• Acknowledgements
• 1 Introduction
• 2 Conceptual issues and background
• 3 The development of VET in China
• 4 Case studies of VET in China
• 5 Reforming the VET system and enhancing teachers’ and students’ career development
• 6 Ongoing challenges and future development of China’s VET system
• Index