Upskilling a Nation 🎯 Transcend Newsletter #47
How governments are adopting upskillling models + the F21 Transcend Fellowship!
Hola! Alberto here. Welcome to the Transcend Newsletter.
The Transcend Newsletter explores the intersection of the future of education and the future work, and the founders building it around the world.
We welcome 163 new readers since our last newsletter! If you have a friend who is interested in new trends in learning and work, hit the ❤️ button and share the Transcend Newsletter with them!
Before we start ✨Are you an early-stage founder building the future of learning and work? We are selecing an intimate and global cohort of founders to join our Fall 2021 Transcend Fellowship, where we help founders connect with a wonderful founder community and move towards product-market fit. Applications close in 48h – appy by October 8th!
This week’s newsletter is about how governments are adopting upskilling models at a mass scale! Read on to learn more about:
What the upskilling model means
Why and how governments are adopting these models
Case studies from 🇸🇬 🇫🇷 🇬🇧
The next transformation in education and work models has a name: upskilling.
I describe it often in this newsletter, but here's the main idea of the upskilling model: we are moving away from long-term learning experiences (degrees, large entrance exams) that individuals only experience a few times in their lives, towards short-term learning experiences (certificates, courses, apprenticeships) that are incremental (teaching one skill at a time) but happen constantly over our lifetime.
This is the upskilling revolution.
We are still in the early days of this transition towards the upskilling model, but all stakeholders are showing signs of interest.
Individuals want to upskill because the traditional education system is failing them. The growing unemployment and underemployment among higher education graduates is just one proof.
Employers want their teams to upskill because they can't catch up with market needs, and employees are demanding they invest in them.
But there's a missing player in this equation: government.
Historically, governments have funded or subsidized an immense amount of education and training, whether directly (running public vocational and higher education schools) or indirectly (creating tax incentives for companies to train their employees). Where do they stand on upskilling now?
Governments now are realizing that their existing structures for education and training can't keep up with the demands of the economy.
The answer is clear: it is way too costly for governments to have one individual unemployed.
As soon as somebody loses their job, governments start paying for two costs: the unemployment benefits they issue to the individual and resources to find another job, and the cost of not collecting taxes for their employment (to the company and individual).
Just how expensive is it? This study estimates the average cost of unemployment per person in Europe ranges from 18,000€ ($21k) in the UK to 33,000€ ($39k) in Belgium. The cost strucutres change considerably by country.
For a country like Spain, with 15.2% unemployment and 20,000€ ($23k) yearly cost to unemployment, the total cost of unemployment adds up to $167B. This is bonkers.
The bottom line is that it's really darn expensive to pay for an unemployed person.
Upskilling a Nation
Governments are embracing upskilling as a way to address unemployment and underemployment.
In the previous model, government ran programs directly through schools.
In the upskilling ecosystem, they act mainly as the funder of programs, which are instead run by upskilling companies, and as the coordinator of incentives between employers and individuals.
I've found three case studies for government-led upskilling programs that I want to highlight:
Apprenticeship Levy (UK) 🇬🇧
The UK's Apprenticeship Levy is an amount paid by British employers that can be redeemed to fund apprenticeships.
Employers paying over £3M in yearly contracts pay a .5% tax, which is held on a digital wallet for them to use. The government matches a 10% contribution to each monthly payment. Employers then have 24 months to spend that funding on training apprentices at their company. That training is partly done by them, but also supported by government-approved "training providers" like Multiverse, QA, and many more.
The program has been lauded by many who see apprenticeships as the future of employer training. But the levy is also underutilized: many businesses don't yet know they can spend this budget on training, as 1 in 3 see it as just another tax. The challenge for the levy will be to roll out the implementation to all businesses and support the growing apprenticeship industry in the UK.
Compte Personnel de Formation (France) 🇫🇷
The Compte Personnel de Formation (or CPF) is a learning budget allocated by the French government for all citizens that can be spent on any learning resource throughout the year. Individuals can spend 500 euros per year of employment, up to a 5,000 euro limit.
CPF is spent by individuals through an online portal, where they can see all learning options and buy them straight away. Individuals have full freedom to invest in whatever they want.
French agencies need to approve vendors to list their programs on the CPF website (like training providers in the UK apprenticeship levy), which has created a rich ecosystem of training providers, like OpenClassrooms, Iconoclass, or Livementor.
The challenge for CPF is to maintain high completion rates and show a clear impact, since there is no risk for failing to complete the courses, but it has already lifted the learning ecosystem in France.
SkillsFuture (Singapore) 🇸🇬
SkillsFuture Singapore (or SSG) is an initiative of the Singaporean Ministry of Education to grow upskilling efforts in the country.
This is the type of policy you expect from a government that spends ~20% of its budget on education: it includes a learning budget for all Singaporeans (like CPF, it offers citizens 25 and older S$500 to invest in their personal learning) and a trainee program (the government covers 80% of the training cost and gives a $1.2k learning budgets) that has grown to 21k trainees last year. It also comprises other initiatives like hiring incentives for the private and public sector and internship opportunities.
The challenge for SSG will be to promote the utilization of learning funds, since they are not as easily accessible as the CPF portal, and to lift startups providing great upskilling programs by listing them in their marketplace.
What are we learning?
These programs are relatively new, but they are paving the way for more government-led upskilling.
There are still many challenges: business adoption and completion rates are low in some countries, and fraud is also a major threat. But one underappreciated strength of these programs is the effect they had on the respective national edtech ecosystems, which have florished with better funding and connection to employers.
The way government funds training and education is changing. Soon, we will see dozens of countries adopting these new structures of learning and work in order to upskill their nations.
If you are building a project in the space or exploring it, reply to this email and let us know! We’d love to meet you and find ways to support your project!
💻 Want to know all there is to know about the growing Edtech space in LATAM? Our friends at Startupeable give you the full overview in their report.
🔍 Katelyn Donnelly shares her thoughts on the new era of education startups we are entering: the Era of Pedagogy-Powered Technology.
🇮🇳 India is the capital of education in this decade. Learn about the growing learning/working ecosystem in India from this comprehensive report from GSV.
📚What are the trends shaping K-12 and higher education? Check out this wonderful write up from Reach Capital.
👩💻Adult learners don’t get the interest they deserve in higher education – Sean Gallagher say we need to reboot our thinking.
For more job opportunities, check out our full Job Board!.
Many thanks to Eddy Chan and all the other conversations that made the research here possible!