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INTERNATIONAL LABOUR OFFICE

Human Resources
for Industrial Development

Some Aspects of Policy
and Planning

GENEVA
1967

STUDIES AND REPORTS
NEW SERIES, No. 71

PKINTED B T " LA TKIBUNE DE GENÈVE " , GENEVA, SWITZERLAND

CONTENTS
Page

Introduction

1
PART I
MANPOWER FOR INDUSTRY

1. Skill Requirements for Industrialisation
Object and Scope of Paper
Decisions and Targets for Skill Formation
Sources of Skills
Time Spans to Be Envisaged
Decisions to Be Taken
Information Needed and Available
Production Forecasts
Manpower Targets
Manpower Requirements of Specific Industries
Relative Skill Requirements of Manufacturing Industries
Occupational Requirements of Selected Manufacturing Industries . . .
Skill Requirements for Industrial Occupations
Some Conclusions and Recommendations
Tools of Manpower Planning for Industry
Some Organisational Questions
2. Education and Training Programmes

5
5
7
8
11
13
14
14
16
27
28
31
41
44
45
48
53

I. The Problems
Shortages of Qualified Personnel
Quality Deficiencies
(a) The General Education System
(b) The Training System
Cost of Education and Training
Absence of an Integrated System

53
54
55
55
56
61
61

II. Strategy of Education and Training
Three Phases in Defining a Strategy
(a) The Assessment Phase
(b) Decisions as to Objectives
(c) Allocation of Responsibilities
A National Industrial Training Plan and Organisation

63
65
65
67
68
72

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT
Page

III. Organisation and Financing of the Programmes
74
Organisation and Content
74
(a) General Preparation for Industrial Employment
74
(b) Specific Preparation for Industrial Employment
77
(c) Concluding Remarks
97
Financing
98
(a) Training Levies
100
(b) Arguments for and against Training Levies
102
(c) Financial Aspects of the Industrial Training Organisation . . . 105
IV. A Few Suggestions for International Action
International Contribution to the Definition and Implementation of the
Education and Training Strategy
(a) Provision of the Instruments
(b) Definition of the Industrial Training Plan
(c) Industrial Training Organisation (I.T.O.)
International Contribution to the Organisation of Effective Programmes
(a) Better Education and Training Arrangements for Industry as a
Whole
(b) Launching of Integrated Projects for Particular Sectors . . . .
(c) Better Education and Training Techniques
International Financial Assistance
3. The Effective Utilisation of Manpower for Industrialisation
Introduction
I. Specific Measures Which Countries Might Take to Improve Utilisation
of Industrial Manpower
(a) Measures to Channel People to Industrial Education and Training
Streams
(b) Measures to Channel People to the Jobs where Manpower Is Required
(c) Measures Aimed at Improving the Performance of Industrial Manpower
II. International Action
4. Training for Small Manufacturing Enterprises in Developing Countries . . .
Introduction

107
107
108
108
109
109
109
109
109
110
113
113
115
115
122
126
129
133
133

I. Training Small Industrialists in Entrepreneurial and Managerial Skills 134
The Nature of the Small Enterprise
134
Current Training Practices
139
Guidelines for Training
141
Practical Applications : Integration of Managerial Training
146
II. The Technical Training of Small Industrialists and Workers
148
The Present Situation
148
Technical Training Needs of Small Enterprises
151
Guidelines for Training
153
Practical Applications : Integration of Technical Training
155
Conclusion
158

CONTENTS

PART II
OTHER POLICY ISSUES
Page

5. Social Participation in Industrial Development

163

Introduction

163

I. Industrialisation and Individual and Collective Labour Relations . . .
Individual Labour Relations
Staff Policies
Participation of Workers in Decision-Making within the Undertaking
Industrial Relations

166
167
168
168
170

II. Workers' and Employers' Organisations and Their Contribution to
Industrialisation
Workers' Organisations
Employers' Organisations
Participation of Workers' and Employers' Organisations in the Framing
and Implementation of Industrialisation Programmes

176

III. National and International Action to Promote Social Participation . .
National Action
International Action

178
178
181

6. Employment Aspects of Industrialisation

171
172
174

185

A. The industrial sector in developing countries provides directly only
limited employment in proportion to the amount of capital invested,
but makes a long-run contribution to the solution of employment problems
to the extent that it promotes rapid economic growth and development 186
B. If too much weight is given to short-term employment considerations,
countries may choose a product mix and types of technology that do not
make for rapid growth
187
C. If too little weight is given to short-term employment considerations,
countries may choose a path of development that leaves large numbers of
people unemployed or underemployed and fails to make full use of their
human potential for development
188
D. Countries have accordingly to determine what their policy towards
employment in the context of industrial development is to be; a useful
distinction can be drawn in this connection between relief-oriented
employment on the one hand and production-oriented employment on
the other
188
E. The first and major element in a developing country's policy towards
employment in the context of industrial development should be to make
sure that all labour that can be employed productively in the industrial
sector is employed; and steps should be taken to implement this policy 190
F. Some forms of international action may be helpful in this connection . . 198
7. Progressive Industrial Technology for Developing Countries
Introduction

201
201

I. Some Factors Affecting the Choice of Industrial Technology
201
II. Sources of Appropriate Technology and Ways of Increasing Its Availability
209

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT
Page

New Designs
Modern Technologies
Long-Established Designs
Second-hand Machinery
III. Measures to Promote the Eflfective Introduction of Industrial Technology
Industrialists and Employers' Organisations
Governments
Action by International Organisations
Conclusion
8. Wages and Industrial Development
Introduction
Objectives of Wage Policy
The General Level of Wages
The " Room for Wage Increases "
The Structure of Wages and Salaries
Instruments of Wage Policy
International Action

209
210
211
212
214
214
215
216
217
219
219
221
221
222
228
234
236

INTRODUCTION
This volume is a collection of papers prepared by the International
Labour Office for an international symposium planned by the newly
established United Nations Industrial Development Organisation to
follow the series of regional symposia held in 1966. The purpose of the
papers is to identify some of the major manpower and social problems
encountered by developing countries in the process of industrial
development, and to discuss action that needs to be taken both at
national and at international levels if these problems are to be solved.
The interest of the I.L.O. in these matters is twofold: it is concerned
to make its contribution to the process of industrial development which
has a vital role to play in providing the resources for social progress;
and the I.L.O. also has special responsibilities for helping member
countries to ensure that workers share fully, both as consumers and as
producers, in the fruits of industrial development.
As may be seen from the table of contents, the papers in this volume
fall into two groups. Part I, entitled " Manpower for Industry ", comprises four papers devoted to problems of training and utilising manpower for industrial development. Problems discussed include—
(a) determination of goals, quantitative and qualitative, to be achieved
in the education and training of skilled industrial manpower;
(b) the development of coherent and efficient systems, including
provision of adequate legislative and administrative support, and
the establishment of national industrial training organisations, for
attaining these goals;
(c) the special role of industry itself in development of skills;
(d) measures to ensure the best possible use of available skilled manpower;
(e) the contributions that international action can make to enable
the developing countries to formulate and implement effective
programmes of training for industrialisation.
Part II of the volume, entitled " Other Policy Issues ", likewise
contains four papers. That on " Social Participation in Industrial Development " stresses the importance of enlisting the co-operation and

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

active participation of different social groups, particularly employers
and workers and their organisations, in the processes of industrialisation,
and discusses the purposes that such participation may serve and the
forms that it may take. The paper on " Employment Aspects of Industrialisation " suggests a number of reasons why, unless appropriate measures
are taken, less labour may be employed in the industrial sector in
developing countries than it would be economically worthwhile and
socially desirable to employ, and discusses various approaches to the
problem of providing more productive employment in industry. One of
the most important of these approaches is discussed at greater length
in the following paper, entitled " Progressive Industrial Technology in
Developing Countries ". Finally, a paper on wages and industrial
development points out that the success of a country's efforts to promote
industrial development, as well as the way in which the proceeds of
industrial development are shared, will depend partly upon the level,
structure and rates of increase of wages and salaries, and discusses
various problems that arise in this connection.
Action needed to deal with the manpower and social problems of
industrial development has, of course, mainly to be taken in the countries
concerned. But some forms of international action can contribute to
the solution of these problems, and it was considered appropriate, in
papers prepared for discussion at an international symposium, to
devote special attention to the possibilities that exist for useful international action. Three types of international action can contribute to
national policies for industrial manpower: (a) provision of advice,
equipment and qualified technical personnel under technical co-operation
programmes, bilateral and multilateral; (b) financial assistance; and
(c) joint action by developing countries themselves sharing common
problems. Suggestions are made in the papers regarding all three types
of action. In connection more particularly with the first of these types
of international action, some information is given about ways in which
the I.L.O. is equipped and ready to help member States on request in
dealing with the manpower and social planning of industrial development.

PARTI

MANPOWER FOR INDUSTRY

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

OBJECT AND SCOPE OF PAPER

The purpose of this paper is limited but important. It is to help in
defining national and international action needed to determine the skill
requirements of industrial development in low-income countries. Action
needed to meet these skill requirements is considered below in papers
Nos. 2 and 3. The discussion below is concerned with determining needs
for skilled personnel.
The importance of programming or planning in this field is twofold.
On the one hand, success in industrial development depends in part on
the availability of skills, and it is the task of planning in this field to
ensure that the skills are available at the appropriate moment. The
productivity of plant and equipment is low when the managers and
workers handling them are of low capability. Domestic investment may
then become not a help to progress but a burden on communities
already very poor; and foreign investors may be deterred when no
skilled manpower can be recruited or trained. On the other hand, the
cost of providing skills is high x : training too much or too many in
some fields and too little or too few in others, and recruiting manpower
abroad that could well have been trained at home, places unnecessary
burdens on poor nations. It is therefore another task of planning in this
field to determine the optimal balance of quantity and quality in skill
formation.
1
It is almost impossible to provide a comprehensive measure of the cost of skill
provision. But one indicator may help to suggest an order of magnitude. Jacob MINCER
(The Journal of Political Economy, Oct. 1962, Supplement, p. 55), using a very broad
concept of training and an indirect method of determining its cost, estimated that, for
instance, in 1958 in the United States total life-time investment in training per male
amounted to $7,700 for those whose educational level did not extend beyond elementary school. In that year gross domestic product per head at factor cost in the
United States amounted to $2,324 (both figures in current prices). The former sum is
well over three times the annual product per head. A more restricted concept of
training (e.g. excluding part of general education and some of the " learning by
experience ") would, perhaps, reduce this ratio considerably, to, say, twice the annual
product per head. Even then the cost of training of this group of relatively low skill
would be quite considerable. For males with high-school and college education
Mincer's figures of total investment were more than twice and seven times higher,
respectively, than for the first group.
In view of the discussion of on-the-job training later in this paper, it is perhaps of
interest to note that, of the $7,700 mentioned above, less than one-third was attributed
to the cost of all forms of formal schooling and the rest to on-the-job training.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

The focus of the following discussion is on decisions to be taken by
public policy makers. Each country has some facilities for skill formation
—the general education system, some enterprises in which workers
can be trained, and possibly some schools or centres for vocational
training. Also, each government has some means of control over the
provision and utilisation of such facilities; the budget may provide for
increasing numbers of schools and teachers, the law may compel certain
types of firms to provide specific kinds of training, the central bank may
provide foreign exchange for study abroad, vocational guidance may be
given, fellowships provided, and attractive salaries fixed with a view to
inducing young people to seek certain kinds of training rather than
others, and so on. Furthermore, many governments have some degree
of control over the recruitment of foreign manpower to fill gaps in the
national labour force. This paper does not discuss what these controls
should be or how they should be exercised. It is concerned instead with
questions of calculating what public policy should try to make these
various sources of skill provide: what a country should want or need
from them.
This statement of the problem corresponds to the " target-setting
approach to human resources planning ".1 It provides a basis, first,
for deciding what facilities for skill formation should be provided
in the country concerned; and second, for deciding what should be
done to induce people to make use of these facilities. The former
aspect is of special relevance to the problems discussed in paper
No. 2.
The reason for discussing these questions at some length is that they
are difficult, and yet were not until recently recognised as involving
major issues of policy.2 There are two main problems. First, there is the
problem of matching the costs and benefits of skills already referred to :
better-qualified personnel produce more but they also cost more, and
it will be necessary to determine where the optimum lies. Second, difficulties arise owing to the time factor. A period of several years may
separate the beginning of study and training from its completion; by
this time the usefulness of a particular skill may be much below that of
other skills for which no provision had been made at the outset. Moreover, many training facilities (school buildings, specialised equipment
1

Frederick HARBISON and Charles A. MYERS: Education, Manpower and Economic
Growth (New York, Toronto, London, McGraw-Hill, 1964), pp. 202 if.
2
Considering people as " human resources ", in which investments can be made
on the basis of calculations of costs and benefits, seems repugnant. This may be a
major reason why systematic analysis of manpower has long been neglected in the
study of economic development as compared with, for instance, physical capital and
financial questions.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

and teachers), once installed, cannot be used for entirely different programmes without considerable loss.
The main concerns of the present paper may now be stated in these
terms : by what methods and on the basis of what kinds of information
should current public decisions regarding the future provision of industrial
skills be taken in order that these decisions be as nearly optimal as
possible? This leads to the further question as to what services are
needed at the national level to collect this information, to analyse it
and to translate the findings into concrete policy decisions. Since present
approaches to the problem rely heavily on international comparisons,
this in turn raises the question as to how useful information can be
assembled and exchanged on an international basis. Finally, some
questions of international action and policy arise from the fact that
international exchange of manpower (especially highly qualified manpower) is an important source of skill provision.
The discussion that follows is divided into four sections. First, a
simple outline is given of the various types of decisions that have to
be taken at any time concerning the provision of industrial skills and of
the types of information about future manpower needs on which these
decisions should be based. Second, sources of obtaining such information
and methods of analysing it are presented and illustrated and it is noted
to what extent they meet requirements and what practical questions they
leave unanswered. Third, some data concerning manpower requirements
are applied to specific industries, the development of which was recommended by the Regional Symposia that have preceded the present
International Symposium. This may give some idea of at least the
relative difficulty of meeting manpower requirements in these different
industries, and it may help in focusing national and international action
needed to meet these requirements. Fourth, some conclusions are
suggested regarding national and international action for determining
industrial skill requirements.
DECISIONS AND TARGETS FOR SKILL FORMATION

As this paper is concerned with target-setting and public decisionmaking for the development of industrial skills, the sources of such skills
should be briefly considered. Different sources will be required according
to the nature of the skill to be provided, according to the method of
providing it, or both. Hence the time needed for skill development will
also be different, i.e. decisions taken now can yield results in the near
future for some of the sources, but only in a more distant future for
others. Thus, the type of information needed for target-setting regarding

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

various sources of skill is also different; rather detailed data concerning
short-term manpower requirements are wanted for some sources, more
global figures about long-term requirements for others. In all cases this
information must include estimates of future production, about the kinds
of work it would involve, and about technology.
Sources of Skills
Four sources of skills may be distinguished:
(a) general education ;
(b) formal institutions for specific vocational preparation at secondary
and tertiary levels such as technical schools, colleges and universities ;
(c) on-the-job training;
(d) foreign countries.
(a) General Education.
The functions of general education are far broader than the provision
of skills for industrial development. But all advanced industrial skills
require some level of general attainment in the use of language, reasoning
and mathematics, such as is taught at general schools. Furthermore,
ability to adapt from one type of work to another is enhanced by a
relatively high level of properly oriented general education. This is
important when industrialisation involves fast technological change.
It is also important because, as noted later in this paper, precise forecasts
of skill requirements are impossible, so that trained personnel must be
adaptable. For these reasons the planning of general education should
be part of the decision-taking processes with which this paper is concerned. In other words, the " manpower approach " to planning of
general education is necessary, even though it is by no means sufficient
for such planning. Quantitative manpower targets to be met by the
general education system should be calculated as a basis for action in
that field. In practice, the main bottlenecks of general education systems
in developing countries from this point of view are at the secondaryschool level.1
(b) Training Institutions.
Several types of formal training institutions provide various levels
of specific vocational preparation (including retraining) as distinct from
general education. Thus, lower- and higher-stage vocational and technical
1

HARBISON and MYERS, op. cit., pp. 57, 81 and

111.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

schools exist at secondary educational level : at the lower stage more or
less specific vocational skills in trades such as woodwork and metalworking are taught; at the higher stage a variety of scientific, technological, commercial and other fields may be covered. At a yet higher
level training takes place in the form of university and equivalent
education. Most formal training institutions are provided by public
authorities as part of a country's education system. But others may be
provided and operated by industrial enterprises acting singly or jointly.
(c) On-the-Job Training.
On-the-job training includes a variety of arrangements whose common
feature is that they are carried out wholly or largely within the enterprise
by which the learner is employed. On-the-job training includes apprenticeship programmes, but also less formal arrangements. It is provided for
semi-skilled and skilled workers as well as for higher ranks such as
middle-management categories. Much on-the-job training is arranged
for workers and employees newly recruited by the enterprise, but highly
developed programmes exist also to prepare workers for higher grades
of work, or for new methods of production.
For a broad range of skills, learning on the job and courses at schools
are alternative training methods between which the future worker must
make a choice. Public policy makers, too, must decide whether to
encourage, within this range, the development of one rather than the
other method, both generally and in specific fields of training (e.g. for
various types of skilled workers and technicians). One important aspect
of the problem is that for many types of training the cost of one method
(assuming roughly equal efficiency of application) is much lower than
that of the other. This question is considered further in paper No. 2
below, where it is submitted that training on the job is the more efficient
method in a far wider range of cases than that in which it is actually
applied.
For present purposes another difference between the two methods is
important, namely the necessary advance calculation of industrial skill
requirements to be met. For two reasons this is simpler in the case of
training on the job than in special institutions. First, whereas instructors
and equipment used for training in an enterprise can normally also be
used for production, the staff and installations of schools often cannot;
most of the latter's useful life is entirely committed to training. Hence,
when deciding whether to provide training facilities and on what scale,
the specific training use to be made of them can be forecast over a shorter
term for training on the job than for formal institutions. Second, decisions
to train specific persons on the job are usually linked directly to concrete

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

jobs. These decisions normally rest with the employer and involve him
in some cost and inconvenience: he decides in the light of his own
production and investment plans. Decisions to set up schools often rest
with public authorities and are based on some general expectation that
over the years enough people will be using them to warrant their establishment. Moreover, participation in training at schools is normally at the
initiative of the trainee, in the expectation that his new skill will eventually
stand him in good stead. But this expectation may never be realised.
For example the trainee may ultimately be employed in an occupation
for which a different kind of training would have been more useful or
cheaper. Even when employed in the occupation for which he was
trained he may find his skills to be too advanced, or not advanced
enough, or based on a different technology from that used in his job.
So, for a number of reasons further discussed in paper No. 2, it
seems important in the provision of industrial skills to follow two
general principles :
(i) Training of employed persons in connection with their jobs (" training
in employment ") should be preferred to training outside the framework of an employment relationship.1
(ii) Wherever possible training within enterprises should be preferred

to training in schools or other formal institutions.
Training in employment places considerable responsibility on employers, while reducing that of public authorities. It consists largely
—but not always wholly—of training within the enterprise. For some
kinds of training formal courses in outside institutions (schools or
centres) are preferable or indispensable (see paper No. 2). Even then
the employer, or an employers' association, or an industrial board may
set up the school, or assume all or part of the cost of an employee's
training in a public or private institution.
The main task of public policy in this case would be to ensure that
industrial employers did in fact discharge these responsibilities adequately
in accordance with a predetermined target. This target would serve the
public authorities as a basis for financial incentives, technical assistance
and facilities, and legal compulsion where necessary and appropriate,
as further discussed in paper No. 2.
1
In developing countries "pre-employment trade and technical training in secondary schools is probably a waste of both time and resources " (HARBISON and MYERS,
op. cit., pp. 56, 68, 82, 96 and 123). See also Philip J. FOSTER:" The Vocational School
Fallacy in Development Planning ", in C. A. ANDERSON and M. J. BOWMAN (editors):
Education and Economic Development (Chicago, Aldine Publishing Company, 1965);
Robert L. THOMAS: " High-Level Manpower in the Economic Development of
Uganda ", in Frederick HARBISON and Charles A. MYERS (editors) : Manpower and
Education (New York, Sydney, Toronto, London, McGraw-Hill, 1965).

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

(d) Training Abroad and the Employment of Expatriate Manpower.
From the point of view of the present paper, training abroad and the
employment of expatriate manpower may be regarded as balancing
items. Training abroad is useful when there are no facilities at home—
whether because of lack of foresight or because of the cost. Employing
expatriate manpower fills gaps in national skill availabilities arising out
of unexpected needs or mere short-term requirements, e.g. consultancy
services or the training of national personnel by foreign firms supplying
and installing new industrial plant and equipment.
Time Spans to Be Envisaged
Decisions for providing sources of skill must be based on targets to
be attained in the future. The period for target-setting is the time needed
for the decisions to yield their results. To consider shorter periods
would be useless; to look at longer periods may be unnecessary. The
appropriate time span depends on the following factors :
(i) the period of learning needed to acquire the skill;
(ii) when new facilities are to be provided: the period of planning and
constructing buildings, acquiring equipment and providing national
or expatriate teaching staff;
(iii) when the number of trainees is to increase: the time needed to
attract learners.
When new facilities are to be provided it is also necessary to consider
to what extent these are likely to be needed in the more distant future,
and whether the investment in new buildings and equipment is
justified.
The length of target periods in years differs for the various types
and methods of skill provision. For most purposes one or more of
three typical time spans will be relevant, i.e. the short term (less than
three years), the medium term (from about three to seven years) and
the long term (more than seven years).
(a) For secondary general education, the period for target-setting
must be long, as this is, inter alia, the first stage in acquiring a wide
range of advanced industrial skills. While long-term programming is
hazardous and subject to great uncertainty, in the case of general education this is somewhat offset by the fact that the programming need not
be detailed. Often (in so far as the supply of industrial manpower is
2

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

concerned) only a distinction between scientifically and commercially
oriented curricula is needed.
(b) In the case of formal technical education, greater precision in
estimates of future requirements is needed than in the case of general
education, because of the higher degree of specialisation involved. But
the period to be considered is shorter, and thus medium-term forecasts
are often helpful. However, when expensive new facilities are needed,
involving elaborate equipment (e.g. university departments of engineering), time must be added for preparation of construction and finance,
and estimates have to be made of long-term needs.
(c) On-the-job training, being linked to specific jobs and conducted
in large part with instructors and equipment that can also be used for
production, calls for much less advance planning than do formal education and training. It can be undertaken, and facilities made available,
when a specific need arises. Some general foresight is, of course, indispensable. Management should provide in its investment and production plans the spare capacity and time needed for ensuring that new
recruits are trained and established workers upgraded to the extent
called for by normal turnover and by growth in the labour force. The
introduction of new products or of new methods and equipment may

call for considerable retraining, and the enterprise's engineering staff
who designed the new product or method should be available for this
purpose. When ordering new equipment it may be necessary to stipulate
that the enterprise supplying it will also help in retraining workers and
higher employees. There is also some need for highly skilled staff to
keep abreast of technological progress of interest to the enterprise.
(d) The main difference between training abroad and at home is that
in the latter case teachers and instructors must be provided, and training
requirements for such personnel have to be foreseen long in advance.
So it seems rational that a large proportion of technical assistance
experts sent to developing countries should be specialists in the training
of teachers and instructors. 1 This means that education and training in
developing countries can expand fast. It may also mean that in planning
for the distant and very uncertain future some reliance should continue
to be placed on foreign supply of teachers and instructors (whether
through technical assistance or otherwise).
Some forward planning would then seem indispensable. Technical
assistance programmes have encountered considerable difficulties in
1
HARBISON and MYERS: Education, Manpower and Economic Growth, op. cit.,
p. 16; in 1963, out of 82,000 technical assistance experts provided by O.E.C.D. countries, 38,000 were teachers.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

recruiting staff with the very high qualifications that this costly source
of manpower should supply. If such programmes are to continue and
even grow in the future, some manpower planning at the international
level will be needed as badly as it is at the national level. Furthermore,
at lower levels of education and training, the language barriers reduce
the extent to which foreign teachers and instructors can be employed.
Decisions to Be Taken
Summarising the preceding sections it may be said that public authorities responsible for the provision of skill have, at any point of time, to
take two main types of decisions :
(a) those concerning the provision of sources of skill, national and
foreign;
(b) those concerning vocational guidance (including provision of scholarships and other appropriate incentives) of persons available for training through various facilities.
Each type of decision needs to aim at attaining targets for each of
the sources of skill. At primary schools pupils can be given some guidance
as to whether or not to seek entry into secondary general schools, and in
choosing manual or non-manual occupations of various kinds. At
secondary general schools guidance can be given with a view to channelling the right proportions of pupils directly towards specific occupations
(or even specific enterprises), higher-stage secondary technical schools
and various kinds of university training.
Simultaneously, decisions have to be taken (with reference to the
targets chosen) as to the expansion or contraction of various kinds of
formal training institutions, the expansion or redirection of schemes for
training in employment, the recruitment of foreign manpower, and study
abroad.
Although these decisions will all have an impact in the future, for
some this future is near, for others distant. Vocational guidance for
school leavers not continuing formal study must to some considerable
extent be related to the immediate situation in the employment market.
For those continuing formal study, the occupational outlook must be
of longer term, the longer and more expensive are the studies concerned.
Similarly, while decisions to recruit expatriate manpower should be
based on immediate requirements, those concerning the expansion of
national training facilities should be based on expectations regarding the
more or less distant future.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

INFORMATION NEEDED AND AVAILABLE

Targets for industrial skill formation in the short, medium and long
run must be derived from estimates of industrial output and technology.
The present paper is concerned with this derivation—not with the making of production forecasts. Something must be said, however, about
the actual availability of such forecasts. Future productivity, an important
indicator of the level of technology, also raises some serious problems in
determining manpower requirements.
Forecasts of both output and productivity become less detailed and
reliable as the period considered lengthens. Yet the amount of information needed for decisions on training increases as this period becomes
longer, for the scope and impact of decisions taken at any moment, while
quite limited in the immediate future, are greater over longer periods.
Decisions regarding industrial skill formation should be based on
some estimate of production, but they should also take account of the
broader context of industrial development. First, provision should be
made for the highly skilled manpower needed for industrial research and
development. Although developing countries can rely to a large extent
on technical knowledge applied in advanced countries, they should make
some provision for research and development for new products and
methods in addition to current industrial output, if they are to develop
industries capable of capturing significant shares in the international
markets for manufactures.
Second, even though the estimated manpower requirements of industrial development should play a major part in decisions regarding the
scale and direction of training and educational programmes, it would be
wrong not to take account of the high-level manpower requirements of
other sectors. Both casual observation and ample statistical evidence
show that people with quite similar education and training are engaged in
widely differing occupations. So, if enough manpower is trained for estimated industrial needs but not for other purposes (e.g. agriculture, government services) some of this manpower will be employed in other sectors,
leaving a gap in industry.
Production Forecasts
For present purposes the most interesting questions of short-term
output expectations (i.e. for one or two years) are what new industrial
plants are likely to be established and what existing ones substantially
expanded. It should not be difficult to obtain reasonably accurate answers to these questions from inquiries among existing enterprises and

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

from such government agencies as may be concerned with the establishment of new plants. In centrally planned economies most short-term
enterprise plans are quite precise, and relatively certain to be approximately implemented, as regards both output and manpower input. In
market-oriented economies greater flexibility (and hence uncertainty)
exists in these respects, but the short term raises no very great problems
and in any event little can be done to remedy them.
Medium-term production estimates (i.e. for a period of about five
years) are of great importance because over such a time span decisions
regarding vocational guidance and the provision of training facilities can
have a considerable impact on the actual supply of skills. It is therefore
of great help that such estimates are now often available as targets of
national development plans. These are often based on thorough and
realistic estimates of what is feasible and desirable, in industry as well as
in other sectors, and may include estimates of manpower requirements
and measures to meet them. It would indeed seem essential for realistic
development plans to include manpower planning, that is, for the kinds
of decisions discussed in this paper to be made an integral part of the
over-all plan, but except in the centrally planned economies this is rarely
done.1
Plans prepared without regard for human resources are perhaps not
likely to be realistic in other respects. Although their output targets can
be used as a source of information for manpower planning, they may well
have to be checked against other sources, such as employers' estimates or
actual developments in other countries in comparable conditions. In any
case plans cannot be regarded as statements of what will happen in the
future; rather, they are forecasts of what is likely to happen if the measures they propose are taken and have the effects expected of them by the
planners. In this sense plans in most developing countries have not proved
particularly reliable guides.2
It is perhaps partly owing to the unreliability of comprehensive
development plans in some cases that some developing countries have
refrained from establishing them. One source of information on which
to base targets and decisions of skill provision is then missing. But this
does not remove the need for setting targets and taking decisions. So
other sources of information, less systematic and perhaps less reliable
1
For instance, it has been found that in Latin America few of the plans prepared
in recent years pay explicit attention to manpower aspects; Eighth Conference of
American States Members of the International Labour Organisation, Ottawa, 1966,
Report II, Manpower Planning and Employment Policy in Economic Development
(mimeographed), p. 105.
2
For a pessimistic assessment of plan experience see Andrew WATSON and Joel B.
DIRLAN: " The Impact of Underdevelopment on Economic Planning ", in Quarterly
Journal of Economics, May 1965.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

than a comprehensive development plan, must be found. Manpower
planning cannot wait until a country has prepared such a plan and all
relevant information is available. Naturally, manpower decisions that are
integrated into general plans and based on copious information can be
better than those that are not. But decisions based on careful consideration of even very incomplete data, even without the framework of an
over-all development plan, are less likely to prove seriously wrong than
decisions taken at random or on grounds of mere short-term political
expendiency.
The above considerations are particularly relevant to long-term output
expectations (i.e. for more than ten years). For long and very long periods
it may not be possible to go further than making more or less reasonable
assumptions about the level of, and rates of increase in, over-all output
subdivided into two or three sectors. Yet even estimates of such a global
nature can be useful for certain types of manpower decisions—although
it is of course convenient if somewhat more refined " perspective plans "
are available.
Manpower Targets
Converting output expectations into targets of skill provision is a
complex process. Its precise nature depends in part on the time span to
be considered, and on the types of information available both on the
output expectations and on the relationships between output and skill
requirements. Some of this information has to be obtained from the
country in question itself. But in judging the possible future course of a
developing country's economic system it is often useful to examine the
actual experience of other countries that have already passed the stage
upon which the former country is about to enter.
In recent years a number of methods have been developed to estimate
skill requirements. All these methods are deficient in many ways; yet
they all help to raise the level of decision-taking above the haphazard and
the short-sighted. However, nearly all systematic methods of forecasting
skill requirements or setting targets for meeting these requirements
concern general education. Much less attention has been paid to vocational education, and almost none to training in employment.
Below some of these methods are briefly reviewed. The purpose of this
review is threefold :
(i) to illustrate the nature of the work involved in preparing rational
decisions ;
(ii) to indicate the kind of national facilities needed for this purpose;
(in) to indicate what contributions could be made by international action.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

Long-Term Targets.
It is simplest to begin with the case of long-term problems in which
little information is available in the way of output expectations. In that
case there are few variables to consider.
Thus, the Tinbergen-Correa model enables educational requirements
to be determined at secondary and tertiary level, for sequences of sixyear periods.1 To this end the model assumes a certain rate of future
growth in global production, certain fixed relationships between this
output and the required numbers of workers with secondary and thirdlevel education, certain teacher-student ratios and a six-year study period
at each level. The numbers of persons with secondary and third-level
education assumed to be needed per $1,000 million volume of annual
production were derived from United States data.
TABLE I. EDUCATIONAL REQUIREMENTS ACCORDING TO THE
TINBERGEN-CORREA MODEL FOR TWO CASES O F GROWTH
O F OUTPUT
Case A: 30 per cent, growth
per six-year period
Base
year

Volume of production
(1,000 million 1940
dollars) :
100
Educational requirements (millions) :
Manpower with
secondary education
20.0
Manpower with thirdlevel education . .
2.45
Students in secondary
9.4
schools
Students in third-level
0.98
institutions . . .
Manpower with
secondary education and less than
six years' employ6.2
Manpower with thirdlevel education and
less than six years'
employment . . .
0.76

1st
period

2nd
period

130

169

26.0
3.19
12.2
1.27

8.0

0.98

33.7
4.14
15.8
1.65

10.5

1.27

3rd
period

219

43.7
5.35
20.5
2.15

13.6

1.66

Case B: 40 per cent, growth
per six-year period
Base
year

100

20.0
2.57
12.0
1.29

7.2

0.93

1st
period

140

28.0
3.60
16.8
1.80

10.1

1.29

2nd
period

196

39.2
5.02
23.5
2.54

14.1

1.80

3rd
period

274

54.8
7.03
32.9
3.53

19.8

2.54

1
Jan TINBERGEN : "Quantitative Adaptation of Education to Accelerated Growth",
in Herbert S. PARNÉS (editor): Planning Education for Economic and Social Development (Paris, O.E.C.D., 1963), pp. 159 ff.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

Illustrative results of this model for an 18-year period are as given in
table I. 1 Case A concerns an assumption of 30 per cent, growth of national output per six years, or 4.47 per cent, per annum; in Case B growth is
assumed to be 40 per cent, per six years or 5.77 per cent, per annum.
The model also makes it possible to calculate how many more persons
with second- and third-level education will be needed if the rate of growth
is to be stepped up from 30 per cent, to 40 per cent, per period. Furthermore, it specifies how the use of foreign manpower can shorten the
period of transition from the lower to the higher rate.
The limitations of this model are obvious. For instance, the assumed
ratios may not be valid for many countries and they will be constant in
none. There is no distinction between major economic sectors and
occupational groups. As a result, there is no distinction between the
various types of secondary and third-level education to be developed;
length of study is certainly not uniformly six years; and so on. But the
model does make explicit the main interrelated variables of output and
education to be considered. It also provides a first approach to balanced
development of a country's educational system where no detailed
information is available on which to base expectations regarding these
matters. Of course, when additional information does exist, this should
be substituted for or added to the original presentation of the model.2
At the same time, a search should be made for methods and data
enabling reasonable forecasts to be made for developing countries of
more specific indicators of skill requirements as a basis for targetsetting. Especially as regards the long and medium term it seems clear
that comparative international experience can be an important source
of such data.
International Comparisons.
The general use of international comparison as a tool for projecting
national trends was recently stated in the following terms :
There are two bases for projecting the future evolution of any social unit:
its own past experience and the experience of other similar units. All economic
forecasting methods represent some blend of these two approaches. At one
extreme, the past history of a country may be formalised in an econometric
model and predictions determined from assumptions as to the future values
of the exogenous variables in the model. In this approach, the experience of
other economies is drawn on in estimating some of the parameters in the model,
1

The model is known to have been applied in practice in China (Taiwan), Greece,
Spain and Turkey; see O.E.C.D. : Econometric Models of Education (Paris, 1965) and
H. F. MCCUSKER, Jr., in Société française de recherche opérationnelle: Recherche opérationnelle et problèmes du tiers-monde (Paris, Dunod, 1964).
2
A less limited version of the model is that by J. TINBERGEN and H. C. Bos in
Econometric Models of Education, op. cit.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

in choosing the values of exogenous variables, and in judging the plausibility
of the results. At the other extreme, generalisations from common experience
in the form of patterns or stages of growth form the analytical core around
which projections are built up. In this case the relation between the two
approaches is reversed; the model of the particular economy serves to modify
the conclusions reached from comparative analysis.
The choice of analytical techniques is more limited in less developed countries than it is in advanced ones. Econometric models based on time series for
the country concerned have proven to be of very limited value, both because
of the scarcity of historical data and because some of the structural relations
are undergoing significant changes. Therefore plans and projections for these
countries must rely more heavily on international experience, both of countries
at a similar stage of development and of those that are more advanced.1
In an early and simple application of this principle to the setting-up
of guideposts for long-term national educational development, Professor
Harbison derived from comparative international data some " rules of
thumb " relating annual rates of increase in required numbers of highlevel manpower to desired rates of over-all economic growth.2 More
recently, on the basis of more advanced statistical data permitting of
more refined analysis, a number of interesting systematic relationships
were established by the Unit for Economic and Statistical Studies on
Higher Education of the London School of Economics and Political
Science.3
In this study variables of interest to long-term planning of vocational
guidance and skill formation are related to output per worker as an
indicator of the level of economic development. From data concerning
from eight to 13 countries productivity was calculated, for the economy
as a whole and for major economic sectors (i.e. the eight one-digit
sectors of the International Standard Industrial Classification of All
Economic Activities). Inter-country differences in productivity were then
correlated with the following indicators of manpower development:
(a) distribution of the labour force within sectors by " major
occupational groups " (i.e. Major Groups 0, 1, 2 and 3 of the
International Standard Classification of Occupations) ;
(b) educational attainments of the labour force within four major
occupational groups;
(c) educational attainments of the labour force by economic sector;
1
Hollis B. CHENERY, with Lance TAYLOR: Intercountry and Intertemporal Patterns
of Industrial Growth, Interegi'onal Seminar on Long-Term Economic Projections
(United Nations), Elsinore, Denmark, August 1966.
2
International Institute for Labour Studies: Lectures on the Labour Force and
Its Employment (Geneva, 1963), pp. 40 and 41.
3
P. R. G. LAYARD and J. C. SAIGAL: " Educational and Occupational Characteristics of Manpower: An International Comparison ", in British Journal of Industrial
Relations (London School of Economics and Political Science), Vol. IV, No. 2,
July 1966, pp. 222 ff.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(d) proportions of certain high-level minor occupational groups in
the national labour force as a whole.
All data and findings related to years around 1960.
The provisional findings of the study may be illustrated as follows :
(a) A 1 per cent, increase in productivity in the manufacturing
sector tends to be associated with increases in the proportion, within
the manufacturing labour force, of professional, technical and related
workers of 1.01 per cent., administrative, executive and managerial
workers of 0.32 per cent., clerical workers of 0.54 per cent, and sales
workers of 0.48 per cent.
(b) A 1 per cent, increase in productivity in the economy as a whole
tends to be associated with certain percentage increases in the proportions
of workers in the above occupational groups holding degrees, having
completed secondary school, attained matriculation level, completed
middle schooling, or completed only primary schooling.
(c) A 1 per cent, increase in productivity in the combined manufacturing and electricity sectors tends to be associated with a 1.02 per
cent, increase in the proportion of the labour force in these sectors
having completed secondary school or higher education and a 0.76 per
cent, increase in the proportion of those having had middle schooling.
(d) A 1 per cent, increase in productivity in the economy as a whole
tends to be associated with a 0.81 per cent, increase in the proportion,
in the national labour force, of architects, engineers, surveyors, scientists,
draughtsmen, and science and engineering technicians combined.
A somewhat similar analysis was recently undertaken in the I.L.O. 1
In this case employment in the ten major I.S.C.O. groups was related to
national income per head, but also to the rate of economic growth and
to the size of a country's population. On this basis, using projections of
economic growth made by P. N. ROSENSTEIN RODAN, total employment
in the major groups was projected for each of the regions distinguished
in the United Nations demographic statistics for the world as a whole,
for the years 1970, 1975 and 1980.
Again, some of the limitations of international comparisons of this
nature are clear. They can be applied to any national situation to a
limited extent only. Thus, although less advanced countries may gain
some impression of skills available in the labour force of more advanced
nations, these are not necessarily the skills needed—i.e. the skills countries would have provided if, over a number of years, they had practised
1
James G. SCOVILLE: The Structure of Labour Demand, I960-J980, Interregional
Seminar on Long-Term Economic Projections, Elsinore, Denmark, August 1966.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

manpower planning, in full knowledge of the costs and production
benefits of various kinds of training and education and about the future
development of their economies, and if all countries placed the same
value on and could afford the same level of education as an end in itself
as distinct from a prerequisite of production.1 Also, the manpower
structure of countries that advanced earlier to a certain level of development is adapted to technologies that may be out of date, or inappropriate
for other reasons, when newly industrialising countries reach that level.
Besides, comparisons in terms of whole economies and broad economic
sectors suffer from the fact that the composition of output and employment within such aggregates differs widely, so that no precise conclusions
can be drawn.
Apart from these difficulties in interpreting international comparisons,
problems arise in making them. Thus, the small number of countries
on which the United Kingdom study is based reflects the general shortage
of data. Such data as exist are often incomparable without considerable
adjustment—for instance regarding levels of educational attainment.
Many other shortcomings and qualifications of international comparisons and their use in long-term manpower planning could be added
to the above. Yet in spite of these inadequacies it would seem that
relationships based on such comparisons provide some guidance in
national long-term target-setting for education and vocational training.
Conditions and expectations in any individual country can be compared
with international " patterns ". Deviations between the two do not
mean that a country should blindly follow the pattern. But they will
raise questions as to the reasons for the discrepancy and thus provoke
either more explicit justification of national policies or their correction.
Medium-Term Targets.
As already noted, medium-term forecasts of skill requirements must
be more specific than long-term estimates because greater specialisation
in training and education is needed to meet requirements (see page 12) ;
they can be more specific because output expectations are less uncertain
than for the long run (see page 15). In the present section some questions
of method and data are briefly reviewed concerning medium-term skill
requirements of industrial development.
1
Striking differences in years of formal education distinguished skilled workers in
different countries, e.g. the United States and Japan. It seems reasonable to conclude,
in view of the size of these differences, that educational levels in high-income countries
are the result, in part, of a demand for education as an income-elastic consumer good
rather than as a prerequisite for accomplishing certain types of work. See United
Nations, Centre for Industrial Development: Skill Reguirements in Manufacturing
Industries, document E/C.5/112/Add. 1, 23 Feb. 1966, p. 22 and Appendix III.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

A common procedure of estimating these requirements consists of
three steps1 :
(i) statement of output expectations in the target year, for the economy
as a whole, individual sectors and principal industries; this statement may be based on plans or on other sources of information
(page 15);
(ii) estimates of total employment in the target year, again for the
whole economy and for sectors and industries; these estimates are
to be derived from the output expectations, using some target or
forecast of future productivity;
(iii) specification of the employment estimates according to occupational
groups which, at a later stage, can serve as the basis for estimating
training requirements and setting targets for meeting these requirements; for present purposes it is this third step that is of major
interest.
Although developed for long-term forecasting (because it is limited
to problems of educational planning) the O.E.C.D. Mediterranean
Regional Project is the best illustration of this approach. Its detailed
method has been lucidly described and its results have been the object
of penetrating analysis and evaluation.2 Extensive reports are also
available for each of the countries that participated in the project:
Greece, Italy, Portugal, Spain, Turkey and Yugoslavia. The table below
indicates the degree of detail used in the country studies (except for
Portugal, where no subdivision by sector was made).
Country

Greece
Italy
Spain
Turkey
Yugoslavia

Number of
Occupational
Sectors and
groups
industries

61
6
9
4
8

8
10
9
5
15

In France and Hungary similar methods have been used for mediumterm planning, and greater detail was therefore needed. Thus, in France
105 occupational groups and 41 economic sectors were distinguished.3
1
See J. MOULY: " Human Resources Planning as a Part of Economic Development Planning ", in International Labour Review (Geneva, I.L.O.), Vol. 92, No. 3,
Sep. 1965, pp. 184-207.
2
Herbert S. PARNÉS : Assessing Educational Needs for Economic and Social Development (Paris, O.E.C.D., 1962), and R. G. HOLLISTER: Technical Evaluation of the First
Step of the Mediterranean Regional Project (idem, 1966).
3
For details see Revue française du travail (Paris, Ministry of Labour), Jan.-Mar.
1966, p. 98, and J. TIMAR: Relations between Skilled Manpower Requirement and
Educational Planning, International Institute for Educational Planning document S.6/7.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

In selecting and defining occupational groups the main criterion for
present purposes is, of course, the structure of the education and training
system for the development and adaptation of which targets are to be set
and decisions taken. Thus, as the Mediterranean Regional Project was
designed to help in long-term educational planning, its architect, Professor Parnés, divided the entire International Standard Classification
of Occupations into four classes, each corresponding to an educational
level. In France, in connection with medium-term planning, five
levels of skill formation were distinguished for each of five fields of
skill, thus giving 25 different classes. In Hungary, with three levels
of training for each of 17 occupational categories, 51 classes were
defined.
Once the units of the targets or forecasts have thus been defined, the
estimation of actual numbers can begin. As in the case of long-term
estimates (see page 19), the two basic methods are extrapolation of past
national experience, and international comparison. While generally
some blend of both approaches is used, extrapolation has been relied
upon more heavily in France in the preparation of the Fifth Plan, and
in the Mediterranean countries, except Spain. International comparison
has been used primarily (and mostly for long-term purposes) in Puerto
Rico, Spain, Thailand and the United Arab Republic.
In the procedure discussed in this section the theory underlying both
international comparison and extrapolation is that a given level of
productivity in a particular activity is associated with (and possibly
" determines ") a specific occupational composition of the labour force.
If a country expects or intends to attain a certain level of productivity
in a certain industry, then it is assumed to need a labour force whose
occupational composition resembles that of industries in other countries
where that level of productivity has been reached. In the actual practice
of development planning, " productivity " (e.g. in the sense of value
added per man-year) does not really seem to have been a specific target
for the development of individual industries. Yet it might well be useful
for development plans to include such targets, and in any case a notion
of what other countries have achieved in the way of productivity with
their particular labour force will be of some interest to public policymakers deciding the scale and direction of development of their systems
of skill formation and vocational guidance.
This assumption of a systematic relationship between productivity
and occupational composition of the labour force was verified in the
United Kingdom. 1 It was also closely examined in a study, more detailed
1

LAYARD and SAIGAL, op.

cit.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

and resting on a broader factual basis, undertaken at Northeastern
University in the United States.1
The latter study is of particular interest to medium-term problems
because of the greater industry detail for which calculations were made
(21 individual manufacturing industries in addition to manufacturing as
a whole) than in the United Kingdom study. Its analytical results can be
summed up by saying that " variations in the proportion of professional
and technical workers are a major determinant of productivity in almost
every industry; and that the importance of other groups varies from
industry to industry, and depends on the type of curve that is used to fit
the data. The only occupational group whose variations seem to exert no
influence on productivity is that of clerical workers ". 2
But the United States study is particularly valuable on account of the
huge amount of factual manpower statistics presented by its authors.
Data were collected from 19 countries, for seven of which statistics were
available at two different dates, so that 26 sets of figures are presented.
While the majority of countries covered are highly industrialised Western
nations, the sample also includes Argentina, Chile, Israel and Japan
(both 1950 and 1960), Puerto Rico and Yugoslavia. Data are given for
225 occupational groups derived from the framework of the International
Standard Classification of Occupations, and for 58 industries or industry
groups based on the United Nations International Standard Industrial
Classification of All Economic Activities.
The O.E.C.D., London School of Economics and Political Science and
Northeastern University experiments referred to above have all pointed to
the lack of occupational data that could throw light on the skill requirements and other qualifications needed for normal performance in
industrial occupations. Thus, occupational data provided by population
censuses (the most important source of information on composition of the
labour force) are usually based on the International Standard Classification of Occupations. But in its present form this classification does not
distinguish clearly between different types and levels of skill requirements
among and within occupations and occupational groups. This means that
but limited conclusions can be derived from occupational data as to the
educational and training requirements or attainments involved. The
reason is that the International Standard Classification of Occupations

1
This study was first presented in Skill Requirements in Manufacturing Industries,
op. cit. The full results were published in Morris A. HOROWITZ, Manuel ZYMELMAN
and Irwin L. HERRNSTADT: Manpower Requirements for Planning, 2 vols. (Boston,
Northeastern University, Department of Economics, 1966).
2

Ibid., p. 33.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

was not designed for such purposes. Its main functions are to help to
identify the contents of specific occupations in a national context (e.g. for
vocational guidance and employment placement), to assist governments
wishing to develop or revise national classifications of occupations (e.g. in
connection with population censuses or labour force surveys) and to
facilitate international comparisons of occupational statistics. To obtain
classification by nature and level of occupational qualifications further
criteria are needed—of the kind used in France (where " qualification/
education profiles " of occupational groups have been developed) and in
the United States (where a full classification is now available by " worker
traits " 1 ) . There would seem to be a need for developing some such
classification at the international level.
Short-Term Targets.
For present purposes the main difference between the short term
and the medium and long term is twofold. First, expectations about the

future are more specific—a typical short-term situation arises when plans
and blueprints are being drawn up for the construction of a specific plant.
Second, the scope for adjustment to expected needs is narrower—in the
short run practically nothing can be done about general educational
qualifications of the labour force, although something (perhaps a good
deal) can be done in the way of vocational training and, of course, by
hiring expatriate manpower.
When a plant is under construction or expansion, detailed occupational requirements are implied in the plans. The designers can usually
provide fairly specific job descriptions, indicate the skill requirements that
they think are needed, ways of acquiring these and time needed for this.
For a structural steel plant for example, it could be established that a
template-maker " makes full-size wood, cardboard, or sheet-metal templates from blueprints or models for use in laying out rivet holes, cuts and
bends on structural steel : locates holes, cuts and bends, using his knowledge of trigonometry, orthographic projections and radial projections,
and marks their locations, using such layout tools as squares, dividers
and scales ". It might further be determined that in general such a worker,
in addition to a certain general educational attainment, needs no less
than two and no more than four years of training and basic experience,
which he might acquire in another plant (in the same country or abroad)
or in a school or training centre.
1
United States Department of Labor, Bureau of Employment Security : Estimates
of Worker Trait Requirements for 4,000 Jobs (Washington, D.C., 1957), p. 114.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

Information of this kind can be developed only in industry itself,
and it is indeed in industry and the individual enterprise that it is primarily needed. Central public concern with foreseeing such short-term
skill requirements would seem to be limited to two aspects: first, to
ensure that manpower problems receive timely attention when plans are
being established so as to minimise delays and losses due to unforeseen
lack of skills once expensive buildings and machines have been installed;
second, the central authorities may wish to see to it that in considering
these manpower aspects use is made of a wide range of information on
different possibilities, so as to avoid, for instance, the risk that unrealistically high or unduly low skill demands are made, that provision is made for
expatriate manpower where local staff could have been trained, or that
machines are installed for work that in a developing country is more
appropriately performed by human labour.
It would indeed seem very useful for information on the manpower
requirements of specific production processes to be much more widely
available than is the case at present. This would enable developing countries, working out short-term plans, to choose from alternative possibilities
those that are best suited to their own conditions—as regards
manpower as well as other factors determining optimal production
techniques.
Important sources of data for such purposes are engineers' blueprints—project feasibility studies and technical assistance reports drawn
up by consulting firms for new plants—and the actual staffing of existing
enterprises. Much of this information is of a private and often confidential nature, but some is freely available and has been published at the
international level by the United Nations.1 It tends to be in terms of
occupational requirements rather than skill requirements, and the occupational categories distinguished are not always clearly defined or necessarily the same in different studies. Yet data of this kind can provide a
very useful basis for determining short-term skill requirements, and
considerable scope exists for international action in supplying such
data.
Without going into technical details, it is suggested that such action
could consist of the systematic collection of blueprint information for
the use of developing countries seeking technical assistance in the expansion of their industries. The blueprints would of course be of much
1
See, for instance, United Nations, Economic and Social Council: Training of
National Personnel for the Accelerated Industrialization of Developing Countries,
Annexes (XXXVII) 12, New York, Sep. 1965, Annex C (pp. 86 ff.); United Nations:
Managerial and Technical Personnel Requirements (Cement Industry, Fertilizer
Industry, Pulp and Paper Industries, Metal Processing Industries) (United Nations
documents 65-06216, 65-06217, C.I.D./VI Background Papers Nos. 15 and 18).

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

broader use than for the mere estimation of manpower requirements.
But special attention could be given to the inclusion of clearly defined
information on the manpower aspects. To be internationally useful it
would of course be essential for such information to be based on clear
and uniform definitions of occupational groups.
Information of this highly specific nature quickly becomes obsolete.
It is immediately and often quite drastically affected by technological
change, much more so than more aggregated data are. An international
service for the collection and dissemination of such information should
therefore have available resources for keeping itself reasonably up to date.
MANPOWER REQUIREMENTS OF SPECIFIC INDUSTRIES

In this section the question is discussed of what is actually known
about the manpower requirements of some of the proposals for industrial
expansion made by the Regional Symposia. The question is of interest in
its own right. Do these proposals seem at all feasible from the manpower
point of view? Are the manpower problems involved in some of the
proposals markedly more difficult than those of others ? But in addition
an examination of this question can illustrate in more concrete terms
some of the general problems of manpower planning discussed in the
previous section of this paper.
In the reports of the Regional Symposia special importance was
attached to the development of the fertiliser, cement, iron and steel, and
textiles industries, and of the metal trades. The data presented below
therefore relate in part to these industries.
The proposals of the Regional Symposia relate to the medium or
long term; some involve production targets for 1970, others for 1975
or later. But the proposals have in common that more or less precise
output targets are put forward for fairly specific products or industries.
The data presented below are of three kinds. First, a very simple
classification is given of over-all skill requirements in certain manufacturing industries according to experience in the United States. This information may throw some light on the relative size of skill formation problems
arising in the development of one industry as compared with another.
Next, some more detailed data are given regarding occupational requirements of certain manufacturing processes according to present-day
technology. Third, some figures are put forward relating to the skill
requirements of some of the occupational groups that seem of
major importance in the development of various manufacturing industries.
3

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

Relative Skill Requirements of Manufacturing Industries
For the United States a unique, even if admittedly quite imperfect,
statement exists of skill requirements of the labour force employed at
certain census dates in well over 100 industrial sectors.1
The measure of skill requirements used is years of schooling as far
as requirements of general education are concerned, and length of training
(whether vocational education in schools, apprenticeships, on-the-job
training or acquisition of essential experience) as regards specific vocational preparation. Estimates of these required periods were based on
what was needed " for a worker to acquire the knowledge and abilities
necessary for average performance in a particular job-worker situation "
in a large number of jobs, in the view of experienced labour placement
specialists in the United States during the early 1950s.2 This information
on skill requirements in specific jobs was applied to employment data, by
occupation and industry, provided by the United States population censuses of 1940 and 1950. In this way a survey could be made of the distribution of the labour force in individual industries, according to seven periods
of required general education and eight periods of specific vocational
preparation.
Table II below is based on these data as relating to the 1950 census.
It ranks a few industries that were the object of recommendations by the
Regional Symposia in order of increasing average learning time required
(general education and specific vocational preparation combined) for the
labour force of each industry as a whole. The table further shows for
each industry weighted average education and training times needed as a
percentage of those in textiles.3 While it can certainly not be assumed that
developing countries " need " the same length of training time per man
in their industries as did the United States in the early 1950s, it may be
much less seriously wrong to assume that if the labour force in some specific industry in the United States needed a markedly longer (or shorter)
average period of training than in other industries, that industry would
also need relatively long (or short) training in developing countries.
The above figures suggest that among the industries listed " logging,
etc. " is least exacting, and " construction " most exacting in terms of
training time per man. The most demanding industry but one is nonelectrical machinery, and the least demanding but one is glass making.
1

R . S. ECKAUS : " Economic Criteria for Education and Training ", in Review
of Economics and Statistics, May 1964, pp. 191 ff.; see also comments by David F.
Ross and reply by R. S. ECKAUS in ibid., Feb. 1966, pp. 103 ff.
2
Estimates of Worker Trait Requirements for 4,000 Jobs, op. cit., p. 110.
3
The absolute figures for textiles in the original source are 9.93 years of general
education and 0.94 year of specific vocational preparation.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

TABLE II. EDUCATION AND TRAINING REQUIREMENTS IN SELECTED
KEY INDUSTRIES AS A PERCENTAGE OF THAT REQUIRED IN TEXTILES,
UNITED STATES, 1950
Industry

Logging and wood products,
except furniture
Glass and glass products . . .
Cement
Pulp and paper
Textiles
Blast furnaces, rolling mills, etc.
Fabricated steel
Chemicals1
Electrical machinery
Non-electrical machinery . . .

General
educational
development

Specific
vocational
preparation

91
90
97
100
102
100
101
106
107
109
110
107

76
94
112
87
76
100
131
134
153
147
188
247

1
This industry is included here in place of fertilisers, which featured prominently in the reports of
the Regional Symposia.

While the figures may be helpful in indicating relative training time
and cost per worker in different industries, they do not indicate relative
cost of training per unit of production (e.g. $1 million of annual
steel output). For that purpose one should also take account of
the numbers of workers needed or, alternatively, of output per
worker.
Thus, for example, value added per man-year in the United States
is nearly twice as high in the pulp and paper industries as it is in the
textiles industry.1 Therefore, although general educational development
and specific vocational preparation per man in these industries are
about the same, per unit of output value they are only 53 and 54 per cent.
respectively in pulp and paper of the requirements in textiles. For
chemicals, the contrast is even greater : though training requirements
per man in that industry are much greater than in textiles,
general education required per unit of output is only 35 per cent.
and specific vocational preparation only 50 per cent, of those in
textiles.
In a sense the full information available for the United States could
be of far greater and more specific importance to the planning of edu1

Data from the United States Census of Manufactures, J958.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

cation and training in developing countries because that information is
not limited to average relativefiguresas given in the table. It also shows
the distribution of the labour force in each industry according to seven
levels of required general education and eight levels of required specific
vocational preparation. But as absolute figures on required training time
in the United States in the early 1950s cannot be of great immediate
relevance to developing countries during the late 1960s no further details
are shown here.
Three further points of general interest may be noted in connection
with the United States data. First, comparison of training time requirements of the labour force as shown in successive occupational surveys
reveals the existence of trends which can help in making projections as
a basis of planning. Table III below illustrates this point for shifts,
between the 1940 and 1950 censuses, in the composition of the United
States labour force as a whole, according to the eight categories of specific
vocational preparation.
The second point worth noting is that the increase in training requirements between 1940 and 1950 revealed by these figures was due entirely
to increases in the proportions of occupations requiring relatively longer
training. It does not reflect increases in training requirements of the
occupations themselves; the same "catalogue" of skill requirements
was applied to the labour force data of both 1940 and 1950.
TABLE III. DISTRIBUTION OF SPECIFIC VOCATIONAL TRAINING
REQUIREMENTS FOR THE UNITED STATES LABOUR FORCE
IN 1940 AND 1950
(Percentages)
Specific vocational preparation range

1940 labour force

1950 labour force

Short demonstration only
Anything beyond short demonstration up
to and including 30 days
Over 30 days up to and including 3 months
Over 3 months up to and including 6 months
Over 6 months up to and including 1 year
Over 1 year up to and including 2 years . .
Over 2 years up to and including 4 years .
Over 4 years

1.44

0.47

16.70
13.23
22.90
4.33
17.54
20.53
3.33

20.95
7.71
23.71
5.06
14.37
23.52
4.21

Total . . .

100.00

1.26

1.35

Average years of training required . . . .

Source: ECKAUS: " Economic Criteria for Education and Training ", op. cit., p. 186.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

Third, it is of interest that the United States study suggested (but
the data would not permit of any stronger term) the existence of some
discrepancy between general educational attainments of the labour
force and general educational needs according to this particular application of" the manpower approach " to education. Thus, in 1940, 31.2 per
cent, of the labour force had actually had " full high-school education "
but only 28.5 per cent, needed it for their work; by 1950 these figures
had risen to 39.0 and 32.4 per cent, respectively. As regards college
education (four years or more), in 1940 only 5.9 per cent, of the labour
force had had such education while 7.1 per cent, would have needed it
for their work; by 1950 needs and actual attainments in this respect
had balanced at 7.4 per cent.
Occupational Requirements of Selected Manufacturing Industries
Some of the figures presented above indicate differences in average
training time requirements as between industries. Such data may be of
some general help in the fixing of medium-term and long-term targets
of skill formation, to the extent that these can be linked to expectations
(in plans or otherwise) about the growth of certain industries.
In the following pages more specific figures are presented concerning
occupational requirements for some of the key industries whose expansion
was recommended by the Regional Symposia. The data may illustrate
the use of " blueprint information ", whose systematic collection and
dissemination at international level was suggested above (see pages 26
and 27). The use made of this information below is somewhat hazardous.
It is to estimate orders of magnitude of manpower required in certain
broad skill categories if the output recommendations of the Regional
Symposia are to be implemented. It should be stressed that the quality
of the data, especially their comparability, is extremely limited. So the
figures cannot be regarded as meaningful forecasts or targets. The
conclusions drawn at the end of this section are much more limited—
and even they may be contested. But in spite of these shortcomings this
type of data is thought to be of sufficient general interest to warrant
presentation of a small sample of what exists.
(a) Fertilisers.
A summary table of " blueprint " information concerning fertiliser
plants (table IV) is given below.
The data are most heterogeneous, the plants compared differing in
fuels and raw material input, product output, size and geographical

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

location. Thus, the table illustrates the tremendous variation in manpower requirements even within one rather narrowly defined industry.
However, it also suggests that these variations are largest by far for the
category of unskilled workers (input per 1,000 tons capacity in plant 5

TABLE IV. OCCUPATIONAL INPUT COEFFICIENTS
IN THE FERTILISER INDUSTRY FOR 1,000 TONS/YEAR
Plant
No.

1
2
3
4
5
6
7

Location

India

Fertiliser

Urea complex
fertiliser
Urea nitro
India
phosphate
India x
Ammonium
sulphate
India
Urea
Urea ammoIndia
nium phosphate
Urea ammoBurma
nium phosphate
Latin
Ammonium
sulphate
America 1

Tons/year

Feed

Tech- Skilled
Unnical workers skilled
workers
workers

Total

310 000 Naphtha

0.19

0.90

0.62

1.73

310 000 Gas

0.72

3.04

2.81

6.57

270 000 Coal

—

14.18

185 000 Naphtha
70 000 Naphtha

0.51
1.38

3.14
8.35

2.10
6.51

5.75
16.24

177 000 Gas

0.97

3.32

0.11

4.40

150 000 Crude
oil

0.22

0.98

0.06

1.26

Source : Adapted from Managerial and Technical Personnel Requirements: Fertilizer Industry,
United Nations document 65-06217, op. cit., table 2, p. 6.
1
Existing plants where the coefficients represent actual staffing patterns. All other plant data are
taken from feasibility studies and represent occupational inputs according to engineers designing new
plants.

being 100 times as large as in plant 7), much smaller for skilled workers
(plant 5 needing nine times as many as plant 1) and smaller still for
" technical workers " (input in plant 5 being seven times that in plants 1
or 7). So the variation is least large for the group for which skill formation
matters most. Furthermore, plant 5, the one most greedy of manpower,
is also the smallest by far. If it is deleted from the comparison the ratios
between highest and lowest manpower input are reduced to 47:1 for
unskilled workers, 3.5:1 for skilled workers and 5:1 for technical
workers.
These are still very large differences. They seem to point to a rather
wide variety of technological choice. From the point of view of manpower planning this would mean that, in this industry at any rate,
manpower requirements differ widely according to the technology
selected. Conversely and more importantly, there seems to be some

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

considerable possibility of adapting technology to manpower availabilities—which is of interest for purposes of employment creation as
well as of skill formation.
As noted in a study cited earlier, such a choice of technology appears
to exist in a wide variety of industries. This finding would seem to
strengthen the case, suggested above, for systematic collection and
dissemination of information concerning staffing patterns of specific
plants, but also regarding the occupational composition of industries
found in different countries as a basis for manpower planning. " From
such an array of data a developing nation could select one s e t . . . as its
target for some future level of development." x
As an example of what is involved in drawing up and interpreting
information on individual plants it may be of interest to refer to a
relatively detailed manning table, drawn up by a United Nations mission
in 1961 for what was considered the optimum type of fertiliser plant
under Indian conditions of weather, social benefits, holidays, etc.2
The table reflects not merely technological conditions of production but
also principles of organisation and personnel management. Thus it is
specified that the table makes no allowance " for extraordinary training
of staff members except the over-staffing of providing an assistant for
each responsible position ". But 20 per cent, extra manpower was
allowed on all continuous shift jobs for relief for sickness, vacation and
training. Again, the table does not provide for labour required during
seasonal peaks. Furthermore, it applies to the fertiliser plant only, to the
exclusion of administrative and policy-making functions of the enterprise.
Assuming that this plant were roughly appropriate, not only for
India but also for Africa and Latin America, and assuming further that
the increase in fertiliser output until 1975 recommended for these two
regions by the Regional Symposia3 were to be met entirely by plants of
this type, what manpower requirements would this involve? The question
is not entirely legitimate because it cannot be assumed that technology
appropriate in 1961 will still be so in 1975. Furthermore, the model
plant is for nitrogen fertiliser, whereas development of fertiliser industries
will also have to include phosphoric and potassio products. Yet, a
calculation of the kind made here may be of some interest in indicating
an order of magnitude of possible manpower requirements of the
development of a very important manufacturing industry in the
developing countries.
1

HOROWITZ, ZYMELMAN and

HERRNSTADT, op. cit., p. 4.

The table appears as Fig. 1 on p. 89 of Training of National Personnel for the
Accelerated Industrialization of Developing Countries, op. cit.
3
The Regional Symposium for Asia did not set an output target for fertilisers.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

The plant in question would have an annual capacity of 80,000 tons,
using naphtha as feed stock. According to the report on the African
Regional Symposium capacity in the fertiliser industry would have to
increase between 1965 and 1975 by 3.6 million tons. The report on the
Latin American Regional Symposium contains a forecast that consumption of fertiliser would rise from 1965 to 1975 by between 1.4 and 3 million
tons; it is assumed below that this increase would be met by the region's
own production.
Dividing the various groups of personnel specified in the manning
table for the Indian model plant into eight broad groups of workers,
and then applying the resulting figures to the recommended increases
in fertiliser capacity, thefiguresgiven in table V are obtained.

TABLE V. MANPOWER REQUIREMENTS IN FERTILISER INDUSTRY,
1965-75
Africa

Managers and supervisors
Health personnel
. . .
Secretaries and clerks . .
Engineers and chemists .
Draughtsmen
Skilled workers, foremen
Operators
Labourers, guards, etc. .
Total .

Latin America
Low estimate

High estimate

1 100
300
1500
1300
100
4 700
6 000
11 500

400
100
600
500
50
1800
2 300
4 400

900
200
1300
1000
100
3 900
4 900
9 400

26 500

10150

21700

The precise meaning of thesefiguresis, of course, somewhat uncertain,
since no exact definitions are available of the occupational categories in
terms that could be compared with I.S.C.O. or with any specific national
classification of occupations. Furthermore, as already noted, the output
mix of the model plant is more limited than will be the future production
of fertilisers in the developing world ; the actual output mix will involve
different occupational patterns.
An alternative estimate of occupational requirements was, therefore,
made, using the occupational data in table IV, and weighting the
occupational categories according to the output capacity of the
different plants mentioned in that table. The results are given in
table VI.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

TABLE VI. ADDITIONAL MANPOWER REQUIREMENTS:
ESTIMATES FOR 1965-75
Latin America
Occupational group

Unskilled workers
Total . . .

Africa
Low estimates

High estimates

2 000
9 400
5 800

800
3 600
2 300

1700
7 800
4 800

17 200

6 700

14 300

The two projections differ considerably, in particular as regards skilled
workers :
Africa

Second projection

4 700
9 400

Latin America
Low estimates

High estimates

1800
3 600

3 900
7 800

These differences illustrate the weak basis on which the coefficients
have been calculated. We are not even in a position to state that the
manpower requirements are most likely to be somewhere between the
minimum and the maximum estimate. Since we do not want to underestimate the burden that will be placed on the educational and training
systems we retain the high projection, i.e. the first one.
(b) Cement.
Another key industry considered by the Regional Symposia for which
a good notion of available technology exists is cement. Once again,
though, only two Regional Symposia made estimates for output
expansion. Theoretical manpower requirements are calculated below,
using as a basis summaries of staffing needs in two large-scale plants
in which unit capital costs are relatively low.1 These plants are of 335,000
and 400,000 tons capacity; in the former the so-called " wet process "
is used ; in the other a " dry process ".
1
For a description of these plants see United Nations: Studies in the Economics of
Industry, No. J: Cement, document ST/ECA/75, p. 21.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

Asian demand is expected (and output here assumed) to grow by
44.5 million tons from 1964 to 1970; African output by 2.9 million tons
from 1964 to 1975. Should these output levels be reached by either of
the two plants cited, estimated additional manpower needs for six
occupational groups are shown in table VII.

TABLE VII. ADDITIONAL MANPOWER REQUIREMENTS
IN THE CEMENT INDUSTRY: ESTIMATES FOR 1965-75
Asia
Occupational group

Africa

Plant I :
wet process

Plant H:
dry process

Plant I:
wet process

Plant II:
dry process

.
.
.
.
.

4 400
57 800
5 200
3 000
6 700
8 900

3 700
48 200
4 400
2 200
5 200
13 300

200
2 300
200
100
300
300

200
1900
200
100
200
500

Total . . .

86 000

77 000

3 400

Quarry workers
Production workers . . .
Laboratory workers . .
Technical workers
. . .
Administrative workers .
Guards and miscellaneous

3 100

Without any doubt the occupational coefficients and hence the estimated
manpower requirements are more reliable for the cement industry than
for the fertiliser industry, the reason being the more homogeneous
output in the former (see table VIII).

TABLE VIII. POSSIBLE CAPITAL/LABOUR SUBSTITUTION IN CEMENT:
EFFECTS ON THE SKILL STRUCTURE OF THE LABOUR FORCE
Total capital outlays required (calculated in millions of dollars in 1960):
Asia: Plant I
1488
Africa: Plant I
Plant II
1 558
Plant II
Change from plant I to plant II in :
Capital outlays
Employment1
Quarry workers
Production workers
Laboratory workers
Technical workers
Administrative workers
Guards and miscellaneous
1

Based on more detailed estimates than those shown in the previous table.

98
103
Per cent.
+4.7
—10
—14
—16
—15
—30
—18
+50

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

Thus, although plants I and II have very similar fixed investment
costs per ton of capacity ($33.4 and $34.8), their manpower inputs are
substantially different. A small increase in fixed investment expenditures
from plant I to plant II implies much larger reductions in the input of
skilled—and especially technical—personnel. The choice between these
two types of plant should depend on judgments about which of the
scarce resources (capital or highly trained labour) provides the binding
constraint, or could be better employed elsewhere.
However, a further consideration is that developing countries that
establish new cement industries will find the wet process (plant I) preferable to the dry process in so far as the former is simpler to operate and
uniform quality can be maintained more easily. Moreover, fuel costs
on the dry process are higher than those on the wet process.
(c) Other Industries.
Following the general method described above for the fertiliser and
cement industries, the I.L.O. has made very rough estimates of occupational requirements in the iron and steel, textiles and pulp and paper
industries. These estimates are subject to the same types of limitations
stressed in the case of fertilisers and cement. For this reason, as well as
for reasons of time and of data problems, no attempt was made to
calculate similar figures for some of the other industries on which
recommendations were made by the Regional Symposia—machine
tools for Latin America; oils and fats, glass, and forest products for Asia.
It would also have been of great interest to compare the calculations
with the results that could be obtained using the wealth of data contained
in the Northeastern University study referred to above.1 That study
includes detailed occupational statistics for, inter alia, the chemical,
iron and steel, textiles, paper and paper products, machinery, food and
beverages, and glass industries. But the study was not available in time
for detailed examination in connection with the present paper.
(d)

Summary.

Again, for purely illustrative purposes, however, the figures obtained
by the I.L.O. calculations are summarised in table IX, which shows
for each region the total calculated manpower requirements of the
industries concerned, and their division between professional and
technical manpower on the one hand, and workers (in some cases
skilled workers only) on the other.
1

See pp. 23-24.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

TABLE IX. OCCUPATIONAL REQUIREMENTS BY INDUSTRY
AND REGIONS
(Rounded estimates for 1965-75 (in thousands))
Region

Africa

Asia

Latin
America

Industries

Fertiliser . . . .
Cement2 . . . .
Iron and steel 3 .
Textiles
. . . .
Pulp and paper *
Total
Fertiliser . . .
Cement * . . .
Iron and steel 3
Textiles5 . . .
Pulp and paper
Total
Fertiliser ' . .
Cement . . .
Iron and steel s
Textiles . . .
Total .

Total

26.5
3.1-3.4

10.9-63.3
214.3
41.8
300-350
N.A.
77.0-86.0
14.9-87.4
314.0-474.0

463.0
850-1100
10.2-21.7
N.A.
54.1-314.3
548.6
N.A.
600-900

Professional,
technical,
engineers

Skilled
workers 1

2.5
0.5-0.6
1.8-13.1
14.6
7.4
27-39

4.7
2.1-2.5
6.6-24.0
178.3
30.3
222-240

N.A.
11.8-14.9
2.4-18.0
21.6-32.6
140.4
175-200

N.A.
51.9-62.2
9.1-33.2
261.2-394.1
322.6
650-800

1.0-2.0

1.8-3.9
N.A.
32.7-119.4
456.0
N.A.
500-580

N.A.
8.9-64.8
37.9
N.A.
50-100

1
Including semi-skilled workers in textiles and iron and steel. a Wet process (high projection>
and dry process (low projection). ° Highest and lowest estimates from among five different occupational
patterns. ' Excluding North Africa.
* The ranges are due to two assumptions as to likely consumption (3,700 and 5,600 million square yards). ' High and low assumptions as to likely output.
N.A. *=figuresnot available.

The figures are subject to a number of limitations, including the
following:
(a) Where manpower requirements had to be based on demand
projections it was assumed that demand will be entirely satisfied by
production in the region concerned.
(b) The definition of output in global projections is not the same
as the definition of output at the plant level. Projection of final demand
relates to an economic sector or a branch of industry: iron and steel,
cement, etc., whereas output mix of a plant forms only a part of total
sector or industry output mix; i.e. to a certain extent we compare units
which cannot be readily compared, the sector and the enterprise, the
total and the specific. With the exception of cement, the final products
are too heterogeneous to warrant projection on the basis of occupational
coefficients for one or a few plants.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

(c) The occupational coefficients do not reflect the considerable
variation depending on size of plant (except for cement).
(d) The occupational classifications in the data used for making
the projections are neither uniform nor consistent. This is one explanation
for the sometimes tremendous variations in the projections.
In spite of these and other shortcomings, it would seem that from
this very limited table at least two conclusions may be drawn. First,
it is quite evident that the total employment-creating capacity of the
industries concerned is but a minute fraction of the expected increases
in the total labour force of the regions concerned.
Recently, estimates were made in the I.L.O.1 of future increases in
the world industrial labour force. In table X these estimates are compared
for the period 1965-75, with the maximum estimates of total new employment calculated for the key industries considered above.
TABLE X. ESTIMATED INCREASE IN THE LABOUR FORCE AND
IN EMPLOYMENT IN KEY INDUSTRIES, 1965-75
(In thousands)
Region

Asia
Latin America
Total . . .
Percentage . . .

Labour force

Employment in
key industries

28 100
150 600
25 100

350
1 110
880

203 800

2 340

100

1.15

Of course, increases in manufacturing output indirectly give rise to
greater output and employment in related activities (transport, sales,
raw materials, etc.). And in any case many industries will grow independently from the expansion in the key industries considered in the
present paper. Furthermore, not all countries are included in the regional
production and employment estimates for key industries given in table IX.
But it is clear that even if these factors were to cause the estimates
of employment in the key industries to be multiplied by, say, five or ten,
only a small proportion of the increase in the total labour force would
be absorbed.
The second conclusion that one would like to draw from the figures
in the table is that the requirements for skilled manpower which it
1
James N. YPSILANTIS: World and Regional Estimates and Projections of Labour
Force, United Nations document ISLEP/A/VII.4.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

indicates do not seem forbiddingly high. Evidence for judging this
question is almost non-existent. In particular, it is not possible to compare
the figures with indicators of what is obviously the most relevant factor—
i.e. the current and probable future capacity of the region to train
personnel of the various categories involved. Some estimates exist,
however, of future total skilled manpower requirements in the developing
regions. It may be of interest to compare these with the very partial
estimates of the table, to see whether the latter are at all compatible
with the former.
The first of these estimates can be found in an I.L.O. study submitted
to the 1966 United Nations Seminar on Long-Term Projections.1 In
that study projections were made of future demand for labour in each
of the major groups of the International Standard Classification of
Occupations, assuming reasonable rates of economic growth. The
projections were based on statistical analysis of employment in these
groups on the one hand, and level of economic development, rates of
growth and size of countries on the other. Taking the projected increase
in employment during 1965-75 for the major group " professional,
technical and related workers " as the indicator of growth in total
demand for high-level personnel, and the increase for the major group
" craftsmen, production process workers and labourers not elsewhere
classified " as the indicator for skilled workers, table XI can be drawn
up.
A second estimate of future high-level manpower needs appears in a
report submitted in 1964 to the Economic and Social Council.2 Here,
increased numbers of engineers, scientists and technicians required for
industrialisation in general were estimated for the period 1960-75. For
the period 1965-75 these estimates may be assumed to be somewhat
larger than two-thirds of those for the 15-year period. This would mean
increased needs in the three occupations mentioned of approximately
70,000 in Africa, 400,000 in Asia and 250,000 in Latin America.
For what they are worth, these figures suggest that the high-level
manpower requirements of the key industries considered in this paper
would not be excessive compared with global estimates of future manpower requirements in the developing regions. Indeed, in some cases
the key industries would seem to require relatively small fractions of
the total estimates; global estimates themselves might be grossly unrealistic. It might be fair, however, to conclude that the skill requirements
in the key industries cannot yet be seen to be alarming.
1

SCOVILLE, op. cit., Part (b), pp. 38-40.
Training of National Personnel for the Accelerated Industrialization of Developing
Countries, op. cit., pp. 24-25.
2

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

TABLE XI. INCREASES IN DEMAND FOR HIGH-LEVEL PERSONNEL
AND SKILLED WORKERS, 1965-75
(In thousands)
High-level personnel

Skilled workers

Region

Latin America . . .

Total

Key industries

Total

Key industries

1500
6 700
1800

40
210
105

6100
35 600
9 000

240
810
580

Skill Requirements for Industrial Occupations
To establish occupational requirements for industrialisation is a first
step in target-setting for human resources development. The second
necessary step consists in determining the skill requirements involved,
so that measures can be taken for providing the skills. But for various
reasons methods and information regarding this second step are less
satisfactory than those concerning the first. Skills have been, and perhaps
can only be, defined and classified in much less precise terms than
occupations. Furthermore, many skills can be acquired in several ways—
in different types of schools, by different methods of training in employment, or in various combinations of the two. Practice varies widely in
this respect both within and among countries, so that for many occupations, even when skill requirements have been defined, it cannot be said
that there is one particular path of skill acquisition.
One result of these circumstances is that the possibility of planning
on the basis of international comparison is more limited as regards skill
requirements than it is in assessing occupational requirements. But in
practice the scope for international comparison is even far smaller
owing to three further factors. First, few countries collect systematic
information on training in employment, and while many collect data
about formal education of their labour force, they do so by very different
criteria that may be impossible to compare (e.g. classification by different
periods of school attendance, age of school leaving, highest level of
school completed).1 Second, although it should not be impossible to
reach a measure of international agreement and comparability on this
particular point, further difficulties arise from wide international differences in the organisation, methods and effectiveness of training and
1

For a clear discussion of the problems involved see LAYARD and SAIGAL, op. cit.

Also HOROWITZ, ZYMELMAN and HERRNSTADT, op. cit., Vol. I, p. 20, and Vol.

II,

pp. 158 ff., where occupational data are classified according to years of schooling.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

education. Hence, even if all countries provided comparable data on,
say, years of general education and training in employment, this would
by no means imply that a comparable measure of skill had been provided.
Third, to the extent that comparisons can be made of educational
attainment in given occupational groups as between different countries,
these are likely to indicate primarily the levels of general education that
countries can afford rather than the minimum education that is needed
for effective, normal or efficient performance of jobs.
For all these reasons the present scope for international comparison
in determining skill requirements of given occupational patterns is quite
limited; yet it would seem desirable to take international action for
increasing this scope. There can be no doubt that if each of the above
difficulties were carefully examined at the international level, not only
could ways be found of overcoming them but, once comparable data
existed, many ways could also be discovered of improving national
practices in education and training.
Meanwhile, countries have to rely largely on their own experience
and judgment in determining skill requirements by occupation or
occupational group. Relatively little systematic work has been done in
this field, but two interesting examples may be mentioned here.
The first is an inquiry made in July 1966 among Nigerian employers
in a sample of 124 private and public enterprises1, employing ten or
more workers each, outside the agricultural and services sectors, mostly
in Lagos. The occupations examined included senior positions (engineers
and other professionals, administrators), two groups of medium-level
occupations Gunior administrative/supervisory/foremen, and technicians), occupations at the skilled and semi-skilled level, and unskilled
occupations. The data concern 126 occupations listed in the International
Standard Classification of Occupations (in which 65,000 workers were
engaged in the enterprises covered),five-digitoccupations at the senior
level, three-digit groups of occupations at the other levels. Employers were
asked what educational qualifications they would require when recruiting
new employees, and what special training in employment (apprenticeship,
on-the-job or in-service training) and experience they thought necessary
for efficient performance in the jobs concerned.2 In addition, they were
asked what qualifications their labour force actually possessed, what
difficulties existed in recruiting personnel with the desired qualifications,
and what wages and salaries were paid.
1
National Manpower Board (Nigeria) : Survey of Educational and Training Content of Occupations (Lagos, 1966).
2
In the study, training in employment is called " employer training ".

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

It is impossible to summarise here the detailed method and rich
contents of this survey, which should be of great interest to every developing country. But a few salient points may illustrate the results obtained :
(a) Seven out of ten jobs above the unskilled level, three out of four
at the medium level, and more than one in two at the senior level called
for training in employment, in addition to formal education; of jobs
requiring secondary technical education more than three-quarters also
required training in employment.
(b) In the senior group, engineering jobs required the most advanced
formal studies, but 60 per cent, also needed training in employment;
for the senior group as a whole, and in mining, manufacturing, construction and utilities, 30 per cent, or more of these positions called for more
than two years' training, mostly on the job.
(c) Senior administrative positions called for experience, typically
during more than three or even five years; indeed, for this group
" employer responses indicate a willingness to accept experience as a
substitute for part of education and/or training qualifications ".1
(d) The highest proportion of jobs requiring training in employment
—76.1 per cent.—occurred at the medium level; but the proportion was
higher for the junior administrative/supervisory/foremen category than
for the technicians ; in manufacturing the required training was estimated
at two or more years for 30 per cent, of the positions in medium-sized
enterprises and at three or more years for about the same proportion in
large enterprises.
(e) In almost half of the jobs at the skilled or semi-skilled level no
post-primary education was needed, but in nearly 70 per cent, training
in employment was required; clerical and sales jobs required least
training; production jobs and occupations in transport and communications required most training.
(f) Salary levels rose clearly with educational level required, so that
employers could reduce wage and salary costs by providing their own
specialised training in so far as this replaced specialised pre-employment
training.
The second example of determination of skill requirements for given
occupations is taken from the United States. In that country jobs have
been classified in groups that make similar demands on workers (worker
traits) in terms of training time as well as aptitudes, interests, temperament and physical effort. The classification is based on elaborate data
collected by employment service specialists, from business organisations,
1

Survey of Educational and Training Content of Occupations, op. cit., p. 17.

HUMAN RESOURCES FOR INDUSTRf AL DEVELOPMENT

trade associations, professional societies and government agencies.
Worker traits are specified for 22 broad areas of work, including clerical
work, crafts, education and training, engineering, machine work, managerial and supervisory work (as well as art, writing and other non-industrial
activities).1 Within these areas of work a total of 114 more detailed
" worker trait groups " are distinguished, e.g. (within the area of machine
work), set-up and/or all-round machine operating, set-up and adjustment, operating-control, driving-operating and tending. The specific
worker traits required within each group of occupations are stated in a
" qualifications profile ". In the case of the group " set-up and machine
operating " this profile indicates under skill requirements a general
education level 4 and a range of specific vocational preparation levels
6 to 8. The profiles also give indicators of aptitudes and other traits
required, and of common channels of entry into the group of occupations
concerned—e.g. through on-the-job training and/or various types of
schools.
Each worker trait group lists a number of specific occupations : thus,
the group " set-up and machine operatives " includes a number of jobs
in the nature of tool-making and related work. Unlike the 4,000 jobs in
the analysis mentioned earlier (where the tool-maker is marked as needing level 8 of specific vocational preparation—more than four years) the
individual jobs within worker trait groups are not separately assigned
figures concerning training and other requirements. Nevertheless, this
classification provides a relatively detailed specification of skill requirements. This classification of jobs by worker traits may indicate the way
out of the difficulties that have been encountered in the use of the I.L.O.
International Standard Classification of Occupations—namely that no
definition can be made according to levels of difficulty and skill within
many occupations.
SOME CONCLUSIONS AND RECOMMENDATIONS

This final section lists some of the salient points that emerge from
the discussion in the preceding chapters. In addition, some suggestions
and recommendations are made on types of manpower information
the systematic collection and development of which would seem indispensable for the target-setting approach to human resources planning in
industry, and on organisational aspects of this approach at both the
national and international levels.
The following major points seem to arise from the above analysis:
1
United States Department of Labor, Bureau of Employment Security: Dictionary
of Occupational Titles, Vol. II, Third Edition (Washington, D.C., 1965), pp. 214-530.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

(a) The target-setting approach to human resources planning is an
important condition for the industrialisation efforts of developing
countries to become a vehicle for progress rather than a further burden
on communities that are already very poor.
(b) While the specific skill requirements for the development of
industry should be studied in considerable detail, targets for meeting
them should be set with due regard to the manpower problems of other
sectors.
(c) Where over-all plans for industrial development exist, manpower planning should be made part of them; where no over-all development plan exists, manpower planning should nevertheless be undertaken
on the basis of other indicators of probable future economic development.
(d) In studying industrial skill requirements and setting targets for
meeting them, major emphasis should be given to training in employment
—i.e. largely, but not exclusively, training on the job.
(e) Targets should guide not only the provision of facilities for skill

formation but also measures to influence the utilisation of such facilities
(e.g. vocational guidance, wage and salary policy).
(f) Targets should be set separately for the short, medium and long
term.
(g) International comparison and exchange of experience are
important aids to determining manpower requirements and to setting
targets for meeting them. It is highly desirable—
(i) to develop among countries a common approach, and common
definitions, regarding types and levels of industrial skills as related
to occupational categories ;
(ii) to arrange for the systematic collection and dissemination of industrial
manpower information at the international level, including information on staffing patterns of model plants; arrangements should be
made for keeping such information up to date.
(h) In determining skill requirements account should be taken of
occupations in the field of industrial research and development in
addition to occupations in production, transport and trade.
(i) From the point of view of skill requirements the proposals made
by the Regional Symposia for expansion of key manufacturing industries
do not seem to be unrealistic.
Tools of Manpower Planning for Industry
The data presented above are perhaps too few to be regarded as a
truly representative sample of the work that remains to be done in

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

developing countries to specify the skill requirements of industries that
it has been contemplated—in national plans and at international
gatherings such as the Regional Symposia—to establish and expand.
Yet it may be said with confidence that very little systematic information
is available on this point. It is, therefore, suggested that action should be
taken to fill this gap.
More specifically, it is proposed that developing countries forge
certain tools of manpower analysis that have proved feasible and useful
elsewhere. Of course, these tools should be adapted to the specific needs
and practical possibilities of the developing countries. Five such tools
might be considered.
1. An occupational breakdown of the population census should be
made or (where resources do not permit this) a sample inquiry showing
numbers by individual industries. This information provides the basis
of occupational projections in the country concerned adapted in the
light of experience abroad. It also contributes to the international pool
of knowledge about manpower problems, for other countries may
learn from it as well.
2. A sample survey of the actual educational and vocational qualifications of workers in selected occupations in individual industries
would supplement that mentioned in the preceding paragraph and would
be of great help in connection with the three following suggestions.
Although it would be desirable to have this information also collected
in the framework of a census, this is far too complex a matter to be
possible with the personnel and other resources available for censustaking in developing countries (or, for that matter, in advanced ones).
3. A system of vocational training statistics, covering both formal
courses and on-the-job training arrangements, and showing what is
being done in this field and, if possible, at what cost, would greatly
facilitate any target-setting in the area of industrial training.1
4. A statement of general skill requirements (and possibly other
worker traits) should be formulated—and revised from time to time—for
selected areas of industrial work that are expected to grow in the coun1
It is typical of the traditional neglect of study of human resources as compared
with trade, physical capital, etc., that such statistics are virtually non-existent even in
advanced countries. Thus, in a recent impressive study of Some Factors in Economic
Growth in Europe during the 1950s (Geneva, 1964), the United Nations Economic
Commission for Europe could not include examination of vocational training as a
factor in growth,findingit " statistically intractable " (p. V-22). The Industrial Training
Boards in the United Kingdom to which reference is made later in the present study
can require firms to keep records and to give information. This power could, presumably, be used to build statistics—at least on a sample basis.

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

tries concerned. The criterion of what was required might be found in
the average performance of workers in industries capable of competing
with the manufacturing industries of advanced countries. A statement of
this kind would provide some general orientation for objectives (according to the manpower approach) as regards the nature and level of
general education for those who were expected to find employment in
various kinds of industrial work. It would also provide an orientation
for vocational guidance work, and it could provide clues as to where
public support (financial or otherwise) was most needed to stimulate
the provision of training facilities.
5. Specific skill requirements (and possibly other worker traits)
should be catalogued for a number of key occupations (perhaps from
100 to 150) in a limited number of key industries. Such a catalogue
would be useful for the same purposes as those stated in the previous
paragraph, but as it would be more detailed and precise it would also
provide the basis for making specific training arrangements for the
really crucial occupations in industry. About half of the catalogue
might consist of such occupations as those (roughly 800) that are listed
under Major Group 7/8 of the International Standard Classification of
Occupations (craftsmen, production process workers and labourers
not elsewhere classified) but many of which are unskilled or are of
limited importance to key industries. The other half might include
selected industrial occupations from Major Groups 0 (professional,
technical and related workers), 1 (administrative, executive and managerial workers), 2 (clerical workers) and 6 (workers in transport and communication operations). The survey by the Nigerian National Manpower Board seems an excellent example of how the necessary data
could be collected.
It would appear that, if this approach to some of the problems of
setting targets for skill formation were to commend itself, there would
be considerable scope for international action in organising it. There has,
of course, already been a great deal of international action in preparing
the 1970 censuses—a major opportunity for obtaining, improving and
updating the information mentioned under the first of the five points
above.
But there would also be scope for international action in preparing
the four other tools suggested, mainly for two reasons. First, some of the
work involved would be difficult and expensive; pooling knowledge and
experience would reduce the costs and improve the quality of the results.
Second, as international comparison has proved to be of great help in
forecasting and judging manpower requirements, it is important that

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

the data to be collected and the standards of skill requirements to be
set are truly comparable as between countries.
At the same time it would seem unwise to organise such work on a
world—or even on a continental—basis. To be useful for practical
purposes the data and standards should be specific to the level and
general nature of industrial and educational development, and possibly
to some other characteristics of the countries concerned. Sufficient
similarity on these points, enabling a common pattern of skill requirement to be set for key occupations, can probably be found among
relatively small groups of countries in the same geographical region.
Without entering into technical detail it would seem that international
organisations could contribute to such work, for instance in the following
ways:
(a) convening experts from appropriate groups of countries for which
it seems a priori possible to establish more or less common catalogues
of occupational skill requirements; these experts would include
persons concerned with education, training and manpower planning
as well as employers and workers to the extent that among these
groups people could be found with practical knowledge and insight;
(b) arranging for experience gained in the definition of areas of work
and in the establishment of catalogues (e.g. the United States
worker trait groups) to be brought to bear in developing countries ;
(c) as a specially difficult and important part of the previous step,
assisting in the translation of required types and levels of ability
into terms of specific educational attainment through the school
systems of the developing countries concerned1 ;
(d) in general, promoting common approaches with a view to gaining
maximum benefits from international exchange of experience; of
particular importance in this connection is the adoption of uniform,
or at least internationally comparable, definitions of occupations
according to type and level of qualifications required (e.g. technician,
skilled worker, etc.).
Some Organisational Questions
An attempt has been made in this paper to show that systematic
study of skill requirements as a basis of target-setting is necessary to
prevent waste in industrial development that low-income countries can
1
This problem proved particularly difficult also in the United States. ECKAUS
(" Economic Criteria for Education and Training ", op. cit., p. 185, note 12) reports
having received " conflicting advice " on the matter and having found his own translation " controversial ".

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

ill afford—waste of expensive plant and equipment for want of qualified
manpower, and waste of equally expensive training resources used in
wrong directions, or following faulty methods, or not used at all for
want of means to attract trainees. Suggestions were also made regarding
four fields and three time spans for which targets of skill provision
should be set, and the kinds of information needed for the purpose.
In this concluding section the question is considered of who should do
this work, and how.
It would seem best to look at this question separately for training in
employment on the one hand, and more generally oriented education and
training on the other. Decisions in these two spheres rest with different
agencies : with industry itself (public or private or both) for the former,
and with the government for the latter. Therefore, as already suggested
earlier in this paper, while specific target-setting for general education
and training activities are proper matters for central public concern, for
training in employment this should in large part be the responsibility of
industry itself.
Finally, a brief reference is made to manpower planning at the
international level.
General Education and Training.
As noted in an earlier section, it is necessary to consider manpower
requirements for any country as a whole—not for industry or any other
sector in isolation. Otherwise, since skilled manpower can often move
easily from one sector to another, targets set and attained for industry
might eventually prove inadequate (or excessive) if people trained for
industry moved in large numbers to sectors for which no adequate
targets had been set (or vice versa).
There should, therefore, be some agency of central government to
concern itself with the determination of a country's over-all skill requirements and with target-setting for meeting them.
It would further seem clear that such an agency ought to be knowledgeable about the demands made upon each of the major sources of
skill provision and about the practical means and possibilities of meeting
these demands. This could be achieved by including among the agency's
membership or consultants representatives of—
(a) the government authority responsible for over-all economic and
social development;
(b) industry;
(c) educational authorities ;

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(d) any authority that may exist with major responsibilities for the
organisation and functioning of the labour market (e.g. an employment service).
The nature of the agency itself must, of course, depend on the system
and organisation of national government in each country. For instance,
it may be a committee of a national planning board, where such a body
exists, or it might be attached to some suitable ministry or ministries
(e.g. the ministry of labour, a ministry of manpower, or a ministry of
education) where no national planning board exists. But many other
variations are, of course, possible.
Training in Employment.
How can a country organise a target-setting approach to skill requirements in the industrial sector?
As noted in earlier sections of this paper, industry itself is best
equipped both to specify its detailed requirements and to meet these
through training in employment—i.e. largely by training on the job.
It would, therefore, seem necessary for some body or bodies to be set up
through which industry could perform these functions.
But it was also suggested above that there is considerable public
interest in ensuring that industry adequately discharges its functions
regarding skill formation. Training in general and basic skills tends to be
inadequately provided by employers owing to the risk that employees
will leave the enterprises which trained them. More generally, employers
faced with the expense and difficulties of setting up training schemes
may underrate the value of training to their own enterprises, blaming
bad performance on their workers instead of on their own failure to train,
and hoping that by offering a high wage they can entice workers from
other enterprises which do provide training. Finally, organisations of
skilled and professional workers may insist on unduly slow and expensive
training schemes.
It would therefore seem necessary for any bodies concerned with
training for industry also to include representatives of the public interest.
In view of these considerations, considerable interest attaches to the
Industrial Training Boards set up under the British Industrial Training
Act, 1964, which would seem to meet the requirements suggested above
almost ideally.
These Boards provide the organisation for attaining the threefold
objective of the Act, which is to ensure that—
(a) the quantity of training provided in an industry is adequate to meet
the assessed training needs of the industry;

1. SKILL REQUIREMENTS FOR INDUSTRIALISATION

(b) the quality of this training reaches at least the minimum standards
set for the industry ;
(c) the cost of training to the employers is fairly shared among employers in an industry.
The composition and procedures of the Boards are rather similar to
those of the wages councils that under varying names have for many
years existed in the United Kingdom and several other countries (including developing countries such as Ceylon, India and Uruguay) for the
purpose of statutory minimum wage fixing. Thus the Boards are
appointed (one for each industry or appropriate group of industries) by
the Minister of Labour, after consultations with employers' and workers'
representatives in the industries concerned. They may make proposals
for the Minister to issue a statutory order by which a levy is imposed on
employers in the industry concerned. Their membership includes equal
numbers of employers' and workers' representatives in addition to
educational representatives and a chairman, who must have industrial or
commercial experience. Representatives of the Ministry of Labour and
of the Department of Education and Science attend meetings of the
Board, but without the right to vote.
In addition, a Central Training Council has been set up to advise the
Minister of Labour on the administration of the Act and on industrial
training matters generally. This Council is also tripartite and includes a
number of chairmen of Training Boards. It is expected to keep under
review the performance of the Boards and to consider matters of general
interest to them (e.g. training methods, training of training officers and
instructors, use of proficiency tests, training of clerical and commercial
staff).
Several interesting features of this system (such as technical guidance
and assistance to be provided by the Boards in respect of training
schemes, and the imposition of levies as a source of financing grants to
enterprises that operate training systems) need no discussion here. It is
sufficient to note the general organisation set up under the Act and the
role it can play in assessing manpower needs in both individual firms
and industries, and for certain occupations that are common to several
industries. It is intended that the Boards should play such a role for all
categories of employees—management and supervisory personnel,
technologists and technicians, as well as skilled, semi-skilled and unskilled
workers.1 Assessment of training needs is to be made on the basis of job
analysis in terms of the skills and knowledge required for a competent,
1
The Central Training Council has appointed a Management Training Committee, and the Engineering Industry Training Board has formed a Supervisory
Training Policy Committee.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

continuous and confident performance and the compilation of a training
syllabus for each job.
In conclusion, it is suggested that industrialising countries may find a
system along the lines described above of the greatest use in setting
targets for skill formation in industry, for developing the five tools of
manpower planning proposed above and, of course, for the actual
organisation and improvement of training schemes. But this last aspect
will be examined further in paper No. 2.
International Manpower Planning.
It may be rational for industrialising countries to continue relying
to some extent, for some time to come, on expatriate manpower, especially
teachers and instructors. If so, it would seem necessary to arrange for
some planning at the international level so as to ensure that the necessary
manpower could indeed be made available by the countries expected to
provide it.
This would mean an international application of the target-setting
approach, at least for certain occupational groups that are important for
industrialisation. It would require a forward look to be taken at probable
needs in the industrialising countries and possible availabilities in
advanced countries. A start has indeed been made with this approach.
The Report of the Secretary-General to the Economic and Social
Council quoted earlier x and, on a more modest scale, the present
document have sought to throw some light on future needs in the industrialising countries. Some advanced countries have included in their assessments of future skill requirements some provision for assistance to other
countries: e.g. France as regards secondary-school teachers and instructors for accelerated vocational training, and the Federal Republic of
Germany and Sweden as regards vocational training instructors.
It is suggested that international organisations could usefully develop
further the assessment of future needs and supplies with a view to
concrete target-setting for technical co-operation. Such work would
seem to fit eminently into the framework of the United Nations Development Decade and the decade following it.

1
Training of National Personnel for the Accelerated Industrialization of Developing
Countries, op. cit.

2. EDUCATION AND TRAINING PROGRAMMES
This paper is very broad in scope. Education and training with a
view to industrialisation imply the whole process by which the general
and technical knowledge and the skills needed for industrial production
are acquired and developed. By qualified personnel is meant any person
who possesses some special skill or knowledge required at any stage,
and at any level, in the industrial process : from the semi-skilled worker
to the technician, the engineer and senior management.
The purpose of this paper is to define some of the conditions which
must be fulfilled if countries in the process of industrialisation are to be
endowed with an optimum " skill generation system "—optimum as
regards both cost and efficacy. It examines problems raised by the
creation or development of such a system, and suggests solutions for
these problems in both general and specific terms.
The paper is divided into four sections. The first contains a brief
description of the main problems. The second is concerned with determining an education and training strategy. The third section discusses
some of the more important aspects of the implementation of education
and training programmes, while the fourth makes some concrete proposals for international action in this field.

I. The Problems
Developing countries have made strenuous efforts to overcome their
problems in the field of education and training. There have been some
remarkable achievements—often at great cost—especially during the
past ten years, but much remains to be done. In the following pages the
difficulties are summarised which the developing countries themselves
admit still have to be overcome. There are notable exceptions among
those developing countries which have already attained a comparatively
high level of industrialisation. But the broad lines drawn may serve to
highlight underlying principles of national and international action
which would be suitable for application in a great many cases.
Many of the education and training systems existing in the developing
countries are unable to supply, at the right time and in sufficient number,

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

the qualified persons needed for industrial development. Moreover,
the education and training provided by these systems are a heavy financial
burden. This situation prevails equally in both of the main sources of skill
generation: the general education system, and the training system
(whether in schools or in undertakings).
SHORTAGES OF QUALIFIED PERSONNEL

Almost all developing countries suffer from serious shortages of
qualified personnel, at all levels and in all key posts in industry: plant
managers and administrators; graduate engineers in design, production
and research; technicians, workshop supervisors, pattern-makers,
draughtsmen; foremen and supervisors, highly skilled production
workers, office employees; repair and maintenance workers. These
shortages exist, paradoxically, side by side with unemployment and
massive underemployment—even in conjunction with alarming reductions
in the level of industrial employment—and seriously hamper industrialisation plans and programmes in the short term. Even in the medium
term, it seems in certain cases unlikely that they can be substantially
reduced under present conditions. In some countries at early stages of
industrialisation the output of skill generation systems will not even
suffice to supply the qualified personnel needed for replacement purposes.
It is also true that in some countries there is an over-production of
certain categories of staff. Thus in the Philippines, between 1963 and
1970, there is likely to be an estimated surplus of 15,000 graduate
engineers.1 Surpluses of trained personnel, just as much as shortages,
point to one of the main characteristics of the education and training
systems of the developing countries : they have rarely been set up with
an eye to the countries' industrial development needs.
Even in those cases where there is an over-production of certain
categories of qualified personnel, imbalances constitute a serious problem.
In the United Arab Republic, where there appears to be too high a
proportion of university graduates, there are serious shortages at the
technician level, and these shortages will tend to become more acute
unless vigorous action is taken to combat current trends. 2
1
A . S. BHAIXA: "Manpower and Economic Planning in the Philippines", in
International Labour Renew (Geneva, I.L.O.), Vol. 94, No. 6, Dec. 1966.
2
A study undertaken by the Institute of National Planning, Cairo, estimates that
in 1970 the United Arab Republic will be faced with a shortage of 213,000 technicians,
or 41.5 per cent, of estimated requirements. Figures for 1975 and 1980 show estimated
shortfalls of 263,000 (43.1 per cent.) and 373,000 (47.7 per cent.) respectively. See
Manpower Planning in the United Arab Republic (Cairo, Institute of National Planning,
Nov. 1966).

2 . EDUCATION AND TRAINING PROGRAMMES

QUALITY DEFICIENCIES

Frequently, trained persons have not acquired the qualifications
needed for the jobs they will be holding in industry. Many examples
exist of graduate engineers barely meeting the requirements of jobs at
technician level. Although engineers are in fact often called upon to
fill such jobs because of the shortage of competent technicians, such a
substitution is rarely satisfactory : the skills and knowledge of the one
occupation bear no relationship to those required of the other, and all
too often a poor engineer simply becomes a poor technician. The reasons
for such qualitative deficiencies lie in defects in the main sources of skills
and qualifications for industrial employment, namely the general education system and the training system.

(a) The General Education System
Education has many objectives which are not necessarily linked to
the goal of industrial development—e.g. providing a means of access
to cultural riches, developing the personality of the individual. It also
has, however, another basic aim : to prepare the individual for vocational
and technical training. It is thus, in the context of this paper, the main
stream of preparation for industrial employment. Often, however, the
organisational structure, curricula and pedagogical methods of the
educational system are inadequate and jeopardise the success of training
provided later on.
Many countries, in pursuit of important social ideals, have heavily
emphasised the expansion of primary education; but this quantitative
effort has hampered any improvement in the quality of primary education, which in many instances is poor. At the same time it has held
back, for sheer lack of resources, the improvement of secondary and
higher education. As a result, those who have gone through the primary
education system—many without completing it—will not be able while
in employment to receive adequate further education, for lack of teachers,
instructors and other qualified staff which the other, higher levels of
education cannot provide. General secondary education suffers from
well-known deficiencies: insufficient attention to the sciences, oldfashioned teaching methods, no relation to the realities of economic
life, inadequately trained teaching staff. It all too frequently turns out
people who have no desire to enter industrial employment later on or
on whom industrial vocational training will be partly or wholly
wasted.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(b) The Training System
(i) Skilled Workers.
Two main weaknesses characterise manpower training for this
group: (1) persistent competition between or overlapping of different
types of institutions or forms of training—i.e. vocational schools, trade
schools and training centres on the one hand, and training provided in
undertakings on the other; (2) the low quality and/or high cost of both
forms of training. Generally speaking, vocational and trade schools are
very expensive and their graduates are often not accepted by undertakings.
Training centres turn out, at considerable cost, too few workers, or
workers whose trade specialisations do not match the jobs available, or
whose theoretical knowledge and practical skill leave much to be desired.
Both the training centres and the vocational and trade schools are
handicapped by having inadequately trained teachers, curricula which
are too theoretical, too general and often of poor quality, and equipment
that is out of date or inappropriate to the instruction given. Furthermore,
both types of institution suffer from inadequate links with industry,
or even from a total lack of them.
To meet acute shortages of skilled manpower required for specific
industrial projects, recourse is frequently had to accelerated training
centres for adults. Such centres can train persons for specific needs
within the space of a few months, but they are expensive to set up and
run. Moreover, the skills taught are narrow and the centres are not
flexible enough to adapt to changing needs.
Training in undertakings—whether given informally or under a
formal apprenticeship scheme—also has well-known defects. Even when
it is organised systematically it is often too narrow in scope, dividing
the skills and knowledge into too many sub-specialisations, and paying
too much attention to learning tricks of the trade rather than to skill
training in depth. Instructors lack pedagogical training; teaching
materials are either insufficient or totally lacking. In certain cases the
training period is far too long: apprentice training, based on the systems
of some of the industrialised countries, may last as long as four or five
years. The training given in undertakings also tends to neglect the related
theoretical instruction, which is an essential part of the training not only
for attaining the level of qualification immediately required, but also as
a preparation for any further training and retraining made necessary
by technological change. This low level of basic training has repercussions
throughout the occupational structure. Foremen and highly skilled
workers are of necessity recruited among workers trained by a weak

2. EDUCATION AND TRAINING PROGRAMMES

system, and they in turn provide the material from which junior and
middle-level technical and managerial staff, including vocational training
instructors, are selected. Many large and medium-sized undertakings
have tried to remedy this situation, and in some countries they are in
fact the sole providers of trained workers with multiple skills ; but much
remains to be done, particularly in smaller plants and undertakings.
Facilities for further training, which would help to make up the
deficiencies in basic training, are either inadequate technically or else
accessible to only a very small minority. Often they provide supplementary
training for limited additional skills only and fail to give the necessary
related theoretical instruction.
Although undertakings appear generally dissatisfied with the quality
of the workers trained by the school system, it is by no means certain,
at least when one looks beyond the immediate short-term results, that
they have themselves been able to establish better systems. There are
many reasons for this : a certain unawareness of the need for training,
lack of adequate facilities, fear of pirating by competitors, to name just

three. Whatever the reason, the result is that many countries have failed
to exploit the training resources of undertakings and have established
expensive vocational training institutions outside the industrial milieu.
This is paradoxical, particularly in countries with a large public industrial
sector. In such cases it would seem natural for the State to intervene
directly and to expand the training activities of its own industries.
In recent years many countries have tried to remedy these defects.
Vocational and trade schools and centres have been closed down or
converted into institutions providing both basic training and related
theoretical instruction for the different levels of training provided in
undertakings. Comprehensive apprenticeship systems combining inplant training and training in schools and centres have been set up in
numerous countries of Africa (United Arab Republic), Latin America
(Chile, Colombia, Peru, Venezuela), and Asia (India, Malaysia, the
Philippines). A large number of countries are in the process of reviewing
and modifying their training systems. But it does not seem likely that
these efforts will suffice for training skilled labour in the numbers required.
Moreover, although it is too early as yet for a systematic assessment of
the results achieved, many of the newer systems have developed their
own shortcomings. They have given birth to powerful organisations,
but in doing so they have often become rigid, and the training they
provide is not easily adaptable to the changing techniques of industrial
production. Since their creation has not always been accompanied by
a reform of lower technical and vocational education and training,
overlapping has developed. Nor do the institutions always manage to

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

maintain close links with enterprises, particularly with small undertakings which stand most in need of assistance. The courses given in the
training centres are sometimes too long, and the facilities available are
not fully utilised. Finally, the cost of these institutions is high, and there
has been little analysis to discover whether the expenditure involved
might not bring better returns if it were used for other purposes, e.g.
if it were converted into massive assistance to training in undertakings.
Assistance of the latter type has begun to be organised on a systematic
basis in a few countries (India, Mexico, Turkey, United Arab Republic).
But a great many problems still need to be solved: employers and
educationists must be won over, staff trained, appropriate curricula and
teaching methods evolved, and some kind of supervision of the training
instituted.
(ii) Middle-Level Personnel.
The quality of training for the vast range of technician and other
subprofessional occupations seems to be the poorest of all. Teachers of
technical subjects, whether in trade schools or in plant workshops, have
a very low theoretical and practical instruction; foremen and supervisors lack pedagogical training and often do not master the skills of
their trade. Technicians trained in the technical streams of general
secondary education and in technical institutes of secondary or junior
college level do not reach the required standard. Undertakings have
therefore to resort to the traditional sources of technician recruitment,
that is either the highly skilled workers (who do not, however, have the
necessary theoretical knowledge and general education) or engineers.
Most of the industrialists attending a Colombo Plan Conference held in
1966 stated that few graduate engineers could be employed as technicians.1
There are various reasons for these deficiencies in technician training.
In the first place, the importance of the technician has been recognised
only in recent years as industrial operations have become more diversified
and been broken up into component parts as a result of technical change.
In addition, technicians' functions are not given recognised status in the
social hierarchy : they are sometimes performed by highly skilled workers,
sometimes by junior engineers. Thirdly, students who take all their
secondary education in technical streams leading up to a first diploma at
technician level are often the least gifted students in secondary education.
Fourthly, technical education suffers from inadequate organisation,
partly because of lack of funds, partly because of shortages and short1
C. BORJAL: Education and Training Requirements for Technicians, U.N.E.S.C.O.
Seminar on Technical Education in Asia, Bombay, Dec. 1966, Document in Series A*.

2 . EDUCATION AND TRAINING PROGRAMMES

comings of teaching staff. Fifthly, co-operation between schools and
industry leaves much to be desired.
Various arrangements have been made, in an effort to overcome these
defects, to provide manpower already in employment with part-time
training in schools—for instance by means of evening, correspondence
or sandwich courses. But these are not yet satisfactory and raise a number
of difficulties. Full benefit is often not gained from the theoretical
instruction given because the job a trainee holds in industry does not give
him the corresponding practical experience; the theoretical instruction
itself varies considerably in quality; arrangements of the type mentioned
are not practicable in an industry expected to grow fast, but in which at
the time of training there are not enough technician jobs.
(Hi) High-Level Personnel.
Similar problems exist for the high-level personnel categories,
particularly with respect to engineers and managers. The number of
students in engineering, commerce and business administration faculties
is much lower than in such branches as law, the humanities and the arts ;
drop-outs are particularly numerous in the former group. The instruction
received is too little geared to the requirements of industrial life. This is
particularly noticeable in the case of business schools and colleges and
university faculties of commerce.
Engineers.
The process of initiating future engineers into the practical problems
of industrial life is particularly difficult in industrialising countries, many
of which have adapted their curricula from those used in industrially
advanced countries. Science curricula, in particular, do not always meet
the requirements of industrial life. Teaching methods are stereotyped and
do not allow students to participate sufficiently actively and practically
in the process of learning. Universities and higher technical institutes
rarely have the complete range of equipment which, in engineering
schools in industrialised countries, supports high-level theoretical
courses. Theoretical training and practical work are badly combined,
and there is room for improvement in the content of the practical work.
Engineering students in industrialising countries should be given a
certain amount of additional or different knowledge because the engineer
in an industrialising country does not always have at his disposal facilities
such as the specialised libraries, professional study groups and journals
which are within easy reach of his counterparts in industrialised countries.
In addition, factories do not have enough experienced senior personnel to
5

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

help newly qualified engineers. Finally, the importance of systematic
in-plant training and further training after initial qualification is not given
due recognition. The statement that " engineers are not made by a system
which first teaches science in the secondary schools and at university and
then expects industry to produce the practical engineer " 1 is therefore
even more valid for industrialising countries than for countries which
are already industrially advanced. There is no doubt that the shortcomings in training programmes for engineers in many developing
countries form one of the most serious obstacles to rapid industrialisation.
Senior Management.
In many developing countries, the inadequacy—and sometimes the
complete absence—of training programmes for innovators, entrepreneurs
and management of undertakings reflects lack of recognition of the contribution which these groups can make to industrial development. This
is due primarily to the cultural and social structure of many developing
countries, particularly those in which a traditional and a modern sector
exist side by side. Their education systems are not oriented towards the
goals of an industrial society; educational programmes and methods do
not encourage interest in new ideas. Young people tend to be more
interested in entering non-technical professions or government service
than in becoming industrial managers, when the latter's work does not
enjoy equal social status. The pragmatic side of some management
activities is often looked down on.
It is often said that managers and administrators are self-made and
the success achieved by some of them is evoked as an argument against
the introduction of training programmes. There are, however, large
numbers of undertakings, especially medium and small-sized ones,
whose low output is due partly to their antiquated organisation and
management methods. It is not easy for the senior management of such
undertakings to accept the idea of taking training courses. This is so
partly for the reasons indicated above and partly because they do not
appreciate the need for such training: they may see no point in improving
products which they have no difficulty in selling; they may blame their
difficulties on external restrictions (taxes, import quotas, foreign exchange
problems) rather than on their own lack of ability ; they may prefer to
make high profits on a short-term basis.
Many countries have made considerable efforts to improve this
situation. Centres have been set up or arrangements made for the develop*B. V. BOWDEN: Report of the Committee Inquiring into the Feasibility of Establishing a Faculty of Technology in the University of Singapore (Singapore, Sep. 1963).

2. EDUCATION AND TRAINING PROGRAMMES

ment of management from undertakings of all sizes. But they are not
sufficient. For one thing, many industrialists are not convinced of the
utility of the new programmes, especially when these have been developed
for use in very different cultural environments.
COST OF EDUCATION AND TRAINING

Developing countries pay a high price for meagre results. Statistics on
expenditure on education and training, which are far from including all
activities (such as training in undertakings, private training programmes
and sometimes even certain forms of technical training), indicate that
such expenditure represents a substantial part of the national budgets of
developing countries and a high proportion of their gross national
product. Countries such as Burundi, Cambodia, Costa Rica, Dahomey,
Peru, the Philippines, Tunisia and Uganda devote from 20 to 25 per cent.
or even more of their budgets to education.1 In Upper Volta 25 per cent.
of the national budget is spent to provide 9 per cent, of the population
with primary education.2 Ceylon, China (Taiwan), Congo (Kinshasa),
Ghana, Iraq, Kenya, Libya and the Sudan regularly devote a minimum of
5 per cent, of their gross national product to education and training.3
In Nigeria the average recurring annual cost of a university student is
higher than in an advanced country (nearly $3,000 per student), with a
teacher-student ratio of 1:16.4 Sir Arthur Lewis has estimated that the
cost of a high-school teacher in the United States is equal to double the
national income per head, whereas the equivalent figure in Jamaica is 12
and in Nigeria 30.5
ABSENCE OF AN INTEGRATED SYSTEM

The inadequacies mentioned above do not arise from insufficient
recognition of the role of human resources in the development process.
Indeed, it is possible that, from the beginning of the present decade,
1
International Bureau of Education: International Year Book of Education,
Vol. XXVII, 1965.
2
NGUYEN HUU Chan: The Cost of Instruction in Fourteen French-Speaking African
Countries (Paris, U.N.E.S.C.O., International Institute for Educational Planning, 1965)
(Working Paper IIEP/PRG-AFR/65.II.1).
»U.N.E.S.C.C: Statistical Yearbook, 1965.
4
Frederick HARBISON: A System Analysis Approach to Human Resources Development Planning (U.N.E.S.C.O., I.I.E.P., May 1966) (Working Paper IIEP/9).
6
Sir Arthur LEWIS: " Education and Economic Development ", in International
Social Science Journal, Vol. XIV, No. 4,1962. For another, more precise and comprehensive, measure of the cost of education and training see paper No. 1, p. 5, footnote.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

which has seen extensive acknowledgment given to the economic value
of human resources, some countries have been too eager to invest in
people, without having an over-all view of the problem and, in particular,
of the criteria which would enable them to assess the costs and benefits of
such investment. The crucial point seems to be the lack of a coherent
policy, specifying the tasks of the various bodies concerned in training
with a view to meeting carefully determined needs at the lowest possible
cost. The growing importance accorded to educational planning is
certainly a decisive step towards the establishment of such a policy, but it
should not lead to facile optimism. Efforts to this end usually aim at
making general and technical education programmes more effective;
but they are not always linked very clearly with a country's industrial
development aims and they do not cover the very considerable activities
in industry, in public services, and even in the armed forces, which contribute to the education and training effort. As a result there tends to be
rivalry among a multiplicity of government bodies, little or no coordination between them, and, in most cases, absence of a national forum
for discussing major questions of general policy, working out agreements
on objectives to be achieved, and allocating the tasks to be performed.
There are, however, examples of co-operation at the working level
between educational institutions and industry. Advisory committees
have been set up to study the skills and training content of occupations,
and to advise on training curricula and methods of instruction. Their
advice, however, is often based on current practice or individual cases,
insufficient account being taken of the future or of the situation as a
whole, and their membership is not always representative of the real
needs of industry.1 The basic deficiency of such committees tends to be
that they are not integrated into a logical over-all system of industrial
training, with specific objectives and clearly defined elements.
The establishment of such a system appears to be a basic prerequisite
for efficient industrial training policies.
It should be possible to look at the various constituent elements of human
resources development as a system which is somewhat analogous to a system
for the generation and distribution of electric power. In using this frame of
reference, one can identify skill-generating centres, such as for example schools,
universities, training institutes, and employing organisations, which develop
people on the job. The linkages between such centres are analogous to transmission lines. The manpower problems encountered by developing countries,
such as skill shortages and labour surpluses, may be thought of as attributable
1

Hugh KING: The Contribution of Technical Education, Background Paper No. 2,
Pan-Indian Ocean Conference on Technical Education and Training, Perth, August
1966.

2 . EDUCATION AND TRAINING PROGRAMMES

to power failures in particular generating centres, ineffective linkages between
these centres, or faulty design which results in the failure of the total system to
carry the loads expected of it. A system of human skill generation, like a
system of electric power generation, should be designed to carry varying loads;
it must have built-inflexibilityto meet such loads; it must be adequate in size;
and above all its components must be properly balanced. The systems analysis
approach makes it easier to identify in operational terms major problem areas,
and it compels the analyst to examine the critical interrelationships between
various manpower and education programmes. It provides a logical starting
point for building a strategy of human resource development.1

II. Strategy of Education and Training
Countries anxious to attain specific objectives in the field of industrial
development should evolve a general strategy in the field of industrial
training. By " strategy " is meant here the systematic deployment of all
available resources for the effective education and timely training of the
personnel required for industrial development. As in military science, so
here any such broad strategic plan must observe three principles: the
principle of power, whereby each country must be firmly resolved to
attain the goals it has set for itself and must deploy its forces with this
end in view; the principle of security, whereby provision must be made to
deal with unforeseen contingencies; and the principle of economy of
means, whereby the main effort is devoted to the attainment of highpriority objectives and a minimum of energy exerted on goals of less
importance.
Reference has already been made to the lack of co-ordination of
available training facilities in general and technical education, in
industry, in the civil service and in the armed forces. At present there is
no universal recognition of the need for systematic, concerted use of all
resources, for it is felt that the education and training arrangements have
an inherent flexibility which enables them to meet the requirements of
industrial development. The same view is often held in industry itself.
Arrangements are often made, of course, to meet the specific training
requirements of a particular industry or factory, especially with regard
to jobs considered to be essential. But it is rarely realised that training
activities have to be systematically organised, and the education and
training authorities are often left to meet as best they can needs for
skilled manpower arising from industrial projects. Even at the level of the
individual undertaking, plans for training the staff of a new factory are
"Frederick HARBISON: ''Educational Planning and Human Resources Development ", in Fundamentals of Educational Planning (Paris, U.N.E.S.C.O.-I.I.E.P., 1967).

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

often left a good deal vaguer than plans for the capital investment and
equipment which the factory requires.
This lack of systematic organisation causes a considerable waste of
time and resources, and often holds up or jeopardises the implementation
of industrial schemes. Hence the need to convince manufacturers, as
well as the competent national authorities, of the need for a strategy of
education and training for industry just as they devise and apply strategies
for investment, marketing, and the material organisation of production.
At the national level this implies unified planning and direction. Existing
machinery may have to be redesigned or new machinery created in order
to make this possible.
The strategy for industrial training should be integrated into the
over-all education and training effort. Manpower does not enter industry
alone, nor does it remain indefinitely confined to industry. The success
of industrialisation policies depends on the quality of personnel in service
occupations, in local government and in the civil service, as well as on
the quality of industrial manpower. No description will be given here of
the conditions which must be met if a general strategy for the use of
human resources is to be adopted. But it should be stressed that adoption
of such a strategy is an absolute necessity. The absence of an over-all
strategy must not, of course, prevent the development of an industrial
strategy; but the latter will be less effective or more costly for the country
concerned when an over-all strategy does not exist.
It is not easy to co-ordinate separate training efforts each covering a
different period so as to obtain a coherent whole. In the short run,
manpower forecasts serve no very useful purpose. For skills which
cannot be quickly acquired (in the case of very highly qualified staff
such as engineers) there is no time to make the necessary adjustments in
the national skill-generation system; existing staff have to be given
further training (locally or abroad), or foreigners engaged. But the
basis for long-term action has to be laid at the same time; and this
action has to fit into a long-term plan. Hence the need for manpower
forecasting.
As regards skills which are readily interchangeable and usually
require a short period of training, any urgent action that may be taken
should not prejudge the long term. Thus, when the undertakings themselves cannot train sufficient numbers for a particular sector of industrial
development, recourse may be had to centres for accelerated training.
However, care must be taken to prevent such centres from becoming
superfluous or out of date; plans must, therefore, be made right from the
beginning for their longer-term use. Here again, the need for manpower
forecasts arises.

2. EDUCATION AND TRAINING PROGRAMMES

THREE PHASES IN DEFINING A STRATEGY

Three steps must be taken in establishing an education and training
strategy for industrial development:
(a) determination of knowledge and skill required; inventory of training
institutions; assessment of their output;
(b) decisions as to the goals to be attained;
(c) decisions as to the best division of labour between the school
system and industry.
(a) The Assessment Phase
First, action to determine the training programmes should be based
on the following data:
(i) It is essential to have indicators for " strategic manpower ",
which will have the greatest impact on industrial development as a
whole. Such indicators are necessary for certain occupational groups
(senior managers and managers, middle-level technical staff; instructors;
maintenance personnel), and for certain individual occupations (accountants, draughtsmen and electricians). They are essential if a long-term
strategy is to be evolved, especially if there is a general industrial development plan. 1
(ii) In the shorter run, it is useful to start from manpower coefficients
for individual industries. As indicated in paper No. 1 above, such coefficients may be of two kinds. The first consists of the percentage distribution of the industry's total labour force among various occupational
categories. The second consists of typical ratios between numbers needed
in individual occupations or occupational groups, and the quantity of
output.
(iii) In some instances, as when a factory is to be set up, there will be
need for data about over-all manpower requirements and especially
requirements in certain key posts or functions.
For each occupational group or occupation it is necessary to indicate
the knowledge and skills required for normal performance of the job.
1
In a paper devoted to Iran George B. BALDWIN suggests that it would suffice
for most countries on the threshold of industrial development to launch model
vocational training programmes in the following seven fields: automotive and diesel
mechanics, electricity, machine-shop operations, foundry operations, clerical work,
modern building techniques and printing. (See Frederick HARBISON and Charles A.
MYERS: Manpower and Education, Country Studies in Economic Development (New
York, Toronto, London, McGraw-Hill, 1965).)

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

The information should include the general knowledge required (elements
of science, technology and general education) together with the necessary
occupational qualifications—not only manual skills (general and specific)
but also intellectual capacities (linguistic abilities, grasp of special
calculating techniques and of laboratory work, analytical ability, capacity
for synthesis, creativity) and personal qualities (ability to make oneself
understood and obeyed by others and to work as a member of a team).
It is none too easy to define what is " normal performance " on a particular job: although the qualifications currently required should not be
overestimated, at the same time provision should be made for the
necessary foundation for further training. The definition will doubtless
have to be based on the opinions of employers themselves and of other
persons qualified to express a view, such as employment service specialists.
This has been the line followed in the United States and, quite recently,
in Nigeria.1 Useful guidance may also be obtained from foreign experience
and international comparisons.
Second, an inventory should be made of the institutions and bodies
providing general education and technical training. While in many
developing countries the educational planning authorities have undertaken a census of such institutions, allowance is rarely made for training
carried on by industry—in undertakings, both public and private, in the
training schools attached to them, or in the numerous technical and
vocational training schemes organised outside the school system (e.g. by
the armed forces). Even the technical education given within the general
system of education is often covered less accurately than general education and university studies. Furthermore, such inventories are not
designed with an eye to any particular sector of the economy, such as
industry, but purport to cover all branches of activity.
Hence, it would seem important to make an inventory of all facilities
for the generation of skills needed for industrialisation. The information
gathered should be classified in a way showing the institutions that might
be able to educate and train skilled manpower required for specific
individual industries, in specific occupational groups, and for certain
key occupations. The inventory should comprise a description of the
main features of the bodies concerned (total capacity, teaching staff,
equipment, origin of trainees, data on financial and budgetary matters),
an indication of the number of persons trained, the qualifications
obtainable, the effectiveness of the training provided (rate of drop-out,
success percentage, jobs held in industry by former trainees, and at what
levels), plus, if possible, training costs per head.
1
Survey of Educational and Training Content of Occupations, op. cit. Cited in
paper No. 1, pp. 42-43.

2. EDUCATION AND TRAINING PROGRAMMES

Third, the results obtained should be compared with the pattern of
occupational and skill requirements referred to above *• as a basis for
determining what should be done to improve or develop the existing skillgeneration system. In the light of this comparison, it should be possible
to decide on objectives and assess the tasks to be accomplished.
(b) Decisions as to Objectives
Action needed under this heading has been discussed in some detail
in paper No. 1 above. It will be concerned chiefly with medium- and
long-term goals. In certain instances, however, it should be possible to
decide on short-term ones as well, such as, for instance, the recruitment
of foreign workers or instructors, the organisation of emergency schemes
to assist groups of undertakings, the rationalisation of factory training
schemes, the conversion or closing of inefficient or unduly costly
institutions, and the introduction of new curricula and teaching
methods.
A decision as to the goals to be reached in training for industrial
development gives rise to serious problems. First, quantitative estimates
of manpower requirements comprise an element of uncertainty. Second,
the qualitative indications which accompany these forecasts depend on
the soundness of the analysis and judgment of those who drew up the
lists of skills and knowledge required for normal performance on the
various jobs. Third, translation of these data into terms of training and
education presupposes that some idea already exists of the part to be
played by each unit in the educational and training system, and of the
way in which tasks will be apportioned among the various institutions
and programmes, this being the purpose of the third operation. Hence,
the three phases are presented here separately only to facilitate analysis.
In fact, however, they are closely interconnected, though it will often be
necessary to begin with a first approximation of the size of the tasks
involved before going on to apportion them, which should then be
possible with greater accuracy.
A number of factors make the situation rather more flexible than it
might appear. First, human adaptability and the workings of the labour
market together make it possible to meet many needs that are not specifically foreseen; second, many jobs can in fact be done by people with a
fairly wide range of different qualifications; and third, the scale on
which training in undertakings is carried on does not always call for
very detailed planning.
1

See pp. 65-66.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(c) Allocation of Responsibilities
In practice, answers will be required to two questions. First, how
much general education should precede or accompany the main types
of industrial training? Second, how should this training be apportioned
between industry and the other bodies concerned?
(i)

The Requisite Basic General Education.

This will vary with the nature and level of skill required. But, for any
particular level, the basic general education will vary, also, in accordance
with the general educational objectives pursued by a country, the quality
of the education given, the level of development and the degree of
technical progress reached. It would seem that, in the case of occupations
below lower supervisory level, there is a certain gap between the minimum
general education required for industrial production and what one might
call the social demand for education. The experience of both the advanced
countries in the early stages of their industrialisation and the developing
countries seems to show that a rudimentary vocational training can be
given to persons who have received little or no education and even to
illiterates. But experience shows, too, that a higher level of general
education has been a considerable help in the early stages of
industrialisation—both for the advanced and for the developing
countries. In addition, from the viewpoint of industrial development,
the minimum general education required for basic training at the lowest
levels of industrial skill may not be the kind of education a man ought
to have received who aspires to a job of great responsibility. This is a
problem of some importance, in view of the numerous higher jobs
filled by persons who began at the bottom of the vocational ladder.
It also arises when workers are to be given further general education in
addition to initial training. The requirements of industrial development
may result in a programme which is too narrow or too exclusively
practical, whereas both workers and society at large might have gained
from a broader education, to an extent exceeding the cost of such
education.
The complexity of these problems should not stop attempts to find
answers. These will depend on two things: (a) industry's assessment of
the basis of general education required for the various occupations and
levels; and (b) the resources the country is prepared to devote to general
education as such. Clearly, the general educational system should be
able to provide at least the educational basis needed by industry; if it
does not, it should be reformed or expanded. Otherwise, industrialisation

2 . EDUCATION AND TRAINING PROGRAMMES

schemes may be jeopardised. Assessment of general education requirements by industry ought to carry a good deal of weight when it comes to
planning general education. Other factors, of course, must be taken into
account as well, but, as far as industry is concerned, this condition is
necessary and sufficient in itself. If, in addition, the general educational
system can provide an education which goes beyond the requirements
of industry, so much the better, for industry will probably derive advantage from it and the process of industrialisation is likely to be speeded
up. But this is not a necessary condition.
(ii)

Training by the School System and by Industry.

As noted in earlier parts of this paper, general education is the task
of any country's school system. But in most countries the school system
also concerns itself to some extent with more or less specialised vocational
preparation—in technical secondary schools providing training in
various types and levels of occupational skill, and in various university
departments and technical colleges. In the terminology of the present
paper such specific vocational preparation will be described as " training
by the school system". It is distinct from training sponsored—and
possibly organised—by industry itself outside the school system, e.g.
through apprenticeship and in-service and in-plant training schemes.
For the acquisition of several types of skill, especially at the skilled
worker and technician level, training by the school system and by
industry are equivalent—basically similar skills can be learned through
one or the other. Indeed, in many countries both methods are used
simultaneously, some workers being trained by the school system and
others, in the same occupations, by industry. Since the skills which
can be acquired under both systems relate to occupations in which
comparatively large numbers of workers are employed, it is of interest
to consider which system is the better in given circumstances; in other
words, how the training work involved is best divided between the two.
The question is all the more important since in some cases it has given
rise to occasional controversy.
In examining this question it is useful to distinguish three aspects:
(a) Training may be provided in the framework of an employment
relationship (" training in employment ") or outside such a relationship
(e.g. " pre-employment training "). In the former case the trainee has
an employer who arranges for the training and bears at least part of
the direct cost of it. In the latter case there is no such sponsorship by an
employer; training takes place at the choice and responsibility of the
trainee, or his parents, or someone else.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(b) Training may be given at a workplace (shop-floor, office, etc.)
or in a special outside training place, usually some kind of school.
In practice, training in employment is largely a matter of training at a
workplace, while training outside of employment takes place largely
at schools. But this is not always necessarily the case. An employer may
send his trainee to a school for part of the training (giving him time off,
paying fees, etc.), while a private engineering student, or a graduate
engineer receiving a fellowship from an international organisation, may
be placed in a factory for a certain period, to acquire some specific
elements of practical experience.
(c) Technical schools may be part of a public education system,
wholly governed by the educational authorities. Or they may be under
some measure of formal control by industry, certain employers having a
certain say—which may be considerable or even complete—in the
programmes and policies of the schools. Technical schools over which
industry has a substantial degree of formal control are referred to below
as " training centres " ; schools for which this is not the case are called
" vocational schools ".
Most people would agree that, in examining the relative merits of
the alternative courses under each of these three aspects, policy makers
should be expected to aim at the optimum balance between costs and
benefits. Where one method promises better results for a given cost
than the other, the former should be chosen, while a method promising
a given training result at lower cost should be preferred to a more costly
alternative. On this assumption three practical conclusions may be
drawn regarding the above aspects of the roles of industry and the school
system in industrial training.
1. Any kind of training is more likely to meet industrial requirements
for specific types of skill if industrial employers can make their needs
effectively known. So that, other things being equal, training centres
have the advantage over vocational schools wholly controlled by educational authorities.
2. Whether training in a given skill is better given in a centre or at a
workplace depends mainly on the nature of that skill and on the training
facilities available at centres and workplaces. The more specific the skill
is to the work done at a given workplace (with its particular machines,
organisation and methods of work) the more obvious it is that training is
better given at the workplace. Otherwise trainees may learn to work on
the wrong machines and acquire work habits out of line with those of the
plant at which they are to work. General skills, however, the " theory "
of certain occupations, are not confined to individual workplaces, and

2. EDUCATION AND TRAINING PROGRAMMES

can often be taught more conveniently in the quiet environment and by
the specialised teachers of training institutions. On the other hand,
training facilities in local plants may be highly inadequate even for
imparting the specific skills that in principle are better taught at the
workplace; there may be no instructors or no spare machine time, or the
equipment itself may be obsolete. This is so especially in two kinds of
plant—those that are badly managed and equipped, and those that are
too small to organise training programmes even though they may be well
managed. Both types of enterprise are more common in industrialising
countries than in developed ones. Developing countries may therefore
find it wiser to conduct training mainly in centres. In many cases, however, it may be both possible and preferable to give direct assistance to
workplace training schemes rather than concentrate on training in
centres. For instance, when the difficulty is due to lack of instructors, a
central agency of the type proposed in this paper (Industrial Training
Organisation) can " lend " them to individual enterprises, while mediumand small-sized firms may be encouraged to organise group training
schemes. Such joint undertakings may work with their own teaching
staff and equipment, or they may avail themselves of the facilities
existing for pre-employment training programmes.
3. Training in employment as described above should, where
possible, be adopted in preference to training outside the employment
relationship, for—other things being equal—it has two major advantages.
One is that training at the workplace is much simpler, and much more
likely to receive proper attention, if it is given to the enterprise's own
employees than if it is to be given to outsiders. Thus, in cases where
workplace training is technically superior to school training, it is better
organised as " training in employment ". But furthermore—as noted in
paper No. 1 of the present volume—training in employment is given once
a specific need for specific skills is clearly perceived by a specific enterprise. There is hence much less risk of people being trained in skills of less
than the greatest importance and urgency—let alone skills for which
there may be little demand or none at all.
The upshot of all this would appear to be that industry should play
a much greater and more active role in the training of its manpower than
has been customary in either developing or industrialised nations. More
training should be given at the workplace; what remains to be done in
schools should be controlled to some appropriate extent by industry—
i.e. there should be a movement towards training centres ; and as much
training as possible should be given in employment. There are, however,
three limitations of training in employment, which are commented on
below.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(a) Such training cannot be expected on any large scale for skills that
take several years to acquire and that are not precisely tailored to the
needs of the employer concerned. Training in such skills is both costly
and risky. The need for the skill would have to be foreseen by the enterprise long in advance, and the original expectation of that need might
prove to have been wrong. Furthermore, the trainee may quit the
enterprise during or after the training. Training of the type commonly
given at universities and technical colleges cannot, therefore, be expected
to any large extent to be superseded by training in employment. It is
likely to remain largely what it has always been—a matter of public
educational concern. Though even so it would be highly desirable in
many countries for industry to be given some effective role in the determination of curricula, training methods and other policy issues, and to
participate in the actual training process by means of suitable in-plant
training schemes.
(b) Even in the case of skills that do not call for long periods of
study, the risk that a trainee may become separated from the enterprise
which trained him limits employers' willingness to provide training in
employment. This is the case when the skills concerned can be applied
also in other enterprises—in particular in competing firms. As stated
below \ this problem may, however, be met largely by systems of training
levies-cum-grants to individual undertakings, and the establishment of
an adequate administrative machinery to implement these measures.
(c) In developing countries industry often lacks the technical knowledge and staff for training.
The Industrial Training Organisation proposed below could help in
overcoming these obstacles. But it will be obvious that the I.T.O. would
have to play a major role in tackling all the problems examined in this
section; it would, indeed, be both the nerve centre and the principal
operating arm of a true industrial training system.

A NATIONAL INDUSTRIAL TRAINING PLAN AND ORGANISATION

It is recommended that each country should draw up a national
industrial training plan to carry out the above-mentioned tasks. Such a
plan should cover the entire industrial skill spectrum, from engineers to
semi-skilled workers. It is suggested that the appropriate machinery for
such a plan should be a national Industrial Training Organisation (I.T.O.)
1

See pp. 100-105.

2 . EDUCATION AND TRAINING PROGRAMMES

possessing the requisite technical and administrative facilities. In this
organisation, industry (public and private) would play a dominant part.
No model structure can be recommended for the I.T.O., since much
depends on the degree of development of the country concerned, the
scale and complexity of its industrial projects, and its political, governmental and administrative structure. Many countries have set up bodies
which undertake these duties to some extent or other: vocational training
commissions, national industrial manpower councils, planning commissions, special government departments, vocational training councils,
co-ordinating bodies, and so on. But there is rarely an over-all coherent
plan for industrial training. Very often basic questions fail to be
settled, e.g. matching the training requirements created by the plan or
other economic sectoral forecasts with existing training possibilities;
co-ordination between manpower planning, educational planning, and
the planning of industrial development (including industrial training);
and, within the training machinery, co-ordination between the various
activities (accelerated training programmes, management development,
training in undertakings, long-term training of high-level personnel).
Almost always, even when the need for co-ordination is emphasised, an
over-all view is lacking.
The I.T.O. should be directed by a body empowered, at the national
level, to decide on training objectives in the light of industrial development needs and on how such objectives should be achieved. It should
have the technical and financial resources to enable it either to encourage
education and training activities for industry in accordance with the
policies laid down, or itself to undertake such activities. It should be
made up of persons representing industry (governmental and private)—
men responsible for planning and carrying out industrial projects, senior
managers, trade union leaders, directors of education and training
schemes for industry—and representatives of the government departments concerned.
This body should have available—or itself create—machinery for the
assembly of the data it requires to perform its functions. The nature of
these data has been indicated above. In countries where industry is still
embryonic, such a central organ would in all likelihood suffice to provide
a coherent industrial training system. Where industry is more developed
or more diverse, the creation of similar organs in the principal industries
should be encouraged, in which case such bodies would have authority
delegated to them by the central organ and should enjoy a considerable
degree of technical, financial and administrative autonomy, provided
always that they conform to the guidelines laid down and work towards
the same objectives. Subsidiary organs could also be set up within the

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

bigger industries. It might also be desirable to create inter-industry
regional bodies within each country, whenever regional problems are
sufficiently important or regional industries are heavily interdependent.
One essential task to be undertaken by the I.T.O. would be to create
or strengthen the links which should exist at every level, for the purposes
of industrial training, between the general education system, vocational
education, the various industrial training programmes and other institutions (productivity centres, professional associations, trade unions,
small industry institutes, etc.). It should draw up training standards
itself, or encourage their adoption (conditions of entry, examinations,
certificates and diplomas), help in the establishment of curricula and
teaching methods and equipment, supervise the training given, and
provide practical assistance to undertakings. It would need adequate
financial means, derived either from government subsidies or from
contributions by industry (through the introduction of a training tax, or
by other means) or from a combination of the two. A more detailed
presentation of the financial aspects of the I.T.O. will be found below.1

III. Organisation and Financing of the Programmes
The purpose of this section is to bring out some of the practical
difficulties involved in designing education and training programmes for
industry as part of the strategy just defined. Two types of problems will
be discussed: the organisation and content of these programmes and
questions of finance.
ORGANISATION AND CONTENT

These programmes can be divided into two categories: general
preparation for industrial employment, which is provided by the general
education system, and specific preparation for employment, which is
provided by a whole range of institutions and schemes from the national
education system to training on the job.
(a) General Preparation for Industrial Employment
What changes can be made in the general education system in order
to equip individuals to benefit from better vocational and technical
training? The main need is to adapt educational syllabi and teaching
1

See pp. 105-107.

2 . EDUCATION AND TRAINING PROGRAMMES

contents and methods to the conditions prevailing in the country concerned and to the needs of industrial development. The type of change
needed will vary widely according to the level of industrial development
already attained. The principles discussed below, however, may be
applicable to a number of countries:
1. The content of the general education syllabus (primary school,
junior secondary (or middle) school and senior secondary school) should
not only ensure progressive acquisition of knowledge but also so equip
the pupils that, on completing a given stage or level of education, they
are able to take up a course of initial vocational training. This would
involve a far-reaching overhaul of primary education, which should be
a self-contained unit since it is all the general education the great majority
of the labour force will receive (as was the case in most of the economically advanced countries in the early stages of their industrialisation).
Emphasis should be placed on the acquisition of basic competence in
communication skills (reading, writing and verbal expression), enumeration, measurement and reasoning (arithmetic, science, analysis and
synthesis), general culture (history, geography, the pupils' own environment), individual and group behaviour (character building, readiness
to learn, civics, team work, health and safety) and creativity (handling
and construction of various objects, appreciation of creative art). The
age of entry to primary school should not be lower than seven.
2. The subsequent stage—junior secondary or middle-school education—should also form a self-contained whole. One of the most
effective measures for achieving this objective would be to give it official
recognition, possibly by awarding a certificate or diploma to pupils
who successfully complete the course. Training for many industrial
and administrative occupations can well begin after this stage. Full
secondary education for entrants into such occupations is in many
instances a luxury which countries that are highly industrialised today
could not afford during the vital stages of their own industrialisation.
3. In both primary and secondary education emphasis should be
placed as early as possible upon science teaching (both the exact and the
natural sciences) not only for their content but also for their contribution
to the intellectual development of the pupils. This is particularly important at secondary education level in which all streams, including the
humanities stream, should devote considerable attention to mathematics,
physics and chemistry.
4. Textbooks should take many of their examples from local conditions and economic life. This principle applies to the arts and humanities
6

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

as well as to science. Science—especially mathematics—textbooks
should stress applications of theory to everyday life.
5. Teaching methods should be adapted in the first place to the
characteristics of the pupils—by making intensive use of audio-visual
aids whenever powers of visual and auditory observation are highly
developed, appealing to the pupils' imagination, drawing on the wealth
of popular culture—and in the second place to the characteristics of the
economy in which they will be working. Active teaching methods should
be used.
6. Compulsory courses of initiation into industrial life—involving
visits to undertakings—should be introduced.
Educational planners have recommended or are considering a number
of these measures in many countries. Such reforms will require enlisting
the services of all qualified persons in the country for the modernisation
of syllabi and methods. They will also require more intensive training
of student-teachers, combined with updating and other further training
for teachers already in employment.
The need for improving the quality of educational standards may
have the effect of curtailing the general right to schooling. Alternative
measures might therefore become necessary. In the case of pupils who
have only had a partial primary education, U.N.E.S.C.O. is now endeavouring to work out functional literacy programmes to cater for the
great mass of virtually illiterate adults. Such programmes, which involve
more than the mere teaching of reading and writing, draw upon " all
the forces in the nation and, in particular, local authorities and communities, educational, scientific and cultural bodies, public and private
enterprises, non-governmental organisations, political groups, religious
movements, women's organisations, and so on ". 1 Other schemes, such
as periods of pre-vocational training combining an introduction to
industrial employment with a brushing-up of the trainees' general
knowledge, are in operation in a number of countries. For persons who
fail to complete junior secondary school, evening classes and correspondence courses are widely used and are generally effective. Some
countries are thinking of making it compulsory for all citizens who have
had some education to contribute towards raising the educational
standards of those who have not had the same educational opportunities
(through extension services or other arrangements). The armed forces can
do much to help, not only by organising literacy programmes for recruits
but also through the educational work that can be assumed by military
1
Final Report, World Conference of Ministers of Education on the Eradication of
Illiteracy, Teheran, September 1965 (U.N.E.S.C.O.).

2. EDUCATION AND TRAINING PROGRAMMES

instructors in the areas where they are stationed. A number of countries
have launched experiments of this type, e.g. Iran. 1
(b) Specific Preparation for Industrial Employment
These programmes vary widely. At the lower levels of the occupational
hierarchy there does not exist any single path; at the higher levels there
is less flexibility but alternative means of access are still possible. Training
programmes can be divided into three main groups according to the
level of training involved. The first level includes industrial manpower
up to and including skilled workers and lower-level clerical employees ;
the second level comprises foremen, supervisors, middle management,
instructors and technicians; and the third level covers engineers, administrators and senior managers. In each of these levels a distinction is to be
made between initial training on the one hand and further training or
development on the other. Much of the following discussion concerning
manpower of the first level is relevant, mutatis mutandis, for personnel
of the second and third levels.
(i) First-Level Industrial Manpower.
"***—*- is the largest category, since it comprises unskilled workers,
led workers or operatives and skilled workers and craftsmen.
> are often made to classify training programmes catering for
orkers by distinguishing between school-based training, i.e.
given in schools or centres, training in undertakings, which
on-the-job training as well as systematic apprenticeship schemes,
bined systems under which training is given partly in a school
s and partly in the undertaking.2 These classifications are not
atisfactory for the purposes of this report. Quite apart from the
in many cases the first two categories are becoming increasingly
hence the evolution of the third category) and that the distinction
llways be fully justified (a factory training centre is a school),
sification seems to help little in formulating and carrying out
policies because the criterion applied is the type of training
ment and not the purpose of the training—industrial employ»espite the risk of over-simplification, it is proposed here only to
ish between training in employment (also known as " job-linked
SLAND Y and M. NASHAT: " The Education Corps in Iran: A Survey of Its
id Economic Aspects ", in International Labour Review (Geneva, I.L.O.),
No. 5, May 1966, pp. 521-529.
ining of National Technical Personnel for Accelerated Industrialization of
<g Countries, op. cit., Add. 1 and 2.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

training ", " enterprise training ", " employer training ", " on-the-job
training " and " training in undertakings ") and pre-employment training.
Training in Employment.
A distinction should be made between initial training and further
training.
The main characteristic of training in employment is that the trainee
has a contractual relationship with the employer (a contract of employment or articles of apprenticeship). The training itself may be given on
the job, in special training workshops and training bays, in schools
run by individual firms or groups of firms, or in training centres or
vocational schools, whether for accelerated or normal courses.
On-the-job training is appropriate for most semi-skilled jobs. These,
including the operation of machines, can be learnt from an experienced
worker at the place of work in a very short period of time, which may
vary from a few days to a few months. Experience has shown that their
skill content is so limited that it is not only expensive but generally
inefficient to give the training outside the undertaking. Except in cases
where workers come from an environment or area which has hitherto
had no contact with industry, the trainees' low standard of general
education does not constitute an insuperable obstacle. With improved
primary education syllabi and better teaching methods, trainees should
have little difficulty in making the adjustment to industrial life, including
the observance of health and safety standards.
The quality of the training given on the job depends largely on the
way in which it is organised. Clear, precise instruction sheets should be
issued to the workers to ensure a systematic build-up of knowledge.
Often, these instructions can be based on work study or on training
methods employed in pilot plants. The standards achieved also depend,
to a considerable extent, on the level of skill and teaching abilities of the
experienced workers.
If the above conditions cannot be fulfilled, training on the job can be
supplemented or replaced by initial training given in training bays or
training workshops up to the point at which trainees can perform a good
many production operations and carry out the more difficult tasks.
Trades and occupations which require training of more than one
year's duration should be taught by a system combining practical work
and theoretical instruction. Apprenticeship is the most systematic arrangement of this type. The training is given for the most part on the job.
It implies teaching a range of skills composing a recognised trade and the

2. EDUCATION AND TRAINING PROGRAMMES

provision of a specified amount of related instruction. It is organised in
accordance with a contract specifying the obligations of the contracting
parties, and at the end of his training the apprentice is recognised as fully
qualified in his trade or occupation.
In many industrialising countries existing apprenticeship schemes
have so far been handicapped by serious defects—to such an extent that
in some cases the system has fallen into disuse even though the relevant
legislation is still in force. These shortcomings are largely due to the fact
that apprenticeship systems have been taken over, almost without
adaptation, from the industrialised countries, with the result that the
length of the training—sometimes as much as five years—and the skills
taught no longer fit the needs of the industries in question. The systems
also suffer in many cases from poor organisation, sometimes generally
(lack of clear job descriptions, training plans, examination standards or
administrative machinery), and sometimes in their details (unsystematic
practical training and inadequate related instruction).
This should not prevent examination of ways and means of modernising apprenticeship for the training of skilled workers. The system may
have proved defective in practice, but in concept it frequently seems to
meet the needs of industrial development, since (a) the training is
related to a particular occupation and is usually given in the setting in
which the apprentice will be employed ; (b) it entails systematic organisation of training for a clearly defined job, covering a specific period and
allocating time to both practical work and theoretical instruction;
(c) it is subject to training standards and proficiency tests ; (d) it defines
the responsibilities of both employer and apprentice; and (e) it involves
a certain degree of supervision and backing from the public authorities.
Measures to improve apprenticeship systems should concentrate on—
(a) ensuring that the length of training is determined in relation to the
needs of each occupation, having regard to the adaptability of the
apprentices; this will often involve, on the one hand, making a substantial reduction in the total duration and, on the other, varying the
length of the apprenticeship according to the abilities of the individual
apprentice; (b) establishing lists of apprenticeable trades, together with
corresponding training programmes and examination standards;
(c) establishing graduated stages of apprenticeship, each stage being
open to trainees who have attained the level of the previous one, irrespective of whether it was attained as part of an apprenticeship scheme;
(d) establishing a national body to promote industrial apprenticeship,
with responsibility for setting standards and supervising training and
examinations; such a body should systematically aid firms in need of
help, assisting them to organise apprenticeship schemes, designing

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

equipment, helping to arrange inter-firm training schemes, opening
centres in which either part of the initial training (both theoretical and
practical) can be given, or in which training and further training are
provided for training officers and instructors.
The first three changes could be introduced without too much
difficulty if the country has adopted the recommendations made in the
second section of this paper concerning the classification of the qualifications needed for different industrial skills and the definition of the corresponding educational and training standards. The fourth change is
bound up with the establishment of a national industrial training organisation of the type referred to earlier. The national body to promote industrial apprenticeship might be one of the branches of this organisation.
It might constitute part of a wider scheme to promote all forms of
training in undertakings. It might also become the organisation actually
providing industrial apprenticeship training—in co-operation with
industry—as in a number of Latin American countries.
In the latter countries, autonomous training institutions have been
set up in which initial and further training are given during alternative
periods in training centres or schools and in industry. At first, emphasis
was placed on training taking place outside the undertaking, but there is

now a tendency to co-ordinate these activities more closely with the
training given by the firms, and the institutions are now drawing up
training plans and standards for industry-based training as well as for
their own centres. Similar schemes are in operation in other countries,
e.g. the United Arab Republic, where apprenticeship for 58 occupations
in eight industries comprises one year of initial training in centres run by
the Government or by large concerns, followed by two years of training
on the job.
Whether or not training in employment for skilled occupations takes
the form of apprenticeship, its effectiveness depends largely on (a) the
teaching and technical skills of the experienced workers and workshop
instructors; (b) the organisation of the firm, particularly the organisation of its training; (c) the organisation of the related instruction; and
(d) the general technical bases of the training (syllabi and standards,
teaching materials and equipment). The first point is discussed later in
this paper in connection with the further training of skilled workers and
the training of instructors.1
Managements must be aware of the problems created by the organisation of training programmes and must take appropriate action : reorganisation of production, assignment of suitable technical and supervisory
1

See pp. 82-83 and 88.

2. EDUCATION AND TRAINING PROGRAMMES

staff and instructors, proper planning and scheduling of the programmes,
appointment of training officers. As there is a limit to the number of
trainees who can be absorbed by a production unit, it may be advisable,
when there are large numbers to be trained, to assign them to special
training workshops, plant schools (if the undertaking is large enough),
or centres operated by autonomous apprenticeship institutions such as
those referred to above. Undertakings, particularly if small, can benefit
considerably from pooling their training resources; in such cases the
initial training can be given in group training centres. This method is
useful for trades involving repair and maintenance work. Mobile teams
of instructors could also be used.
The arrangements for related instruction depend on the size of the
undertakings and on whether schools are available for giving theoretical
instruction of a suitable standard. Large firms may be able to give either
the required related instruction or the complete theoretical and practical
training in their own workshops or schools, using their own engineers,
technicians and management staif. In other cases, day release or block
release for attending courses in nearby technical schools, or evening
classes, or correspondence courses, are the systems most frequently
used. The effectiveness of these methods depends on the quality of
the schools concerned; but quite often insufficient consideration has
been paid to whether, by improving the qualifications of the workers
and systematically using their highly qualified staff for training
purposes, firms could not themselves provide the necessary related
instruction, either on their own account or through some group training
arrangement.
The question of the best combination of periods of related instruction and practical training is one that is not easy to answer. Although it is
difficult to generalise, owing to the variety of trades and subjects taught,
it is perhaps safe to say that time off to permit attendance at classes
of related instruction should not be too short, since very short breaks
disrupt production and are less effective for training purposes. Unduly
long periods spent on production work are also bad because they
slow down the progress of training. The formula of block release, for a
period lasting from one week up to a maximum of one month, has often
proved successful. Evening classes and correspondence courses are also
used, mainly in the case of small isolated firms, or if there is an acute
shortage of qualified personnel. The practice of giving a short theoretical
lesson in the undertaking every day, or every other day, has been followed
successfully in some cases ; it has stimulated both the employers' and the
trainees' interest in the training and has generally made the training
more effective.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

As was stated earlier, a systematic apprenticeship scheme requires a
schedule or list of recognised apprenticeable trades combined with
appropriate training plans and examination standards. This is true of any
type of systematic training for skilled work. An important task of the
I.T.O. would be to carry out this essential preparatory work and to make
its results available to industry. This task could be performed by national
apprenticeship services, where they exist (as in South America), or be
assigned to a special body set up to promote training in undertakings
(Mexico), or be carried out or promoted by trade testing centres (Kenya).
It should not be confined to providing the bases of initial training, but
should cover all aspects of initial and further training in industry.
In the case of complex new industrial projects, initial training, in the
absence of adequate training facilities in the undertakings, could be
carried out by accelerated training centres sponsored by industry. Such
centres have proved effective in some cases, but they have a number of
serious drawbacks. For one thing, they are expensive. For another, they
are intended to meet a short-term need, which may mean that the training
is fairly narrow or may become quickly outdated. Before embarking on
such expenditure, therefore, an investigation should be made of the
feasibility and impact of investing the same sum on training in industry
(whenever an industrial project is not starting from scratch and is to be
spread over a long period), training in other undertakings (especially in
the nationalised sector or in large firms), training key workers in other
countries or having them trained by the firms building and equipping
the industrial project.
The nature and content of these programmes must vary according to
circumstances. In some cases the objective is to enlarge the workers'
knowledge and skills and teach them more highly specialised skills
within the same trade and at the same level of qualifications. In others
the need is for systematic upgrading, based on the initial training given
by one of the methods already described; this will enable the worker to
move up from one skill level to another, e.g. from semi-skilled to skilled
and later highly skilled. Further training may in some cases take the form
of a prolongation of apprenticeship (involving a second and third
stage). Alternatively, the need may be to adapt existing skills in the
light of technical progress or changes in production processes; this is
" retraining "—a term which also covers the acquisition of qualifications
other than those originally acquired (e.g. training skilled workers to
become specialised in the repair and maintenance of machinery).
Programmes of further training, whatever their objective, will vary
widely in detail. Their content must take into account not only the

2. EDUCATION AND TRAINING PROGRAMMES

minimum standards required but also the skills and aptitudes of the
trainees themselves. In many instances it will be found preferable to
divide further training into short periods involving a series of training
sessions, each with a limited objective, so as to encourage the trainees and
to make due allowance for their frequently limited general and theoretical
knowledge.
In many industrialising countries related theoretical instruction is
more important in the case of further training than in initial training;
first, because of the low educational level of the workers on entry, and
second, because of the higher degree of skill entailed. Related instruction should be concerned not so much perhaps with general scientific
knowledge as with inculcating certain principles by means of courses of
applied technology and experimental work. Development of the workers'
level of general knowledge is also important. Probably recourse should
be had more frequently to block-release courses for related instruction
and, in some cases, to full-time courses in educational institutions.
Further training should occupy a key place in national schemes or
arrangements for promoting or encouraging training in undertakings.
An interesting experiment along these lines is currently in operation in
Mexico. The National Service for the Rapid Training of Industrial
Manpower has three tasks : to train and give further training to instructors in industry; to assist firms in organising their own initial and further
training schemes; to provide a nucleus of permanent training facilities.
The Service has a central unit, five area offices and 20 mobile units.
Whether it is worth while to set up such a network depends on the scale
of a country's industrialisation drive and the general organisation of its
vocational training system. In many South American countries there are
mobile units carrying out similar functions to those of the Mexican
service but coming under the national apprenticeship scheme. Elsewhere,
as in Cambodia, China (Taiwan), Tunisia, Turkey and the United Arab
Republic, assistance to industry is the responsibility of productivity
centres, vocational training institutions and centres for the training and
further training of instructors and supervisors.
Pre-employment Training.
Training prior to employment is usually given in special branches of
the educational system, in vocational schools (lower technical, vocational
and trade schools, industrial arts and handicrafts schools), in vocational
training centres or in centres for the accelerated training of adults.
In many countries the general education system includes a special
technical stream, the first part of which may be complete in itself,

HUMAN RESOURCES FOR INDUSTR[AL DEVELOPMENT

designed to give initial vocational training for semi-skilled and skilled
industrial occupations. The courses place equal emphasis on the acquisition of general and technical knowledge and practical skills. Sometimes
this general and practical instruction is continued beyond the first part
of the course in order to give pupils a better theoretical grounding and
greater degree of vocational specialisation.
Vocational schools give courses for several different trades such as
the woodworking, metalworking, engineering, electrical and building
trades and clerical employment, or concentrate on a particular industry—
engineering, building, etc. In theory, vocational schools should make
good some of the shortcomings of training given in employment, and the
best among them in fact do so. They should ensure that theoretical and
practical training progress in step with each other; they should continue
the pupils' general education and provide the link between school life
and the world of work; they should enable their trainees to acquire their
practical skills systematically, unhampered by the requirements of
industrial production.
Unfortunately, many of them have serious shortcomings, which have
been summarised as follows :
(i) the serious lack of balance between the numbers trained for a
particular occupation and the number entering that occupation,
since the majority of those trained often seek and obtain employment in other sectors, such as the army or the administration;
(ii) the considerable wastage during training which greatly increases the
cost per pupil trained;
(iii) the insufficient adaptation of the training to conditions of work in
enterprises, as well as to the speed and quality required on the job;
(iv) the shortage of personnel and incompleteness of equipment, since
the funds available are not always adequate for the needs of technical institutions; and
(v) the inadequate qualifications of teaching staff, particularly workshop instructors.1
It is therefore recommended that the work of these institutions should
be critically examined from the standpoint of their cost and efficacy.
Some countries have already embarked on extensive reforms in this field.
As a result, some vocational schools have been closed down; in other
cases they have been converted to other purposes, e.g. to give courses of
1
Training of National Technical Personnel for Accelerated Industrialization
Developing Countries, op. cit., para. 126.

2. EDUCATION AND TRAINING PROGRAMMES

related instruction needed to complement the initial training and further
training arrangements in undertakings, or to provide a wide variety of
services (supplementary practical courses of further training, pilot
workshops and laboratories, the production of teaching materials).
The same applies to accelerated training centres whose courses are not
directly linked with specific industrial projects, and are not industrysponsored. The operation of such centres is justifiable only in so far as
the training caters for the needs of industry, both as regards output of
trainees and the type of skills taught.
There are situations, however, in which initial training must be given
away from the place of employment, even though it may be difficult to
eliminate all the drawbacks inherent in such a system. Some types of
training cannot be given effectively within the undertaking. The best
example perhaps is the case of the shorthand-typist, whose training
consists of courses of further education and group instruction in techniques which can be taught more effectively in the classroom than on the
job. The same applies when countries are still in the very early stages of
industrialisation and the facilities available in existing firms cannot
immediately be improved. In such cases vocational schools or training
centres may be set up to give industry the manpower it needs and to serve
as models for the introduction of modern training methods. This pilot
function may continue even after training in undertakings has become
widespread.
It is suggested that initial training should be given outside industry
only if the latter's programmes are totally inadequate or incapable of
improvement. It is also important that any pre-employment programmes
should be based on careful analysis of the demand for industrial manpower and should be capable of conversion for other purposes (e.g. to
further training) whenever this demand changes. In some instances the
programmes might be sponsored by one or more firms.
Although the details of training methods are not to be discussed in
this paper, attention might be called to the need to relate practical
exercises in vocational schools and training centres to real production
work. This is a very controversial question, but it should be possible—
both in order to stimulate interest in the training and for economic
considerations—to devise practical exercises which combine educational
value and the conservation of scarce materials and resources.
(ii) Middle-Level Industrial Manpower.
This category of manpower consists essentially of foremen and
supervisors, teaching staff and technicians. Technology varies widely,

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

mainly because many of their functions overlap. An attempt will be made
to classify the training programmes for the different subcategories on
the basis of the main duties involved and their level.
Training of Supervisors.
Broadly speaking, the duties of foremen and supervisors fall into two
categories : firstly, the supervision of skilled workers, which calls for a
knowledge of the technical operations performed and often entails
personal intervention to correct faulty work; and, secondly, the planning
and supervision of production in a workshop, the detailed programming
of the work to be accomplished and the assignment of this work to the
various workers. Activities in the former category are often described as
" functional " : they require the ability to direct the work of others, to
give instruction, to maintain good working relations with the workers
and to settle disputes, as well as special knowledge of safety and health
rules and administrative and staff regulations. Duties in the second group
require a knowledge of the technical processes employed in the workshop
and in the factory as well as of systematic work organisation.
Where the general level of education and training is fairly low, the
main emphasis has been laid on initiation into " functional " activities.
To this end, courses have been organised, designed both to increase the
supervisor's knowledge of his trade and to initiate him into instructing
and supervisory techniques. Methods adapted from training within
industry for supervisors (T.W.I.) are frequently used. Where the general
level of the worker is higher, or where the technological standard reached
by the undertaking makes it necessary, the training given must also
cover the second type of activity; hence the need to organise courses of
technical and related instruction giving a grounding in general subjects
(mother tongue, applied mathematics, basic science) as well as technical
subjects, and an initiation into the organisation and management of
undertakings.
The " functional " courses should be given as far as possible within
the undertakings, bearing in mind the need to relate the subjects taught
to the daily work performed. They can then take the form of short
special sessions centred, if possible, on a specific operation or series of
operations. They should not take up more than a few hours per week.
Courses of technical and related instruction generally involve attendance
at schools or management-development institutes, productivity centres
or instructor-training institutes. Part-time courses are the most common,
as it is difficult for undertakings to do without their supervisory staff
for a long period. There have, however, been instances of full-time

2. EDUCATION AND TRAINING PROGRAMMES

courses which have been successfully completed without creating
difficulties.1
These activities of supervisory staff overlap with the duties of
instructors and technicians. Courses should therefore be planned to
cater for the greatest possible numbers. For example, prospective foremen may attend all or some of the courses in teaching techniques for
prospective instructors; as for related instruction, this can form part
of the courses organised for future technicians.2 These courses should,
as far as possible, be organised within the framework of existing arrangements and make use of facilities already available. Where it is necessary
to found special institutions for the purpose, they must be of a comprehensive nature—further training for different manpower levels,
theoretical and practical training combined with advanced training for
various functions and in different trades. The experience gained by the
teaching staff of these institutions will often enable them to embark
upon the production of teaching materials and the establishment of
standards for training and pedagogical research.
In the case of new industries launched with the backing of foreign
firms, advanced training for supervisory staff could be given by these
firms outside the country. It may also be indispensable to have recourse
to international further training programmes such as those organised
by the International Centre for Advanced Technical and Vocational
Training at Turin.
Training of Teaching Staff.
It is on the training given to teaching staff that the quality of the
workers trained will largely depend; hence the importance of the training
programmes organised for such staff, who include teachers in general
education, teachers of theoretical technical subjects, and instructors in
training establishments and in undertakings.
Teachers in general education are trained at pedagogical institutes
and teacher training colleges. Their courses last from two to four years
after completion of full secondary education. The teachers of theoretical
technical courses are trained, likewise after completion of full secondary
education, at a few specialised institutes generally within the higher
education system. Their studies last from two to four years after completing secondary school in the case of those giving theoretical instruction
up to the level of technician, and from six to eight years after completing
1

In Nigeria, for example, six-week full-time courses have shown good results.
See, for example, the projects for supervisors and instructors (India, Morocco)
and for instructors and technicians (Israel) carried out by the I.L.O. for the Special
Fund.
2

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

secondary school for teachers of higher-level personnel. But these
standards cannot always be attained, and many countriesfindit necessary,
for example, to entrust such teaching to those who have merely completed
their secondary education, usually in technical subjects, or to university
undergraduates.
The stress which reforms in general education lay on the teaching of
science, on initiation into industrial life and on the use of modern
teaching methods, should provide these teachers with a better basis for
their work. But similar reforms need to take place in the training given
to the teachers themselves. In a number of countries there appears to be
a need for the teaching of science to be thoroughly overhauled; curricula
and textbooks need to be brought up to date and adapted to economic
life; more active teaching methods should be used; the regular updating
of knowledge should form a recognised part of a teaching career, and
special courses should be organised at universities and technical institutes
for the élite of the teaching staff in undertakings. Senior managers should
be encouraged to participate in the planning and implementation of
these programmes, and arrangements should be made for future teachers
to spend training periods in industry.
Related theoretical instruction for instructors in training institutions
and in undertakings is normally given through either full-time or parttime courses at secondary technical schools or at special instructortraining centres or at comprehensive institutions of the type already
referred to.
Future instructors for training institutions or undertakings should
generally be chosen from among the best-skilled workers and foremen.
Special attention needs to be paid to the following points :
(a) Those chosen should be thoroughly versed in the practical skills
required—this may lead on occasion to the passing over of older workers
whose productivity is on the decline, and will nearly always involve the
provision of upgrading training.
(b) Useless theoretical knowledge should be eliminated1 and
pedagogical training should be mainly centred on practical aspects,
thereby reducing the emphasis on some of the complexities of industrial
psychology.
(c) Frequent updating courses will be necessary; it will often be
preferable to provide for a series of limited training operations rather
than an ambitious comprehensive course which would have the additional
1
An efficient method is that of the unit exercise: an operation is broken down into
a number of sequences (or units) in which theoretical knowledge is imparted in conjunction with the manual work.

2. EDUCATION AND TRAINING PROGRAMMES

drawback of depriving industry of the personnel it needs for too long a
period.
A large number of instructor-training institutes have been founded
in the majority of countries in the process of industrialisation—often
under the segis of the United Nations Special Fund and the International
Labour Organisation. They combine skill upgrading training, theoretical
instruction and general education with the application of the knowledge
and skill acquired. Arrangements are made for trainee instructors to
give lessons under supervision.1 These institutes have been highly
successful on the whole. One of the major problems consists in making
these training activities more uniform, whether those involved are
intending to work as instructors in training institutions outside undertakings or as in-plant instructors. Differences should exist only where
necessary to take account of the level of education and skill of individuals
and not as regards the training arrangements in which these individuals
must take part.
Training of Technicians.
This category embraces a variety of occupations which, on the one
hand, are practised at various grades between the skilled worker level
and the professional level and, on the other hand, involve functions of
various kinds—technicians working in offices such as draughtsmen, and
production technicians such as engine-testing specialists. Definitions
proposed for this category of staff vary greatly, some stressing the fact
that the work performed calls essentially for intellectual capacities while
others draw attention to the need for technicians to be endowed with
technical knowledge and manual skill in equal proportions; others
again emphasise that many of the functions performed, even at a senior
level, are more manual than intellectual. Training programmes will
vary widely depending on the case.
Until quite recently, the majority of the different functions of technicians were performed either by highly skilled workers or by engineers
or former engineering students who had failed their examinations or had
not completed their studies, or by students from technical colleges or
higher technical institutes. These four sources of recruitment have often
shown themselves to be inadequate from the viewpoint of both quantity
and quality. There seems, therefore, to be a need for a serious reappraisal
of the different technician training programmes in the light of the real
1
For example in Algeria, Burma, Cambodia, Chile, Colombia, Congo (Kinshasa),
India, Iran, Kenya, Libya, Morocco, Nigeria, Pakistan, Peru, Senegal, Tunisia,
Turkey, United Arab Republic, Uruguay and Venezuela.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

and changing needs of industry. Such a reform of programmes might
be based, inter alia, on the following considerations:
(a) To fill posts as technicians just above the skilled worker level,
which involve operations closely linked with production, such as product
inspection, the supervision of maintenance operations and specialisation
in the use of certain equipment, regular courses should be organised to
broaden the qualifications of the best of the workers already employed.1
Such courses may be attended full time or part time, or they may take
the form of evening classes or correspondence courses. In many cases,
the necessary related instruction may be combined with that given to
instructors and supervisors.
(b) Arrangements might also be made for some form of apprenticeship up to the second or third grade. The success of such arrangements
will depend on the quality of the trainees accepted and the efficacy of
the arrangements made both for related instruction and for work organisation within the undertaking.
(c) Far-reaching changes need to be made in full secondary technical
education, the status of which should be raised in the national education
system. It should be designed in such a way as to enable those who start
work immediately upon leaving secondary school to fill a post after as
short a period of adaptation as possible (junior technician level), as well
as provide a sound general and theoretical grounding for those who
continue their technical studies beyond the secondary-school level
(technicians and higher technicians). This entails a thorough overhaul
of the science and technical curricula.
(d) Short periods of training or work in industry should be systematically introduced. Secondary technical education needs to be organised
in such a way as to provide the courses of related instruction needed to
complement the initial and further training given in undertakings,
whether in the form of day classes, evening classes or correspondence
courses.
(e) Changes need to be made in higher technical education, whether
at technical colleges or at specialised technical institutes whose curriculum
covers the end of secondary education and the first two or three years
of university. Such courses should be considered as terminal and not as
1
Some firms, notably a large concern in India, provide such opportunities
for their more able workers with commendable success and organise their own
training schemes for the advancement of their employees from the shop floor to
the highest supervising grades. H. R. MILLS: Report on Training Facilities at the
Technician Level in South and South-East Asia (Colombo Plan Bureau, Sep. 1961).

2. EDUCATION AND TRAINING PROGRAMMES

an inferior or truncated form of engineering course. An important place
should be given to practical work and to familiarisation with the conditions of industrial life. This may be accomplished through regular
alternation between work in the technical establishment and work in
an undertaking or through training periods in industry, for example
during the holidays; use can also be made of seminars, case studies,
simulation techniques, etc., in industry or through industry. Contracts
might be arranged between the latter and the institutes, covering mainly
the practical arrangements for such training (alternation between the
two, the exchange of teaching staff, the supply of equipment), and the
relationship between the trainees and the undertakings concerned (preemployment contracts covering a group of industries or undertakings).
These technical establishments should also be capable of providing
advanced training to technicians trained by them or by undertakings.
Experiments along these lines are being carried out in a number of
countries.1
(f) Special attention should be devoted to the subject-matter of the
science and technology curricula in higher technical establishments.
The nature of the subjects taught does not differ greatly from that of the
subjects taught in engineering courses, but the range covered is narrower,
the theoretical aspects are not gone into so deeply and a larger place is
given to applied technology. Educators and industrialists must reappraise
the nature and content of the theoretical training to be given to middle-level
and higher technicians. Special attention should be given to subjects
relating to the organisation and management of undertakings, and
particularly to work study, the rudiments of costing, and industrial
relations.
The provision of further training for middle-level industrial manpower is of great importance. Permanent arrangements for such training
should be made between undertakings and scholastic institutions. In
many cases the attendance of selected personnel at international advanced
vocational training courses will have a snowball effect and may give a
decisive impetus to national basic and advanced training programmes.
(Hi) High-Level Industrial Personnel.
This category of personnel comprises mainly engineers and technologists and senior managers and administrative personnel of undertakings.
1

For example in Colombia, Hong Kong, Japan, Malaysia, Philippines, Tanzania
and Venezuela.
7

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

Training of Engineers and Technologists.
Effective programmes for the training of such personnel should be
planned with a view to remedying the shortcomings to which attention
has been drawn in Section I of this document. They should be designed
to take account of the probably poor quality of the general and scientific
education received at secondary school. They should also be so organised
as to combine the indispensable deepening of scientific and technical
knowledge with the applied study of technological processes, in industry
itself, or as close to it as possible. They should also endeavour to resolve
the conflict between two contradictory requirements: first, the need to
provide—in addition to the traditional engineering subjects (civil,
mechanical, electrical and mining engineering)—a grounding in the
specialised subjects which have emerged from technological progress
(electronics, petroleum technology, etc.) ; and, second, the need to give
a very broad training to persons who cannot avail themselves while at
work of all the facilities available to their colleagues in industrialised
countries for dealing with the host of practical problems which arise in a
factory.
Far-reaching reforms appear to be necessary to achieve this. They
should concern—(i) the syllabi; (ii) the methods used; (iii) the sequence
of theoretical instruction and practical work; (iv) in-service training;
and (v) courses of further training.
(i) One of the reasons for the drop-out of students in the first or
second year of their engineering studies, and the impression of detachment from reality given by the training as a whole, derives from the
over-large importance all too often attached to pure mathematics in the
syllabus. Sometimes the engineering sciences themselves are not tackled
in a down-to-earth manner until halfway through the course.
A remoulding of the syllabi effected jointly by educators, scientists and
industrial experts should make it possible for courses to be devised which,
without hindering a thorough assimilation of the general principles,
would devote time from the outset to the application of these principles.
With this end in view courses should include subjects relating to the
organisation and management of undertakings, and particularly the
production function, costing and work study. In some cases industrial
drawing courses need to be made more systematic. Finally, the rudiments
of a foreign language should be taught, with the emphasis on technical
terms, in countries which have no specialised engineering publications
of their own.

2. EDUCATION AND TRAINING PROGRAMMES

(ii) Much could be done through the introduction of more practical
and active teaching methods, for instance by curtailing the number of
ex cathedra classes and replacing them by discussions and experiments.1
(iii) Far-reaching changes also need to be made in syllabi as regards
the division of time between theoretical instruction and practical work
in the undertaking. Some countries are even endeavouring to organise
sandwich courses. One example of this is Malaysia, where curricula
include courses on workshop technology and it is compulsory for
instruction to be given in fitting, machinery, blacksmithing, welding and
boiler-making in the university's workshops. All the first-year students
are assigned to industrial workshops for two months during the holidays.
In their third year students spend only two terms at the university:
during the lastfivemonths they must attend practical courses at industrial
establishments approved by the university. In their final year students are
required to attend a survey camp, usually established within the framework of a rural development scheme.2
(iv) Such alternation obviously does not give a newly graduated
engineer all the industrial experience he needs, the more so since during
the periods spent on the shop floor the student engineer will more often
than not have had to content himself with the role of observer without
being able to play an active part. Since the spontaneous adaptation of the
new engineer—alongside a more experienced engineer—is not the best
solution, more and more in-plant training programmes are being organised which round off the training received by the engineer in the course
of his studies. These courses vary according to the industry and the
undertaking concerned. They provide a systematic and closely supervised guidance to young engineers and emphasise the development of
abilities and exercise of judgment in concrete cases rather than the
addition of further knowledge.
(v) Further training courses should be organised. They would take
place one or two years after the engineer joined the staff of the factory;
this would enable him to deepen his knowledge of the general and
theoretical aspects which he had not been able to assimilate fully during
his initial training, and whose importance for his daily work he would be
1
An expert has recounted how he explained the line transmission theory to
student engineers in West Pakistan by putting them to work on a real telephone line ;
measuring the parameters and calculating the capacity of the line made it much easier
for them to understand the underlying theory than if it had first of all been explained
to them as an example of a Bessel function of a Fourier series.
2
See the paper submitted by CHIN Fung Kee on item B.3 on the agenda of the
U.N.E.S.C.O. Seminar on Technical Education (Bombay, 1966).

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

better able to appreciate in the light of his own experience. Such courses
are all the more necessary in that the new engineer training programmes
based on the foregoing considerations may, in some cases, turn out a
type of man whose theoretical grounding is less sound than it would
have been under the traditional type of programme.
Training of Senior Managers and Administrative Staff of Undertakings.
These are the persons responsible for policy-framing, planning,
organisation and management in undertakings. In a factory employing
several hundred people, where four hierarchical levels can be distinguished
—workers, supervisory staff, departmental heads and top management—
the staff in question will come under the last two headings; they will
include highly qualified persons such as market research and industrial
engineering specialists. In a small undertaking, the only persons falling
within this category will be the owner-manager and his immediate
assistants. As in the case of the other categories of staff, a distinction
needs to be made between management education and training programmes and management development programmes. Special care needs
to be taken with the organisation of these programmes, not only in view
of the strategical importance of this category of staff but because it is
only quite recently that the need has been acknowledged for training to
be given to managers and executives of undertakings.
On a short-term basis, efforts should be concentrated on the existing
staff of undertakings, i.e. the courses should consist of a quick initiation
into management techniques—as a whole or as regards selected aspects—
followed up by a series of management development courses for senior
members of the staff. These may take the form either of seminars and
demonstrations or of a series of lectures, followed by instruction in a
selected, limited number of management techniques, handled in depth
and associated with practical work in a small number of undertakings.
Efforts may be concentrated on industries and undertakings of national
importance, and at times it may be necessary to limit the action to a few
of the basic tasks of management such as industrial engineering and
costing. Priority should be given to convincing managers and administrative staff in both the public and private sectors of the usefulness and
importance of such activities. The initiation sessions will not suffice to
convince them; there will have to be swift results. The first practical
courses should often, therefore, start by dealing with productivity
improvement at the operating level, and go from there to lay stress on
production management and the specialised techniques involved such as
work study, production planning and supervision and quality control.

2 . EDUCATION AND TRAINING PROGRAMMES

By degrees, other management techniques, such as management accounting, market research and personnel administration, may be introduced.
These specialised courses may be accompanied or followed by courses in
general management. It may sometimes be preferred to concentrate first
on the improvement of output and not to tackle the problem of market
research until later. Technicians and supervisory staff might well attend
such courses, especially on the practical side.
These courses should provide just enough theory to enable the
participants to understand the principles underlying the techniques being
taught, but the emphasis should be laid on practical application. They
should not be copies of courses in countries with a different cultural
background. The methods used should employ the most striking and
effective media, e.g. audio-visual aids, books, programmed instruction,
simulation techniques, in so far as these media are appropriate to the
circumstances.
Stress should be laid in management development programmes on
the importance of the rational organisation of training in the undertaking
or sponsored by the undertaking. Special attention should be given to the
proper timing of initial and further training programmes. The place and
functions of the persons responsible for such training (training directors
and officers) should also be made clear. It is essentially from among the
teaching and managerial staff of undertakings that persons should be
recruited to be responsible for all or part of their training activities. The
training of such persons could be completed under the arrangements
made either for instructor training or for management development, and
the institutes existing for this purpose should organise special courses in
which stress would be laid on organisational problems.
The size of management development programmes will depend on the
importance of the industry concerned, the resources available and the
needs. In countries where practically nothing has been done in this field
the temptation to devise ambitious programmes will be great. Experience
has shown that this is a mistaken policy and that it is better to begin on a
modest scale. New programmes should be launched only after a review
and assessment of all the programmes existing throughout the country,
both public and private; any new programmes should be complementary
and not competitive.
In many cases it will be advantageous to set up a national management development centre which can encourage, co-ordinate and supplement what is being done in this field. Such a centre will often be the
starting-point for a series of programmes designed to meet the urgent
needs of industry, especially large and medium-scale industries. Programmes for small-scale industries could come within the orbit of

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

such a centre, unless they are handled by special institutes for the development of small-scale industries which can provide not only aid in connection with the management of undertakings, but also technical
extension services, demonstration workshops and often direct assistance
with credit and market research.
The programmes organised by such centres should not deal with
every subject continuously at each level. While it is true that work study
and costing are long and complex processes in which continuous training
could be given—perhaps simultaneously in several undertakings—and
while it is also true that a standard type of general management course
could be organised throughout the year for industrial management—job
analysis or market research courses need perhaps be given only twice
a year.
It is hardly possible to make suggestions as to the size of such a
centre, for example as to the number of staff required. Thailand, with
a manufacturing industry employing 230,000 persons in 1963, had a
management development centre with 17 professional workers on its
staff in 1965, but separate facilities existed for small-scale industries.
The Israeli Productivity Institute, catering for both manufacturing
industry (215,000 persons in 1964) and the non-manufacturing sector
(273,000 inclusive of agriculture), had 60 professional workers on its
staff in 1965.
The question as to who should be responsible for these management
development centres is a highly controversial one. Where such centres
receive international aid, the government has to furnish counterpart
funds, which implies that such institutions come under its control even
if it is not formally responsible for them. Industry often complains of
the inefficiency of " bureaucratic " government-run centres. The best
solution might be to make these centres autonomous units under the
wing of the proposed I.T.O., with their own executive body composed
of representatives of all those concerned, e.g. ministries, planning
authorities, employers' and workers' organisations, universities, professional associations of engineers, etc. There are also instances, mainly
in connection with small-scale industries, of centres attached to development banks; this system has the advantage of making the granting of
loans subject to strict requirements as regards the sound organisation
of the undertakings concerned.
On a long-term basis the foundations of a better initiation of future
industrial managers and administrative staff into industrial life should
be laid. It has been suggested that the new general education programmes
should include courses on initiation into industrial problems and that
the instruction should be modernised by the use of textbooks and methods

2. EDUCATION AND TRAINING PROGRAMMES

in keeping with the realities of economic life. It has also been suggested
that courses on selected management techniques should be included in
programmes for the training of technicians and engineers. These are
undoubtedly the top priorities. As regards the systematic organisation
of management courses at universities for students with no business
experience, it does not appear that arrangements similar to those existing
in some advanced countries can be recommended unreservedly for
countries in the process of industrialisation. It will no doubt be preferable to concentrate on the gradual improvement of the quality of general
and technical education in the country and to make permanent arrangements for initial and further training in undertakings. These arrangements
will entail the organisation by industry and for industry, in co-operation
with the universities and the technical institutes, of regular courses to be
attended by future managerial staff who will alternate practical work
with study sessions, and by present managerial staff for whom the courses
will take the form of training periods and seminars. Recourse to international advanced training programmes will, in many cases, give an
invaluable boost to what individual countries are doing on behalf of this
category of staff, who are, without a doubt, the keystone in the industrial
training structure.
(c) Concluding Remarks
It may be useful at the end of this section to emphasise some points,
namely—(a) the necessity of linking the different programmes with
one another; (b) the relationship between education and industry; and
(c) the use of all facilities available.
(a) It should be stressed how important it is for the different programmes organised to complement one another. The following is an
example of what this can mean in practice. In Kenya it has been decided
to pool the efforts of the major training institutions, the National Trade
Testing Centre, the National Industrial Vocational Training Centre
and the Management Training and Advisory Centre, with those of the
technical colleges. The Trade Testing Centre frames and checks the
training standards for skilled workers, which make the levels of training
uniform throughout the country and play a role in wage policy, since
there is a fixed wage to correspond to each recognised level of skill.
The Vocational Training Centre is to be opened near the Trade Testing
Centre and will train not only foremen, but also instructors for undertakings and vocational training centres, give upgrading training to
workers and supervise training in undertakings. Trainees who pass the
examinations in these courses will be entitled to admission to technician

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

courses. Related instruction will be provided in the country's technical
schools. Parallel with these activities the Management Training Centre
will help to reorganise industrial undertakings employing workers who
have attended these courses. Arrangements of this kind exist, or are
planned, in a number of other countries.
(b) It has been proposed that co-operation between education and
industry should be established first of all at the national level through
the I.T.O. where they are both represented. This organisation will no
doubt be setting up a certain number of joint committees and subsidiary
bodies to deal with specific problems such as the remoulding of engineer
training programmes, the training of clerical staff or the further training
of managerial staff, for the whole of the industrial sector. But the setting
up of advisory committees at the regional, local or occupational level
would also be a useful aid in gradually evolving a common policy and
uniform practices. Some of these committees might deal with matters
such as the determination of occupational titles and of the skills pertaining to these occupations in a given industry. Others might study
the practical problems of training for this industry, e.g. subject-matter
of courses or layout of workshops.
(c) With a view to making full use of all the training facilities available, consideration should be given to the possibility of using such
facilities as may be offered by youth movements, trade unions, clubs
and community centres. Mention has been made of the role of the army
in the campaign against illiteracy and to promote the spread of general
education. It should be added that in some countries a systematic
vocational training programme is organised for recruits.1 It would also
seem feasible to encourage organisations of the above-mentioned type
to organise their own education and training programmes either to give
pre-vocational training or to supplement what has been learnt at school
or at work. Some of the programmes might be eligible for financial
help from the I.T.O.
FINANCING

Here again, a distinction is made between general preparation and
specific training for work in industry.
1

In Peru the army has five vocational centres which give training to recruits
during the last three months prior to their return to civilian life. Courses are given,
inter alia, in joinery, bricklaying, electricity, ironworking, plumbing, painting and the
repair and maintenance of heavy vehicles. In two-and-a-half years 3,800 recruits have
been trained. The intention is to turn out between 6,000 and 8,000 semi-skilled workers
per year (the Peruvian army has 30,000 men). Hugh HANNING: The Peaceful Use of
Military Forces (New York, Frederick A. Praeger, 1967).

2. EDUCATION AND TRAINING PROGRAMMES

General preparation—provided chiefly within the general primary
and secondary education system—is financed mainly from public funds
and by private contributions. By far the larger part of the necessary
financing is provided by public funds, that is the national budget and
contributions from public authorities at various levels. The money is
paid out directly to publicly operated educational institutions and
indirectly, by way of transfers and subsidies, to private schools and
institutions.
By private contributions is meant the money paid by individual
persons, when schooling is not free, and organisations (lay, denominational or professional) which wish to have a type of education which
is not available in, or else is needed to supplement, the general education
system. Such funds usually constitute only a small fraction of the total
resources available, even when private education is on a relatively large
scale, since the latter itself often receives pubhc support of some kind
or another.
Although it is not possible to discuss in this paper the numerous
technical problems connected with the financing of general education,
it can generally be said that action to affect the flow of investment, in
the sense of the recommendations made in this paper, can be one of
the essential instruments in an industrial education and training strategy.
A change in the volume of public subsidies, or the abolition of such
subsidies, the use of subsidies as a means of encouraging certain kinds
of expenditure, or selective credit facilities awarded to regional and
local authorities, can be just as effective as reforms introduced in the
curricula or decisions to close down or convert existing training
establishments.
If these instruments are to prove effective, their financing must be
properly programmed. Education, clearly, should cater for the requirements of the whole country, not merely those of industry. This presupposes, in the first place, that the national education authorities
participate in drawing up the industrial education and training plan,
and accept it, and secondly, that they are able to reconcile the financial
action required by the plan with the needs of other fields of education
such as general education policy and training for other sectors of the
economy. It also presupposes some centralisation of efforts, although
excessive rigidity is to be avoided.
Specific preparation for work in industry—that is all programmes
and arrangements for technical education, higher education and
vocational training at all levels—is financed, at the national level, from
three main sources : pubhc money, industry (individual undertakings or

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groups of undertakings, trade and professional associations), and
private individuals (trainees and their parents).
Public money finances the technical aids of the general education
system and higher education (universities and technical colleges). It also
finances certain programmes outside the education or university systems
(management development centres, instructor-training centres, centres
for teaching methods research), and meets the cost of assistance given
to the training activities carried on by undertakings; it finances the
national, regional or local co-ordinating and planning bodies and, as a
rule, the general operating costs of the entire system—establishment of
training and examination standards, general supervision, etc. Industry
contributes substantially to all kinds of specific training through the
training programmes organised in the undertakings, the contributions
of trade and professional associations to individual and group training
schemes, and direct financial participation in school programmes
(scholarships, etc., for initial or further training).
In most countries the general rule is that specific training, both
theoretical and practical, carried on outside industry is financed mainly
by public money and by the individuals directly concerned, and that the
cost of practical training carried on in industry is shared between industry
and the trainee, the latter's contribution usually being a temporary
reduction in his wage.
This general rule may be modified in two ways. First, public money
may be used to finance practical training in industry through subsidies
or other measures to encourage the employer to provide such training or
by defraying part of the costs which the employer would normally have
to bear. Second, industry itself may be called upon to shoulder part of
the burden by paying a training levy—usually an apprenticeship levy.
This is the case in a number of countries at different levels of industrial
development, e.g. France, the United Kingdom and several countries in
Latin America.
(a) Training Levies
The administrative rules governing training levies vary considerably
from one country to another. In France industrial undertakings pay the
Treasury a sum equivalent to 0.6 per cent, of their total payroll. In
practice, about two-thirds of this sum can be reclaimed in exemptions.
Briefly, such exemptions can be granted for—(a) wages paid to apprentices during their first ten months of training and with respect to the
periods during which they are receiving related instruction, and other
training costs, e.g. expenses incurred for special training facilities within
the undertaking; (b) the firm's contribution towards setting up and

2. EDUCATION AND TRAINING PROGRAMMES

101

running inter-plant training workshops; and (c) subsidies and gifts in
money or in kind made to vocational schools or other training institutions. While the total sum derived from the French apprenticeship levy
seems to have little or no effect on the Government's plans for the
public vocational training system, the exemptions do encourage firms to
organise systematic training in industry and to set up joint training
establishments.
In the United Kingdom the training levy inaugurated by the British
Industrial Training Act, 1964, was designed to be much more ambitious.
It is part of a general industrial training policy and constitutes one of the
chief instruments at the disposal of the Industrial Training Boards set up
by the Act. 1 Each Board is required to impose a levy on all employers in
the industry concerned. (Certain very small firms may gain exemption.)
This levy takes the form of a percentage of each firm's payroll, except in
one industry where the tax is a per head one. The rates so far applied
vary from 0.5 per cent, (building) to 2.5 per cent, (engineering) of wages
and salaries. The sums thus collected go towards financing the administrative expenses of the Board, the subsidies it grants, and any direct
training activities on which it may embark. The Boards may grant subsidies to firms conducting approved training activities, although firms are
not legally obliged to undertake such activities; they can also pay fees to
specialist firms or other organisations to run courses for the industry.
The rules governing the award of subsidies vary from one Board to
another, but the total subsidy paid to a firm is not necessarily linked with
the sum it pays in the form of the levy; indeed the subsidy may exceed the
levy by as much as 600 per cent. These financial arrangements are intended
to encourage and expand all initial and further training activities considered essential for the industry in question—from the manual worker
to top management and from the young new entrant to the older worker
requiring retraining.
In some Latin American countries the apprenticeship system provides
for a levy on all industrial—and sometimes commercial—undertakings
of a certain size. The levy varies from 1 per cent. (Brazil and Venezuela)
to 3 per cent. (Colombia) of the total amount paid out in salaries and
wages. This income is paid into a fund which finances an autonomous
training system. The main difference between this system and the ones
described above lies in the fact that in most cases there is little or no
possibility of obtaining an exemption or refund.2 This has led to a reduc1

See paper No. 1, pp. 50-51.
Even when it is legally possible for a firm to run its own training school, it seems
exceedingly difficult to get the school officially recognised with a view to obtaining
exemption from the levy.
2

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tion in the amount of practical training in undertakings, although
recently there has been a marked tendency among these autonomous
systems to encourage such training, but by providing services to the
undertakings rather than subsidies. Apart from these autonomous
systems, financed from an apprenticeship levy or by the latter in conjunction with public funds, there exist in almost all the Latin American
countries " competing " systems of vocational training financed from
funds allocated to the national education system or from other public
funds.
(b) Arguments for and against Training Levies
Irrespective of the system adopted, industry must accept responsibility
for a good proportion of the vocational training given (chiefly the
practical training), especially when the training is peculiar to the needs of
the particular firm concerned. In such a case, an employer will consider
training expenses as part of his general financial investment in production.
These expenses will consist of the wages paid during training, the direct
costs of the training programme and the output forgone owing to the
fact that the trainers supplied by the firm are not engaged in normal
production work. Like any other investment, this will have to be profitable, that is to say the benefit to the firm should exceed actual outlay.
But the investment may have been wasted if the trainee leaves for some
rival concern or for any other reason.
This is no doubt the first, and a major, argument in favour of introducing a training levy. Making all undertakings contribute to a fund to be
used either to meet the costs of training provided outside the firm or for
improving training schemes in undertakings or groups of undertakings,
will help combat the pirating of trained staff. The risk of losing a qualified
employee is much greater if the skills he has acquired will be of use to
him outside his own company. Firms may, therefore, tend to neglect
non-specific skills in their training programmes and to recruit their
skilled staff elsewhere. One way to solve this problem could be to arrange
for the requisite training to be provided by the public education system;
this is, of course, already being done with respect to broad general
subjects, such as reading, writing and arithmetic. The same procedure
could be applied to subjects such as carpentry and woodwork, wiring
and electricity, and so on. Another solution is to reduce the cost of the
training in the undertaking, so that the financial burden of losing a
person who has been training is offset in part, at least, by a reduction in
the sums invested in his training. This would be the effect of a training
levy-cum-subsidy system.

2. EDUCATION AND TRAINING PROGRAMMES

103

A second reason for introducing a training levy is that not all employers are equipped technically for organising training for the necessary
numbers or of the required quality within the undertaking. Some of them
still need to be convinced that training is a form of investment, and
therefore they neglect it, or fail to do any at all. The introduction of a
training levy, together with a system of exemptions and subsidies, would
help to remedy this situation.
Thirdly, the introduction of a levy system would certainly be an
exceedingly effective means of financing a training programme for a
whole industry or for a group of industries. Not only would it make all
undertakings share in the expenses of the training, but it would also
become possible, through the standards applied in the decisions to award
exemptions to the levy and subsidies, to influence the training policies of
the undertakings in the right direction. In addition, it would no doubt
help to raise the level of skills throughout the industry, encourage the
adoption of training standards, facilitate adaptation to technological
change and foster mobility of labour. It would associate industry in the
task of deciding on the rate, purpose and scope of the levy, the rate being
subject to revision in the light of changing needs. It would provide a
regular, automatic source for the financing of industrial training, including the running costs of the I.T.O.
A number of arguments have been raised against the training levy
systems. These arguments, in so far as they appear to have some foundation, seem to challenge more the manner in which the levies are applied
rather than their underlying principles.
The extent to which the levies may be a heavy burden for the employer
will depend on the rate adopted. It is essential that industry should have a
say in determining the rate, which should be reasonable and bear some
relation to foreseeable requirements. An important feature of the British
Industrial Training Act, 1964, in the United Kingdom is that the rate
of the levy has to be reviewed from time to time. In any case, since
training is as much an investment as any other, an assessment of 1 or
2 per cent, of the total payroll must surely represent a very minor contribution for an employer who decides to organise no training on his own
account. On the other hand, should he decide to undertake some training
himself, the system of exemptions or subsidies should relieve him of
almost the entire burden. At the same time, the system helps to protect
him against " pirating " and facilitates inter-firm arrangements, the
establishment of standards and supervision of the training.
Calculating the levy on the basis of total payroll (the usual procedure)
can be justified by pointing out that the amounts invested by an undertaking in training activities (and, hence, the benefits it can expect to reap

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in the shape of subsidies and exemptions) are, by and large, proportional
to the size and quality of its labour force, both of which can be roughly
measured by the amounts paid out in wages. But administratively, if it is
possible to draw finer distinctions it might be well, in the countries where
there is heavy unemployment among unskilled workers, to base the levy
on skilled labour alone. Be that as it may, the levy can always be calculated in other ways : as a function of the number of persons employed,
or the output of the firm, or the value of each production contract.
Where administrative costs are heavy, some simplification in procedures
should be possible.
It is difficult to imagine how a training levy could act as a brake on
industrial development, since the whole purpose of the system is to
encourage investment to further such development. In this context, the
obvious case is that of the countries in the early stages of industrialisation.
Provision can always be made for exceptions, and to introduce the levy
system gradually. But even in such cases it will be well to ask whether the
opposition to the levy cannot be attributed to a failure to appreciate the
importance of the training function in industrial production, or simply
to a desire to have the burden offinancingit shifted to any sector other
than industry. This merely postpones the problem and does nothing to
solve it.
The suggestion that introducing a levy system would slow down the
rate of employment is a theoretical rather than a real problem. If the
employer, fearful of having to pay too heavily through the levy, cuts
down the number of jobs, especially at the lowest levels, he will have
either to reduce output or to introduce capital-intensive methods of
production. In both instances it has yet to be proved that payment of the
levy would be more expensive.
Another criticism is that the levy is too heavy an additional burden ;
undertakings already have to pay semi-fiscal dues to trade and professional associations to finance training, or make voluntary contributions towards the initial and further in-service training of certain categories
of staff (management development courses, financing of studies in
universities or institutes of higher learning, etc.). Such activities must
obviously be taken into account when any of the subsidies or exemptions
(which must be an integral part of the levy system) are awarded—
provided, of course, that the activities are in accordance with the
approved training policy for the industry concerned.
From the above, it would appear that a training levy, combined
with a system of subsidies and exemptions, provides a method of finance
well adapted to the strategy for industrial education and training outlined
in this paper. It is, therefore, recommended that such a system should be

2. EDUCATION AND TRAINING PROGRAMMES

105

established in countries where its introduction would not create any
constitutional or legal difficulties and that it constitute in those countries
the principal means of financing the I.T.O.
(c) Financial Aspects of the Industrial Training Organisation
It may perhaps be useful to summarise here the sources from which
the I.T.O. would be financed and the types of financial assistance it
would be able to render.
The income of the I.T.O. would consist of—
(a) the product of the training levy imposed on all industrial undertakings above a certain size; only very small firms would be exempt;
(b) public funds intended to supplement the above with a view to
enabling the organisation to fulfil the purpose; in countries in the
very early stages of industrialisation, such public moneys might be
the main source of finance ;
(c) funds supplied through international assistance.
The I.T.O. would be empowered to—
(a) award subsidies (or exemptions) to undertakings or groups of
undertakings carrying out training programmes in accordance
with the standards laid down by the organisation; such subsidies
should cover a substantial part of the cost of these programmes ;
loans might also be granted, subject to support from development
banks ;
(b) provide financial assistance to public educational establishments
and to institutions or organisations (trade unions, trade and professional associations, small-industry institutes, productivity centres,
technical colleges, etc.) for such parts of their training programmes
as meet both the needs of industry and the standards set by the
organisation ;
(c) finance training activities carried on under its auspices when the
requirements of industry can be met in no other way; such activities
might range from the establishment of comprehensive training
centres to more limited arrangements for the training of instructors,
the preparation of teaching material, or the purchase of equipment.
Contribution to Training Costs by Trainees.
Specific training for industrial employment receives finance from yet
another source: the trainees themselves. Their contribution consists of

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either the fees they voluntarily pay for their own training or reduced
wages during their practical training in the undertaking. As regards the
payment of fees, people would, in all probability, be prepared to make
a considerable financial effort if adequate facilities for initial and further
training were available and were likely to fit them for higher-paid work.
While it is a desirable social objective to assist workers to better themselves through awarding scholarships, loans or outright gifts (which
could be financed partly by employers and partly from public funds),
many workers in the developing countries may be prepared to take a
share in the burden of providing training for industrial employment by
making this personal contribution.
Foreign Assistance.
In both general and specific preparation for industrial employment,
foreign assistance can be called in to fill the gaps. Such assistance may be
public or private, bilateral, multilateral or international. No exact
estimate has ever been made of the total amount thus contributed; it is
probably very considerable. In countries which have recently become
independent, a large proportion of national expenditure on education
and training, including operating costs, is being met by foreign aid.
This situation will have to be changed little by little; it is generally agreed
that most of the effort in this field should be made by the country concerned, and that foreign aid should be selective and aim at filling the
gaps and buttressing the national effort at its weak points. This, in
effect, is typical of the international assistance provided by the United
Nations and its specialised agencies, including specialised bodies for
financial assistance. Through the award of loans and gifts, through direct
contributions to all types of training activity (advisory missions, grant
of fellowships for study abroad), through the provision of equipment,
these organisations endeavour always to intervene in areas of primary
importance and to train the key personnel. Such assistance may take
the form of a comprehensive programme, e.g. the World Bank project
in Nigeria, which covers a whole range of educational institutions—
general secondary schools, technical and vocational schools, technical
colleges and universities and technical teacher-training colleges. It may
be concerned with the establishment of a specific institution—a technical
university, science faculty, technical college, teacher-training college,
a management development centre or a centre for the training of instructors and supervisors. The assistance may also concentrate on
particular aspects such as, for example, further training and education
(fellowship schemes for engineers, courses at an international centre
for advanced technical training), assessment of educational and vocational

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107

training needs, the preparation of national plans in these fields, the
establishment of standards and preparation of teaching materials.
It is, however, surprising that relatively little international finance,
in the form of international capital transactions, has been made available for training, which is now generally regarded as an investment on
the same footing, from the economic point of view, as investment in
physical assets. It is suggested that such international financial assistance
be made available to industrialising countries having established the
proposed Industrial Training Organisation.

IV. A Few Suggestions for International Action
There is hardly a single aspect of the programmes considered in this
paper which has not been the subject of action by some organisation
of the United Nations family during the last 15 years. Hence, in this
last section, the purpose will be not to describe the whole range of these
activities, but rather to bring out a few points on which efforts should
be intensified or concentrated. These will be discussed under three
headings : (a) the definition and implementation of a suitable strategy
of education and training for industrial work ; (b) the organisation of
effective programmes; and (c) ways of financing such programmes.
INTERNATIONAL CONTRIBUTION TO THE DEFINITION AND IMPLEMENTATION
OF THE EDUCATION AND TRAINING STRATEGY

The purpose of international co-operation in this field is to complement national action where necessary and to enable all countries to
profit from the common fund of knowledge and from international
experience. To this end, it is essential that the organisations concerned,
and especially U.N.I.D.O., the I.L.O. and U.N.E.S.C.O., should adopt
a common approach to be reflected in their programmes. In this regard,
efforts have already been made by these organisations, and these are
being expanded considerably. The fact that some problems have not
yet been completely solved is attributable not to inadequate co-ordination,
but to the far-reaching changes which education and training are undergoing all over the world. The strategy which has been advocated in this
document will increasingly demand the integration of activities which
were planned separately in both countries and international organisations.
Such an integration will not come about through abstract reasoning
or by dogmatising, but through concrete concerted efforts within each
8

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country. Three tasks ought to enjoy priority and might call for increased
co-operation from the international organisations: (a) providing
instruments to help in the formulation of the strategy; (b) preparing
national plans of education and training for industry; and (c) establishing national industrial training organisations.
(a) Provision of the Instruments
The international organisations should strengthen the statistical
basis required for planning education and training for industry (manpower statistics, education and training statistics). Their eiforts, which
would combine research and operations, should be devoted, inter alia,
to the following:
(i) preparation of the various kinds of manpower indicators, the schedules
of skill requirements and the statistics mentioned in paper No. 1
above and on pages 65 and 66 of this paper, namely occupational
censuses in certain industries; surveys of the skills possessed by
workers in various occupations within these industries; vocational
training statistics; catalogues of qualifications required for key
occupations ;
(ii) systematic inventory of the various skill-generation processes,
determination of methods for improving such processes and analysis
of the cost of industrial training programmes.
The methodological work required in connection with these instruments could be undertaken at the world-wide or regional level, but the
instruments themselves should be devised in individual countries or by
small groups of countries. This process should provide valuable guidelines for action, while contributing to the standardisation of skill definitions, levels and requirements. A start should be made with research
and pilot projects in a few countries before any really ambitious scheme
is tackled, and the instruments evolved should be continuously improved.
(b) Definition of the Industrial Training Plan
Countries needing advice in this field could request U.N.I.D.O., the
I.L.O., U.N.E.S.C.O. and appropriate financial agencies to send joint
missions to assist them in determining how best to—
(i) survey the situation and decide on objectives mainly by using the
. instruments mentioned above and, as necessary, assist in devising
such instruments ;

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109

(ii) define the main features and general framework of the plan;
(iii) integrate the various national and international activities involved
(planning of industrial development, manpower planning, planning
of education and training).
(c) Industrial Training Organisation (I.T.O.)
The international agencies should assist countries to set up this key
organisation. They would do so by providing advice on its scope and
objectives, its structure, its technical and financial means of action, its
administrative problems, and by participating in its activities. (See
pages 72 to 74 and pages 105 and 106).
INTERNATIONAL CONTRIBUTION TO THE ORGANISATION OF EFFECTIVE
PROGRAMMES

The international agencies should concentrate on projects of three
sorts: (a) those relating to the establishment or reform of education
and training arrangements for industry as a whole; (b) those relating
to a particular industry; and (c) those relating to techniques of education

and training.
(a) Better Education and Training Arrangements for Industry as a Whole
International efforts should aim at assisting countries in improving
the education and training arrangements for industry as a whole according to the priorities of national industrial training plans.
(b) Launching of Integrated Projects for Particular Sectors
The international agencies should be able to develop projects for
the initial and further training of skilled personnel for a whole industry
or for a particular industrial scheme. These projects would be an integral
part of medium- or long-term industrial plans. They would cover, in a
logical order, all skilled personnel, including senior managerial staff.
Joint survey missions should precede the projects.
(c) Better Education and Training Techniques
International agencies should help in devising the new techniques of
industrial education and training which modern systems will require.
Their efforts should be concentrated chiefly on the following:

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(i) development of models showing how programmes might be organised for various branches of industry and for certain key occupations (outlines of sandwich training schemes for managers,
engineers, technicians, and middle-level staff; specimen syllabi in
scientific and technical subjects at various levels; specimen
syllabi of combined theory and practical training for future skilled
workers) ;
(ii) preparation of manuals, pamphlets, and course outlines at various
levels and in the principal occupations within any particular industry; some of these documents may be valid for use in several countries but most will have to be adapted to local conditions;
(iii) preparation of training equipment, such as models of school and
workshop equipment, audio-visual aids of all kinds, and programmed
instruction material;
(iv) establishment of model laboratories and teaching method offices;
(v) establishment of education and training standards (organisation and
subject-matter of examinations, diplomas, supervision and inspection).
INTERNATIONAL FINANCIAL ASSISTANCE

Without the scope of what international agencies are doing in
education and training being in any way restricted, special stress should
be placed on four points on which international financial assistance
might be given:
(a) the financing of joint international missions to help countries in
devising an over-all strategy (page 108), or for launching sectoral
projects (pages 108 and 109);
(b) direct financial assistance to national industrial training organisations to supplement their resources when no adequate national funds
can be made available. International funds would be devoted to
strictly defined aspects, such as programmes of advanced in-service
training for managers and engineers, the establishment of a national
experimental pedagogical centre to assist training in undertakings,
the creation of national demonstration centres and national centres
for examinations and standards, the establishment of mobile instructional units, etc. ;
(c) the financing of comprehensive fellowship programmes to provide
key men in industries of particular importance with further training;

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111

(d) the financing of equipment, purchase of expensive machinery, and
provision of foreign exchange for purchase of technical books and
journals; this assistance might also take the form of long-term
loans to finance certain key aspects of a general industrial training
plan, the other aspects of the plan being financed from national
resources.
Mention should be made of two further aspects of international
action which might suitably be strengthened. First, there is the part
which international agencies can play in providing information, especially
through their technical publications and the world-wide, regional and
national information centres available to them. It is most important that
developing countries should have access to the experience acquired
elsewhere. This is the responsibility of international agencies. Special
efforts must be made to publish, in the field of training, technical journals,
special studies and handbooks, bibliographies and systematic up-to-date
catalogues. Second, the international agencies must make public
opinion aware of the problems of education and training for industry.
Employers' organisations and trade unions, teachers' associations,
professional organisations and popular movements of all kinds have a
very important part to play in the dissemination of ideas, and should
themselves make a vigorous contribution to the activities described
in this paper. Organisations such as U.N.I.D.O., the I.L.O. and
U.N.E.S.C.O., by virtue of their facilities all over the world, can help these
bodies to play their part.They must, therefore, make strenuous efforts to
associate them with schemes for industrial training.

3. THE EFFECTIVE UTILISATION OF MANPOWER
FOR INDUSTRIALISATION
INTRODUCTION

A number of problems concerning occupational requirements for
industrialisation and measures to meet them are reviewed in papers
Nos. 1 and 2 above. Some suggestions were made as to how national and
international action could tackle these problems. It should be recognised,
however, that unless accompanied by action to improve the use of the
capacities and skills available in the existing and future labour force, the
best manpower forecasting job and the finest training programmes will
be inefficient or expensive.
The purpose of this paper is to examine issues calling for policy
action, at the national and international levels, for improving the effective
utilisation of industrial manpower in developing countries. Three major
questions will be considered:
(a) How can the right people be channelled to industrial education
and training streams?
(b) How can they be channelled to the jobs where manpower is
required ?
(c) How can the performance of industrial manpower be improved?
While it is obvious that these three questions are interconnected it is
useful to distinguish between them in relation to different phases in time,
namely the long term, the medium term and the short term. They may
therefore suggest a logical sequence of measures to be taken. This does
not mean, of course, that no action should be taken for the short or
medium term before measures have been adopted for the long run.
This paper is divided into two sections: the first elucidates some
important points arising under each of the questions mentioned above
and suggests measures which countries might take to improve the
utilisation of their industrial manpower; the second contains some
proposals for international action.
Before these various points are dealt with, attention should be given
to some general factors pertinent to the whole set of problems.

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If workers are to be induced to acquire the necessary industrial skills,
to go where their skills are needed, and to perform their tasks in a
satisfactory manner, they must be reasonably committed to what has
been called the " industrial order ". There is ample evidence that in many
developing countries the commitment and the stability of industrial
manpower still leave much to be desired. This applies both to broad
social groups and to individuals.
One of the main reasons is that the cultural and sociological integration of traditional societies within the modern sector has not yet been
fully achieved. Two important consequences of this are, first, that when
traditional values and old forms of social organisation prevail, the participation of people in industrial work is unstable, that is there will be high
rates of turnover and absenteeism, short periods of service, and lack of
interest in the work ; and second, that when industrialisation has destroyed
the older values there is a certain time lag before people fully accept the
new order, so that it is very difficult to instil the spirit of genuine interest
and desire to innovate that are so necessary for industrial development.
Other important obstacles are ill health, malnutrition, inadequate
housing facilities in urban areas, low urban wages, low social prestige of
most industrial occupations, over-long working hours, and poor social
climate of the enterprises—all of which contribute to the slowing down
of acculturation required for progressive industrial development.
While it is generally accepted that the problem of attracting labour
from traditional societies to industrial work " is much less formidable
than it was thought to be " and that now there is a much clearer understanding of " the transitional characteristics of the phenomenon " 1 ,
it is suggested that the anthropological and sociological factors—including
the motivations of groups and individuals affecting utilisation of human
resources for industrial development—be studied along with the technical
and institutional aspects of industrial employment and training
programmes. Manpower planning for industrial development requires
such studies in order to set realistic targets and objectives and to
suggest measures for attaining these goals.
The State, of course, has a very important role to play in removing
some of the general obstacles to the commitment and stability of the
industrial labour force. This includes improving hygiene, health, nutrition and housing, and granting subsidies to employing establishments
where the cost of special programmes for stabilising the labour force
would not match the expected returns to these establishments. It is
suggested that in these matters, decisions of the State plus specific
1
United Nations: Report on the World Social Situation, 1965 (New York, United
Nations, 1966), Ch. X, " Commitment of an Industrial Labour Force ".

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115

action described below be taken within the framework of a well-defined
policy for industrial development, and that these measures be clearly
identified and costed within the framework of industrial plans or programmes (including manpower planning).
Employers and workers, particularly through their respective organisations, can also contribute to the removal of obstacles to the commitment and stability of the labour force. Employers can awaken a spirit
of enterprise and innovation both within their firms and outside, instil a
taste for modern methods of management and develop an awareness of
the social responsibilities of management. They can improve supervision
work and the general climate of the enterprise. Workers' organisations,
in addition to defending the workers' interests, can undertake a number
of activities which might also greatly contribute to the commitment and
stability of the labour force, e.g. the reception of workers previously
engaged in traditional occupations or coming from backward areas,
helping these workers to adjust to their new working life and to the new
social environment, and taking interest in improving the workers'
living conditions and assisting them in organising their leisure time.

I. SPECIFIC MEASURES WHICH COUNTRIES MIGHT TAKE TO IMPROVE
UTILISATION OF INDUSTRIAL MANPOWER

A number of points arising under the three questions raised in the
introduction will be discussed briefly in this section. While it is recognised
that different measures will have to be taken at different levels of development, the points discussed may be relevant to most developing countries.
(a) Measures to Channel People to Industrial Education and Training
Streams
The main measures in this field include providing adequate vocational
guidance, accompanied by steps aimed at raising the status of key
industrial occupations, providing financial incentives and fringe benefits,
properly selecting trainees for industrial education and training, and
improving methods and programmes of education and training for
industrial work.
General Vocational Guidance in Schools.
Few countries in the process of industrialisation have yet been able
to set up educational and vocational guidance services capable of

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conveying to the mass of their young people information which will
help those wishing to work in industry to come to sound decisions on
occupational choice, and useful in helping them to put this choice into
effect.
Effective guidance can be achieved only by close co-operation
between the schools and the public agencies concerned with the employment market—the schools because they can convey to the children at an
early enough stage that an individual can, to some extent, mould his
own destiny as a worker and that one's choice of occupation should be
made as rationally as possible in the light of knowledge both of employment prospects and one's own aptitudes and interests; the manpower
administration because it can provide the necessary information about
the jobs likely to be available when the young people are due to enter
employment, about the nature of the work in each job, about the aptitudes required for it, about the training necessary after leaving school
and about the conditions of work and prospects of remuneration and
advancement. Consequently, it is for the school to advise the child on
the best educational course to follow; to the manpower administration
falls the task of directing the school leaver to opportunities of training
or employment.
In countries with as yet no industry or only a narrow range of industry,
an early step is to acquaint children with the idea of economic development and with the types of industry that development will bring. Teachers
themselves need as part of their training systematic instruction on the
subject of national economic and social development so that they may
pass some of this on to the children. At primary schools, perhaps, little
more can be given than some picture of what the future is likely to hold
for the children. At secondary schools it may be possible to give students
some notions of development plans, to impart an understanding of the
interdependence of different projects, of time perspectives, and of the
importance of the proper utilisation of the nation's human resources,
and thus to stress the role of the individual in the national economy as
a whole. Visits to such industries as already exist, visual presentation of
other industries, and even a few days' trial employment in industry
where this can be arranged, are often more effective than talks and
printed matter.
Beyond this, comparatively little seems necessary in the way of
guidance to channel young persons in the developing countries into
unskilled or semi-skilled industrial work suitable for them. But considerably more is needed to induce young people to undergo the education
and training necessary for the skilled jobs or the supervisory, intermediatelevel, professional and managerial occupations for industry.

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Raising the Status of Industrial Work.
It is important at this stage to break down any false ideas derived
from past traditions. In a wide range of developing countries the same
phenomenon is found: the primary consideration of young people in
choosing a job is the status it is assumed to confer rather than its intrinsic
merits, the contribution it makes to the economy or the opportunities it
offers for genuine self-achievement. Many views on the relative status of
different occupations stem from evaluations which no longer correspond
to reality and which will be even less justified when the youngster concerned reaches the peak of his career. To correct such views is easier
said than done. If, for instance, independent lawyers or government
officials have for generations been recognised as having a higher status
than engineers in industry or factory managers, it is not enough to
present the schoolboy with information to show that this will not always
be so ; nor is it enough that his parents and teachers should be so persuaded; a whole cultural tradition must be changed.
Sociological inquiries into the prestige rating of different occupations
throw light on " mental blocks " of this kind, and it should be the
deliberate policy of governments to raise the status of those occupations
necessary for development which do not at present enjoy the prestige
which is their due. One aspect of this is the persistent problem occurring
in almost all countries which have no long industrial history: that of
prejudice against occupations having some manual content and of an
exaggerated preference for desk jobs.
Governments can do much to raise the status of key industrial
occupations, particularly by two sets of measures : the establishment of
appropriate wage and salary differentials (on the basis either of skill
or of type of occupation, e.g. manual/non-manual), and the conferment
of national honours and titles. These measures should be supported by
campaigns in the press and other media to change the public image of
these occupations. The question of wages and salaries for industrial
work will be mentioned below. As far as the second question is concerned, it should be one of the tasks of the proposed Industrial Training
Organisation (see paper No. 2, pages 72 to 74) to submit a systematic
pattern of technical education and training. Successful students at
specified levels would be awarded a recognised diploma or title giving
access to better-paid key occupations, e.g. technicians at different levels,
junior engineers, specialists in management techniques. National competitions for skilled craftsmen in a number of key industrial trades and
national honours for particularly successful industrial workers should

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be organised and widely publicised, accompanied by financial rewards
where necessary.
Information on Industrial Occupations.
Concurrently with these measures, information should be collected
concerning the occupations which already exist in the country, on those
which will be expanding and on those which will be introduced with the
establishment of new industries and the modernisation of old ones.
This information should be put in the form of occupational monographs
or career handbooks available to the manpower services (vocational
guidance, placement) and—possibly in a simpler form—to schools.
Information needs to be collected on the following items :
(a) the nature of the work—what is done, how and why it is done,
under what conditions it is done, and how it is linked with the work
performed in other occupations;
(b) where persons are, or will be, employed in the occupation considered;
(c) what aptitudes, minimum educational and other qualifications and
specific training it requires;
(d) what the employment outlook is—number of openings forecast
in relation to the present number employed in the occupation;
(e) the average earnings and chances of advancement;
(f) how to obtain detailed information and how to apply for training
or employment in the occupation concerned.
Many models for presenting this information exist in industrialised
countries; they should not normally be followed without adaptation.
The essential need is for information to be presented in the right way
to be digested by—and to appeal to—the young people to whom it is
addressed. The presentation may differ according to the educational
level of those being addressed; there may, for instance, be less written
material and more photographs when operations demanding lower
educational qualifications are dealt with. Great caution must be observed
in borrowing photographs from other countries, since people will have
difficulty in identifying themselves with a situation which is obviously
from a different milieu.
Individual Guidance.
While general publicity and group guidance activities of this kind
prepare the ground, many youngsters need individual guidance. This is
time-consuming and therefore costly, needing well-trained vocational

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119

guidance personnel. In this matter, developing countries must decide
on priorities : which groups of the population is it most important to
guide into channels which will make the best use of their aptitudes and
interests ? In most cases it is best to start with the children with secondary
or intermediate education in the more important population centres,
and to concentrate on key industrial occupations.
Individual guidance again is a matter of collaboration between the
schools and the manpower services; the schools because they have a
record of the pupil's performance in certain subjects over several years
and some knowledge of his personality; the manpower services because
they know of the openings in industry and the characteristics required
of the workers who are to fill them, and because school leavers are
often more disposed to take advice from the world of employment than
from the teachers whom they have known during their school years.
In industrialised countries the practice is becoming more widespread
of having a twofold service: selected teachers in each school specialise
in general occupational orientation, while the external vocational
guidance service is available to supplement this and to give individual
guidance interviews and introductions to training opportunities or jobs.
In countries which have aptitude-testing services, these can prove
extremely helpful in special cases, but the general application of tests is
usually ruled out by the great numbers of persons involved. In connection with the school service, attempts are being made to bring the
teachers and industry more closely into touch with each other, and this
is a step which industrialising countries might adopt from the start.
Advice is not always accepted, and where it is, it may prove to have
been wrong. It is therefore important for vocational guidance not to end
abruptly when the youngster enters training or employment; the service
needs to follow up within, say, six months or a year to see whether he is
making a success of the training or job he entered and, if not, to attempt
to place him in other employment or training while there is still time.
Vocational Guidance as a Tool of Industrial Manpower Planning.
Lack of resources seriously limits group or individual vocational
guidance activities in many developing countries. Therefore, the benefits
to be derived from such activities should be compared with their cost.
While national campaigns and information in schools should be quite
broad, heavy emphasis should probably be on specific groups of the
school population and on key industrial occupations, particularly the
high-level ones. In any case, close links should be established between
education and training institutions on the one hand and industry on the

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other, and guidance and counselling services should be part of the
machinery for the planning of industrial manpower and educational
development. Finally, enterprises should co-operate with these services
in their own interests, by supplying information on occupations, arranging
for visits and so on.
Financial Incentives and Other Benefits.
Governments can provide financial incentives to encourage people
to seek education and training for selected strategic occupations. This
could be done through the national Industrial Training Organisation
proposed in paper No. 2. They might take the form of sholarships,
student wages, etc., in the case of schools, and of subsidies for specific
on-the-job training schemes, including certain apprenticeships. In
general, the policy might be for industry training schemes to receive
public assistance funds commensurate with those received by the general
education system. In addition, special fringe benefits, such as boarding
facilities, free or subsidised meals and housing for trainees and their
dependants, special holidays, and so on, might be provided for students
in certain crucial occupations.
Selection for Industrial Education and Training.
In view of the high cost of many industrial education and training
programmes, attention should be given to a more efficient selection of
trainees, particularly for high-level manpower. Schools as well as employers could be more selection-conscious than they are now. Very
often the admission of candidates is haphazard, or based on criteria
having little relevance to the optimum utilisation of training facilities.
Proper selection can be made only on the basis of an adequate job
description based on proper analysis of the work to be carried out.
The qualifications of applicants must match the requirements, and
selection be made accordingly. This is often difficult in countries where
family or personal relationships play an important role. Those responsible
for selection must, at least, make sure that applicants so sponsored have
the qualifications corresponding to the job specification.
The selection process may include aptitude tests appropriate to the
type of work required. Arguments have been advanced for aptitudetesting programmes in industrialising countries. They can be summarised
as follows :
(a) as children have had relatively little experience of using mechanical
devices their past record provides little clue as to their possession of
the abilities needed for skilled occupations in industry;

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121

(b) for much the same reason, there is little of the self-selection which
operates in industrialised countries to eliminate the less suitable
applicants ; and as few, if any, applicants have been able to profit
from vocational guidance, many apply in ignorance of the requirements of the occupations concerned ;
(c) where suspicion exists, rightly or wrongly, that factors unconnected
with the requirements of the job, such as ethnic origin or political
connections, are taken into account in selection, aptitude-testing
provides some assurance that objective criteria are used;
(d) in any event, a good system of non-verbal aptitude tests counteracts
distortions due to regional differences in education opportunities
and, in plurilingual countries, to differences of mother tongue.
However, aptitude tests are not so simple or infallible as they
sometimes appear to laymen. In fact, they are dangerous except in the
hands of the occupational psychologist or other persons specially trained
in their use. They must be planned with care and be of proven validity for
the type of applicants presenting themselves for selection in the country
concerned. The blind application of tests developed in other countries,
with translation of instructions into the local language, is fraught with
danger.
By " proven validity " is meant that tests must be shown, in practice,
to have some predictive value with the type of applicants involved, in
discriminating between those likely to do well and those likely to do
badly in the training offered.
In selection for training courses in a range of skilled mechanical trades,
it has been demonstrated in developing countries that a well-balanced
range of tests covering abstract reasoning, analogies, numbers and ability
to handle visual space can be administered by personnel trained in a
fairly short time and at reasonable cost, and that the results give a useful
prediction of ability to follow the course. Manipulative tests have not
been found necessary at this level, since although a fitter or radio mechanic, for instance, works with his hands, his real skill depends far less
on his manual dexterity than on his mental power. Moreover, manipulative testing can be done only in small groups, which makes its cost in
staff time prohibitive.
The testing of aptitude to undergo training does not of itself assure
success in training, or in the occupation concerned, since motivation and,
of course, actual developments in the employment market also play
their part. Tests therefore need to be seen as an element in the selection
process, to be used in conjunction with other methods such as interviews
and consideration of school record or other references. And the security

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of tests must be safeguarded—their purpose is frustrated if applicants
obtain advance copies by underhand means.
If aptitude tests are well organised and adapted to the situation
prevailing in the country, the decisive factor may be, in many cases,
their cost as compared with the waste of resources in industrial training
programmes by improper selection. Whatever the validity of aptitudetesting programmes, they should be organised only for specific occupations requiring costly training and education.
Incentives through Improved Education and Training Programmes.
It is important to note that reforms in education and training
programmes and methods will, in themselves, be strong incentives to
attract people who are reluctant to go through traditional or rigid
education and training schemes. Such reforms have been discussed in
paper No. 2 above (see pages 74 to 98). In the short run, changes in the
organisation and methods of in-plant training and upgrading can play
an important role. In the long run, increasing the number of openings
after incomplete secondary or higher education, and removing the
barriers between various levels of education, are crucial. Finally, attention
should be given to the proper geographical dispersion of education and
training facilities within the framework of industrial development
programmes or projects.
(b) Measures to Channel People to the Jobs
where Manpower Is Required
Measures to improve the machinery which will enable the employment market where manpower is required to function properly and to
establish appropriate wage and salary differentials for industrial manpower promote the proper channelling of the right people to the right
jobs.
Improved Employment Market Machinery.
Incentives to qualified workers to take up those jobs where their
skills will be best used need to be backed up with machinery to see that
they know of those jobs and are helped to apply for them, and to assist
undertakings in finding the best-qualified workers available.
Personal introduction or the " grape-vine " are still not to be
despised as ways of contact between worker and job; and, with an
increasingly well-educated labour force, press advertisements also
result in a high number of successful matchings of workers and jobs.
But there are advantages in supplementing these by a public service

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having specific responsibility for organising the employment market.
By this is meant collecting and publicising up-to-date information about
jobs and job-seekers for the mutual benefit of workers and employers and
helping to bring the two together where they would not otherwise have
made contact; the purpose is to ease the workings of the employment
market, not to force them into the channels of a state service. In order
that the service meets the real needs of its users and does not become a
mere bureaucratic instrument, it needs the advice of representatives of
the employers and job-seekers and trained personnel to distinguish, with
the help of industry, the qualifications required for different jobs and to
recognise the suitability or unsuitability of candidates. Such a service
should also be organised within the framework of a national strategy for
training industrial manpower and to have close links with the proposed
Industrial Training Organisation.
In the industrialised countries public employment services have
traditionally been concerned mostly with workers in the lower level of
skills ; attention to professional and managerial workers only came later.
In the industrialising countries there are arguments for reversing this
order and for concentrating first on the strategic personnel whose correct
placement is of greatest importance to industrial development. It is
recommended that the growing practice in industrialising countries to set
up professional registers for people with scarce technical skills, whether
immediately seeking employment or not, be encouraged and expanded.
These registers not only give the authorities an idea of how effectively
such people are being used, but also enable them to make better placements and, in an emergency, to fill vacancies rapidly. Qualified nationals
completing their studies abroad, or employed abroad but willing to come
home when the right opportunity arises, should also be included in the
lists. Registers of this kind can also tell when no national personnel are
available to fill a vacancy and can without undue delay give permission
for the recruitment of foreign workers ; they can even help in establishing
relations with foreign governments and in taking part in the recruitment
of foreign workers.
In the early stages of industrialisation it may be that, once an industry
has been manned, greatfluidityin the employment market is not desired:
but with the expansion and diversification of industry the need for
fluidity grows. Manpower planning deals with broad occupational
groups and presupposes a fluidity of the employment market and the
cross-transfer of trained personnel not only from one undertaking to
another but in appropriate cases from one industry to another. In fact,
movement from one industry to another may be the only way in which a
person can obtain advancement and realise his full potential.
9

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Facilitating desirable personnel mobility of this kind is not only a
matter of putting job-seeker and prospective employer into touch with
each other; it is a matter of removing any obstacles to the worker taking
up his new job.
In industrialised countries with high levels of employment it has been
found economical to spend quite substantial sums of public money in
helping workers to take up employment in another part of the country,
or to transfer from a declining industry to an expanding one. Payment of
family removal expenses, settling-in allowances, assistance with rehousing,
retraining and payment not far short of normal earnings during this
retraining, are all considered fair charges on the public exchequer; in
Sweden in recent years, as much as 4 per cent, of government expenditure
has gone on " active manpower policy " measures of this kind, and the
conviction is held that this expenditure has justified itself by the benefits
resulting from the rapid transfer of manpower resources to where they
can be more productively used, by avoidance of the loss of production
due to unemployment, and by its braking effect on wage inflation.
In developing countries expenditure of this magnitude may not be
appropriate; nevertheless the economic loss which occurs if a job is left
vacant when a suitably qualified worker is available somewhere else in
the country might well be relatively greater, and attention needs to be
given to any measures of active manpower policy which the government
might take to limit this loss.
Wages Policy.
Measures affecting the level, structure and rate of increase of industrial wages are among the most powerful instruments of allocating the
industrial labour force as required. Labour mobility will be influenced by
the establishment of appropriate wage and salary differentials for
industrial manpower as between public and private employment, rural
and urban industrial employment, different national industries, different
occupations (manual or non-manual) and domestic compared with
foreign salaries for occupations in which international labour mobility
is significant (measures against " brain drain ").
Governments can play a decisive role in these matters. Firstly, they
can adopt a general wage policy for industrial development that would
provide effective means for channelling people to the required jobs.
Secondly, governments are the main employers in many developing
countries, and their wage-fixing practices might set a pattern for the
private sector. Thirdly, governments may have a direct impact on wage
and salary fixing in the private sector when arbitrating wage disputes

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and implementing minimum-wage legislation. In all these fields governments could foster rational structures of relative wages and salaries.
Management-administered and collectively negotiated scales of remuneration for technicians and other categories of intermediate-level personnel
could also follow the pattern of government practices for these categories,
according to the priorities established for strategic manpower by an
Industrial Training Organisation.
Reference is made to paper No. 8 below, particularly the pages
which contain a discussion of some of the issues raised by a wage policy
for industrialisation, as well as some of the instruments which can be
used to implement it, i.e. minimum wage-fixing machinery and a system
of job classification and grading.1
Other Measures.
Workers do not always react promptly to wage differentials between
jobs ; they may not be strongly influenced by information on occupations
or by the existence of guidance and employment services. Some countries
have, therefore, adopted other measures to make work more attractive
in certain occupations, industries and regions, e.g. provision of adequate
housing facilities, pension or gratuity schemes, and other amenities.
Hiring and promotion policies can also play an important role in the
allocation of the industrial labour force. They should be based on sound
principles of industrial and human relations and on adequate administrative practices, and should consider the objectives of the national
strategy for industrial training and development and the proposed system
of job classification and grading. Particular attention should be given to
the establishment of sound recruitment standards at the plant, industry
sector and national levels. In this respect, the work done by the proposed
Industrial Training Organisation or by similar bodies in the definition of
industrial occupations and their educational and training content, and by
a trade-testing system to assess the performance of trainees, should help
in improving recruitment policies in industry.
Other measures include the practice of " bonding ", i.e. requiring
people to serve during a certain period in a certain job or occupation with
a view to recovering part of the cost of their training. This would apply
particularly to certain high-level industrial occupations, such as design
and research engineers and scientists.
The problem of " brain drain " is of particular concern to many
developing countries. The exact scope of this phenomenon and its cost
1

For further information on the question of money incentives for industrial work
see Report on the World Social Situation, 1965, op. cit., Ch. XI-XIII.

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to the country of emigration have not been fully ascertained. Nevertheless, many countries are taking measures to improve their pattern of
incentives, both monetary and non-monetary, in order to keep qualified
high-level manpower at home or to attract it from abroad. There is more
to be done, however, in terms of incomes and of subsidies policies, for
the categories of personnel concerned.1

(c) Measures Aimed at Improving the Performance
of Industrial Manpower
While a number of the measures mentioned above, such as those
concerning wages and status, would also improve the performance of
industrial manpower, other specific measures to this end need to be
adopted. Improvement of general conditions of work, including better
health and safety provisions, of the " environment " for industrial work,
briefly discussed in the introduction to the present paper, and of personnel and industrial relations policies, are important in this connection.
The following brief discussion centres on the improvement of the performance of industrial manpower through the rational organisation of
industrial enterprises.
It is often overlooked that the upper limit of productivity of the
worker on the shop floor has been very largely determined for him even
before he starts his job. The production worker is normally the last
link in a chain of activities which starts with design, marketing, purchasing, equipping and planning, and he can be only as efficient as
these activities will allow him to be. Failure to realise this has led to the
onus for high output largely being placed—or rather, misplaced—on the
shoulders of the worker alone, whereas he has often been the victim of
bad management. The factors affecting his performance are worth
examining; they relate to excess work content and ineffective time.
Excess Work Content.
Every product may be considered as having an irreducible minimum
time of manufacture which would be taken if all the conditions were
absolutely perfect. The time to make a product or complete an operation
under these ideal conditions may be called the basic work content, the
term " work content " meaning the amount of work " contained in "
the manufacture of a given product by a given process in terms of man1

For a more detailed discussion of the " brain drain " problem see Report on the
World Social Situation, 1965, op. cit., Ch. XII.

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127

hours or machine-hours.1 In general, the actual time of manufacture is
far in excess of this ideal minimum.
The factors which cause this excess work content may be divided
into two groups : first, those arising from defects in the design or specification of the product and, second, those due to inefficient methods of
manufacture or operation: carrying out operations on the wrong type
of machine; speeds, feeds or other factors being less than optimum;
use of the wrong type of tool; bad layout of the workshop or factory;
and bad working methods of the individual operative.
Each one of these defects tends to prolong the time which it takes
to carry out an individual operation or complete a given product. The
various conditions imposed upon the worker cause him to do more work
than he need do and are almost wholly outside his control. Even his
bad working methods may be due to bad workplace layout or lack of
the proper training which it is the duty of the management to give him
if he is to achieve a reasonable level of productivity.
Ineffective Time.
Ineffective time, that is the time during which a worker (or a machine)
is not working at all or is carrying out work which will subsequently
not be sold, may be due to shortcomings of the management or of the
worker. Many factors that can bring about ineffective time are outside
the control of the worker, such as too great a variety of products, causing
constant changing of tools and stopping of machines; changes in design;
bad planning of the flow of work ; plant or equipment badly maintained
and constantly breaking down; and bad working conditions demanding
breaks for rest which would not otherwise be necessary. Accidents cause
considerable loss of time, not only to the victims themselves but very
often—and to a far greater extent—to supervisors and others associated
with them. Ineffective time may be caused also by the workers idling,
being absent without leave or causing accidents through disobeying
instructions.
Many modern management techniques 2 have been developed for
reducing excess work content and ineffective time. It is not possible in
this paper to discuss in depth any one of these management techniques.
Measures to reduce excess work content include improved design for
producibility, standardisation of components, and proper setting of
quality standards. Process planning, method study to eliminate wasted
1

See I.L.O.: Introduction to Work Study (Geneva, 1966), p. 17.
For a definition of a " management technique " see Introduction to Work Study,
op. cit., p. 26.
2

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movement and effort, plant layout, ergonomics and related techniques,
can contribute to reducing excess work content due to faulty methods.
Ineffective time can be reduced by better planning and control of
production, the analysis of sales to reduce unnecessary variety in the
products manufactured, and preventive maintenance. Improvements
can also be made in working conditions, lighting and air-conditioning,
and appropriate safety training can be given. Finally, ineffective time
for which the workers themselves are responsible can be reduced by
better supervision, personnel practices and industrial relations, as well
as by positive incentives for attendance and output.
In this way the productivity of labour can often be more than doubled
at little cost. The productivity of skilled labour can be greatly increased
if individual jobs are broken down and the elements for which skill is
essential separated from those for which it is not; in the repair of electric
motors, for instance, dismantling and reassembly of the non-electrical
parts can be done by labourers, leaving the skilled electrician to work
only on the electrical parts.
High-level manpower can be economised in the same way as skilled
workers, that is by ensuring that the functions not requiring special
knowledge are performed by people with lesser qualifications. It is
significant that " scientific management " evolved in the United States
in the 1890s because of the shortage of skilled supervisors, which led to
the breaking down of total supervising, planning and control functions
so that individual functions could each be carried out by someone less
skilled. It must be added, however, that in order to deal with the greater
number of individuals involved and to co-ordinate their work, higher
management must be better than formerly.
Other Important Aspects of Organisation of Enterprises.
A more rational organisation of industrial undertakings may include
measures such as intensive staffing and shift work. Although discussed
in another paper, these measures should be mentioned here, in view of
their effects on industrial performance. Examples of the applications of
these measures, e.g. in Japan, show that management can take advantage
of the availability of unskilled and skilled manpower to organise production in a way that makes the optimum use of existing equipment.
The production process can also be adapted to the pattern of available
skills. Very careful process planning, work study and production control
are needed to ensure the success of these methods.
Another important aspect is the efficient organisation of basic and
further training in the enterprise, for all levels of industrial manpower
(including senior staff and management). This aspect, discussed in

3. UTILISATION OF MANPOWER FOR INDUSTRIALISATION

129

paper No. 2, is a powerful instrument for improving the performance
of staff.
Incentives to Stimulate Performance.
Most of the incentives to channel people to industrial training and
industrial work also contribute to increasing work performance. They
fall into two classes : financial incentives in the form of adequate basic
wages and salaries, with or without various types of bonuses, and fringe
benefits such as low-cost housing, medical benefits, education for children,
co-operative purchasing and credit facilities, and so on; and the nonfinancial or psychological incentives, including sound personnel policies,
favourable social climate in the enterprise, etc.
Another aspect of financial incentives is that of payment by results,
especially piece-work. This form of payment " is among the oldest ways
of rewarding work ". It would appear, however, that as economic development proceeds, the scope for piece-work diminishes both as regards the
proportion of the labour force affected and the proportion of pieceworkers' earnings directly related to output. The reasons for this trend
are to be found " in certain intrinsic limits beyond which piece-work
cannot be rationally applied, and in certain costs and other inconveniences
that it entails ". The case for piece-work in developing countries may
well be stronger in view of the relatively greater importance of material
as compared with social needs, and the nature of the industrial tasks
typically performed in a developing economy. A piece-work incentive
scheme, however, cannot be expected to compensate for the deficiencies
of poor management or to offset the inhibiting effects on motivation of
other factors.1
II. INTERNATIONAL ACTION

International organisations, particularly the I.L.O., have undertaken
a number of activities—standard-setting, action-oriented research and
technical co-operation—in order to help the developing countries in a
variety of fields mentioned in this document. It would seem, nevertheless,
that these activities (with the exception, perhaps, of management
development projects), either have not had a sufficient impact—possibly
because many factors bearing on the improved utilisation of industrial
manpower are interconnected—or have not been given a high enough
priority in the programmes of these organisations or in the requests
from developing countries for technical co-operation.
1
For a more detailed discussion of this topic see Report on the World Social
Situation, 1965, op. cit., Ch. XIII.

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More vigorous international action in selected fields might greatly
enhance the value of the developing countries' programmes for effective
utilisation of their industrial labour force. A list of the most important
of thesefields—withsome specific suggestions for international action—
follows.
The following priority measures are suggested to deal with the long
term, namely ensuring that a sufficient number of suitable people acquire
the needed industrial skills :
(a) developing vocational guidance and counselling work for industrial
manpower (principles to be applied for accelerated industrialisation,
standards, techniques); particular attention should be given to
vocational guidance for high-level industrial manpower and for
selected strategic occupations; model schemes of co-operation
between schools and vocational guidance services should be established; assistance should be given in the preparation of occupational
monographs for particular groups of countries; techniques of
gathering systematic information on industrial occupations might
be developed;
(b) raising the status of industrial work (study of methods to achieve
this; assistance in the organisation of national and regional production or productivity competitions; research on social and
cultural obstacles to industrial work and on ways to promote
key industrial occupations, such as managers);
(c) improving the selection process (research on selection techniques,
aptitude-testing, particularly for high-level or strategic industrial
manpower).
For the medium term, that of allocating and reallocating the industrial
labour force between industries, regions, occupations and enterprises,
the following measures are suggested:
(a) establishing or developing wages policies and machinery for their
implementation (see paper No. 8 below); particular attention
should be given to the question of minimum wage-fixing machineries
and systems of job classification and grading; international studies
on wage differentials for industrial work might be undertaken;
(b) improving employment market instruments ; the role of employment
services for industrial development and the scope and impact of
active manpower policies should be investigated; assistance in the
establishment of occupational registers;

3. UTILISATION OF MANPOWER FOR INDUSTRIALISATION

131

(c) improving recruitment and promotion policies; particular attention
should be given to the establishment of adequate recruitment
standards (work in this field should be linked with activities on
work study, job classification and grading, and trade testing);
(d) improving labour-management relations within the undertaking;
practices should be reviewed in the light of the various problems
bearing on the effective utilisation of industrial manpower;
(e) remedying adverse effects of the " brain drain " (research on the
scope, impact and remedies).
Finally, for the short term, namely improving the performance of the
industrial labour force, the following measures are suggested:
(a) nationalising the organisation of industrial undertakings of all sizes
(research on management techniques to cope with excessive work
content and ineffective time, on alternative staffing patterns based on
different occupational structures, on shift work and on the best
organisation of basic and further in-plant training; assistance to
industrial undertakings in improving organisation);
(b) developing optimum patterns of incentives (research on the combination of financial and non-financial incentives for industrial manpower, including management; research on the applicability and
impact of piece-work).
It is recommended that studies of the various problems mentioned
above should be undertaken in connection with international technical
co-operation activities in thefieldsof manpower assessment and planning,
educational planning, management development, vocational training,
vocational guidance, employment services, wage policy and industrial
relations. The conclusions to be drawn from such studies would be
particularly useful for the national Industrial Training Organisation
proposed in paper No. 2 above.

4. TRAINING FOR SMALL MANUFACTURING ENTERPRISES
IN DEVELOPING COUNTRIES
INTRODUCTION

Paper No. 2 above analyses the policies and practices of human
resource development for industrialisation in developing countries;
it deals with the fundamental issues underlying the mobilisation of manpower and with policies that public authorities should pursue to provide
manufacturing enterprises with skilled personnel at all levels and is
therefore not concerned with the effects that differences in the size of
establishments may have on training. The present paper attempts to
focus attention on a number of problems peculiar to small-scale manufacturing undertakings in developing countries, in so far as they will
influence the design and execution of training programmes to raise the
entrepreneurial, managerial and technical skills of small industrialists as
well as shop-floor operators.
The need for a single individual to perform a variety of functions for
which specialist personnel are available in large enterprises creates for
the small industrialist a pattern of work quite different from that of the
director of a large establishment. This will obviously have an impact on
the respective attitudes and skills required for the effective performance
of functions in the two sectors and the manner in which the process of
skill formation for either will be designed and organised. Equally, the
scale on which production in small manufacturing enterprises is carried
out will determine the type of production know-how and technical skills
required for their operation. In developing countries especially, the low
level of applied technology as a distinct feature of the small enterprise
will affect the scope and content of technical training programmes. These
and other factors justify special attention being paid to the question of
training small-scale industrialists.
For the purpose of this paper, small industrial enterprises are defined
as establishments for manufacturing, processing and servicing (installation, maintenance and repair). They differ from large undertakings by a
significant lack of specialisation in the entrepreneurial, managerial and
technical functions. Such small undertakings range from handicraft and
cottage industry establishments in which the owner works together with

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his family to artisan workshops employing hired labour and using
simple tools and equipment and the mechanised factory which may
employ up to 100 workers. The common denominator between them is
that a single working proprietor or manager has to exercise all the
entrepreneurial, technical and managerial functions himself, with the
help of one or two staff, such as a shop-floor supervisor, a book-keeper
or a salesman, at the most.
This paper is divided into two main parts. The first deals with the
subject of training small industrialists in the skills they require to discharge their entrepreneurial and managerial functions effectively and to
perform certain specialist tasks of a non-technical nature which, in a
greater or lesser degree and depending on circumstances, the small
industrialist has necessarily to carry out unaided. Training related to all
questions of production technology, including operative skills in manufacturing techniques for both working proprietors and workers, is
examined in the second part. While technical training questions are
examined not only in relation to the small industrialist for whom the
training is designed, but also as they affect the pattern of work of the
workers on the shopfloor,the question of entrepreneurial and managerial
training is approached from a more limited, strictly personal point of
view, as it has necessarily to be focused entirely on the small industrialist.
Finally, a few concluding observations are made.
I. TRAINING SMALL INDUSTRIALISTS IN ENTREPRENEURIAL
AND MANAGERIAL SKILLS

The Nature of the Small Enterprise
For a clear understanding of the subject of skill formation of small
industrialists, it is desirable first of all to get an appreciation of the
persons involved, the tasks they perform and the difficulties they
encounter when operating their enterprises. The growth of modern
industry in developing countries, and in particular the introduction of
manufacturing activities that constitute a technological break with
traditional handicraft industry, has given rise to the emergence of small
industrialists whose origin may be traced back to a diversified entrepreneurial background. In most of these countries, small manufacturing
enterprises are established by—
(a) skilled artisans, such as the village blacksmith and carpenter and the
urban motor repair man who combines technical skills, rudimentary
business talent and small savings that enable him to expand his
workshop gradually into a small manufacturing unit; it is specially

4. TRAINING FOR SMALL ENTERPRISES

135

in such trades as metal and wood work and tanning—trades
characterised by piece and batch production, where the " financial
threshold of entry " 1 into small-scale industry can be rather low—
that small factories emerge from the handicraft sector;
(b) merchants who are familiar with the marketing function in industry,
and who are generally aware of the opportunities for profit which
are the reward of domestic production of consumer goods as an
alternative to importation. This group is particularly active in the
processing industries, such as soap manufacture and textile weaving,
which have a low-to-medium financial entry threshold and do not
require great technical know-how for successful operation;
(c) landlords and farmers with large holdings, including rural traders
who control agricultural output and/or trade and who are frequently
engaged in agricultural processing industries such as grain-milling,
oil-pressing, cotton-ginning, logging and sawmilling; these industries
require a good understanding of produce marketing but rather
modest investment and limited technical knowledge;
(d) a very heterogeneous but far from negligible group: retired civil
servants and members of the armed forces with administrative
experience and leadership talent; young graduates of technical
schools who establish themselves as independent small businessmen,
particularly in the modern skill-intensive and technologically progressive industries (such as precision engineering); skilled workers
and foremen in large factories with some savings and a desire to
branch out on their own; educated persons with a rather specialised
technical knowledge (such as pharmacists) that can be profitably
invested in small processing units (including the pharmaceutical and
toiletries industries).
This brief summary indicates considerable variety in background and
experience of those establishing and operating small enterprises. For
many small industrialists, experience accumulated prior to joining the
small-scale manufacturing sector relates to technical skills ; they do not,
however, possess the required complement of marketing knowledge.
Others may be experienced in marketing operations, though such
1
The amount of money required to establish an industrial enterprise of minimum
economic size. Obviously, the financial threshold of entry varies considerably according to manufacturing activity. While in developing countries the establishment of a
small but adequately equipped automotive maintenance and repair shop may require
the investment of as little as United States $5,000, approximately SI million has to be
invested in a new cement plant of economic size; such investment amounts naturally
create an effective barrier to participation of small entrepreneurs in the latter type of
manufacturing activity.

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experience is not always an appropriate preparation for successful
management of an industrial establishment. Others still, with a civil
service or military background which has familiarised them with general
organisation, may have no business acumen. Some groups, like urban
merchants, are likely to welcome innovation and change, while small
industrialists emerging from the traditional artisan sector are generally
more conservative in outlook. This peculiar pattern of entrepreneurial
origin, and the corresponding imbalance in knowledge and skills, will
naturally influence the design of training programmes for small industrialists.
The very nature of the small enterprise further complicates training.
A small enterprise has its own peculiar structure; it is not a reduced
model of a large enterprise. No functional specialisation is possible,
neither are the functions of the working proprietor comparable to those
of the managing director of a large firm, even though the small entrepreneur also has to plan, organise and control. While he must deal with
questions requiring thorough technical knowledge—for instance the
choice of equipment—he cannot be compared with the works engineer
who specifies equipment for a large enterprise. The training and motivation of employees of a small enterprise also require a different approach.
The small industrialist, therefore, has to assume many—sometimes
conflicting—roles, which would seem to fall into four broad categories.
Firstly, the small businessman is an investor earning an income, and
ultimately a profit, from his business. While a shareholder may have a
relatively detached attitude towards operations in a business venture, the
private and occupational life of the small industrialist is often directly
influenced by investment decisions.
Secondly, he will generally possess to a greater or lesser extent certain
entrepreneurial qualities—energy and drive, physical stamina, willingness
to take risks, and a strong desire for independence. Those abundantly
endowed with these qualities will be interested in the growth of their
businesses ; those less endowed, in maintaining operation at a level which
provides them with an adequate income.
Thirdly, the working proprietor is the person who manages the
enterprise and who plans, co-ordinates and controls operations. This
management function is very rudimentary in a small establishment:
essentially, management is the art of getting things done through people,
and obviously, an enterprise operating with only a few workers leaves
limited scope to exercise the managerial function. When, however, the
enterprise grows in size, management becomes an increasingly important
activity which, in very large enterprises, requires the full-time attention
of those in charge.

4 . TRAINING FOR SMALL ENTERPRISES

137

In the fourth place, there is what might be called the question of the
specialist function. Because of the absence of functional specialisation
in the operational activities of a small enterprise, the working proprietor
is engaged in a number of activities which require a greater or lesser
degree of specific knowledge and skill for their effective execution. By far
the most important of these activities is the one related to all questions of
production technology, ranging from a general understanding of the
manufacturing process in which the enterprise is engaged to the ability
to carry out specific operational tasks on the shop floor. The working
proprietor is also directly concerned with buying and selling, financing
and managing his money and maintaining accounts and other records.
These activities, which in larger firms are carried out by specialist staff,
are inseparable from management.
The effective performance of so many, often conflicting, roles by one
man requires a balanced view of priorities. For instance, the craftsman
in him may resist a lowering of the quality standards which his sound
management thinking knows is the only answer to declining profit margins. He must concentrate on several functions at the same time, in both
the long and the short term. If he wants to adjust to changing conditions
he may have to select, install and test new equipment and plan the
instruction and training of personnel to work this equipment, while at
the same time carrying out routine tasks such as quality control, scheduling, maintaining relations with suppliers and customers, and having
consultations with government authorities. He must give attention to
each aspect in the proportion in which it is necessary. It is the difficulty
of balancing these activities which is the basic restraining influence in the
growth of small enterprises. In any training programme for small industrialists, therefore, the question of priorities and the balancing of tasks
must be given a great deal of attention.
It would appear that three variables basically influence the nature,
scope and intensity with which the small industrialist carries out his
functions.
The first variable which affects this activity is the nature of the manufacturing process. Some processes require the active and continuous
participation of the proprietor in all questions of technology, while others
more or less run themselves and the emphasis is on marketing. The first
group includes engineering, where the technical function looms large in
the activities of the small industrialist. On the other hand, in industries
such as flour-milling, oil-pressing, sawmilling and cotton-ginning,
success depends rather on commercial skills.
The second variable is the size of the enterprise expressed by one or
more factors—number of employees, capital invested, power, production

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value, volume of turnover—which, coupled with applied technology, is
probably the most important factor influencing the work pattern. The
following broad subdivision of the small enterprise sector may place this
question of size in perspective :
(a) household manufacturing undertakings (less than ten persons per
unit) located in or near the home of the skilled craftsman/owner, who
works on the shop floor and whose main objective is to earn a
livelihood;
(b) pre-factory enterprises situated near the home of the technically
skilled owner, whose main objective is to earn a living but who is
beginning to think in terms of profit rather than income; there is a
rudimentary division between technical production and other
activities ;
(c) small-scale factories (30 to 100 persons per unit) where the proprietor
is increasingly concerned with obtaining maximum profits, and
where, although he is very much involved in techniques of production within the limits of the technology, it is entrepreneurship and
management which dominate the successful operation of the enterprise.
Thus, in a firm which is moving up this scale, the proprietor's pattern
of work is affected by his changing role in the undertaking. In a small
establishment which is expanding, he will generally devote an increasing
proportion of his time to planning, co-ordinating and controlling operations. The growth of the enterprise will change him from a technician
with managerial responsibilities into a manager with technical responsibilities. As operations expand still further, the firm is prepared for subsequent growth into a medium-scale establishment by the emergence of a
management structure.
The third variable which influences the functions of the working
proprietor is the business environment. In a developed country the
owner of a small enterprise benefits from a highly developed system of
infrastructural facilities and services. He is assisted by specialised trade
associations, by industrial supply firms who provide technical advisory
services to clients, by institutions accustomed to dealing with people of
modest financial means, and by numerous public and semi-public
agencies whose sole purpose is to relieve him of certain operational
responsibilities and to help him participate effectively in the economic
life of the country. For example, by paying a small fee he can obtain
management control data without having to speciahse in this or to engage
a highly paid employee to do so. This network of supporting facilities

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139

is denied the small industrialist in a developing country, where the
economic organisation is inadequate.
Summarising, it would appear that a number of variables determine
on the one hand what skills the small industrialist in a developing country
requires in order to work eifectively, and on the other what skills he
brings with him when entering the manufacturing sector. To operate a
small enterprise he needs technical, commercial,financial,administrative,
entrepreneurial and managerial knowledge, and the extent to which he
uses these skills effectively will depend on the nature and size of his
manufacturing activity, and on the infrastructural facilities and services
available. Further, unlike his counterparts in industrialised countries,
he has to cope with the additional burden of a low level of applied
technology. Finally, problems arising from operations carried out on a
small scale cannot be solved by raising the levels of skills of those concerned; the solution lies rather in building up institutional facilities which
encourage mutual support between small and large enterprises. All
these factors call for an imaginative, highly diversified andflexibletraining programme for small industrialists.
Current Training Practices
Like so many other training programmes, those specially designed for
the systematic development of entrepreneurial, managerial and other
non-technical skills have, in fact, started in the developing countries only
since the Second World War with the establishment of an increasing
number of industrial development institutes and productivity and management training centres, partly with assistance from the International
Labour Organisation and the United Nations Development Programme
(U.N.D.P.). Courses oifered by these institutions, for managing directors
down tofirst-linesupervisors, are generally designed to meet the training
needs of personnel already engaged in all types and sizes of enterprises
and deal not only with general management subjects but also with such
techniques as production planning and control, marketing, accounting
and personnel management. Very little provision is made for advisory
or extension services after the completion of courses, although centres
established with I.L.O. co-operation emphasise the intrinsic need for inplant training, and much of the training is " quality-oriented ", with the
aim of upgrading the skills of specialised personnel such as works
engineers and accountants. Such courses are frequently supplemented by
" problem-oriented " training programmes dealing with such common
problems as labour-management relations, staff training, communications within the enterprise and interpretation of statistical information.
10

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This emphasis on specialist training is particularly useful for professional managers and technical and administrative personnel employed in
larger enterprises with a functional management structure; its usefulness
is, however, progressively reduced when it is applied to smaller enterprises where small industrialists together with their few assistants invariably carry out a number of tasks for which the larger enterprise has
specialised staff at its disposal. Moreover, the organisation of training
programmes for small industrialists raises a number of problems which
are significantly different from those generally encountered when management development programmes for personnel employed in larger enterprises are being designed. A recent I.L.O. meeting x has identified some
of these problems as follows :
(a) lack of interest in, and lack of appreciation of, the value of training;
(b) low level of basic education;
(c) extremely wide variety of technical subjects to be covered, together
with a wide range of levels at which business management and
technical training are needed. This militates against the adoption of
a common programme and requires a wide range of teaching skills;
(d) difficulties encountered by small entrepreneurs in leaving their
enterprises in order to attend training courses held during working
hours some distance away;
(e) lack of funds to pay for the cost of training; even if training is provided free of charge, expenses for travel, board and lodging while
attending institutional courses may be a burden; even if funds are
available, the small entrepreneur may be reluctant to spend money
on training which, to him, has an intangible value;
(f) lack of local training personnel in the numbers needed, those that
are available often having inadequate knowledge;
(g) the high cost of providing institutional training on such a variety of
levels and subjects.
In the latter part of the 1950s several countries, particularly in the
Asian region, realising the difficulties experienced by existing industrial
development and management training institutes in running courses for
1

Conclusions on Small Enterprise Development in Africa, I.L.O. Technical Expert
Meeting on Development of Managerial and Entrepreneurial Resources in Africa,
Addis Ababa, December 1966, document Man.Dev./Africa Meeting/33 (mimeographed). While this Meeting examined the question of training problems for small
industrialists in relation to Africa, most of its conclusions are relevant to developing
countries at large.

4. TRAINING FOR SMALL ENTERPRISES

141

small enterprises, set up special programmes for training in entrepreneurial, managerial and technical skills, often with U.N.D.P. and
I.L.O. assistance. As far as possible, training—usually in the form of
free evening courses—is organised for each manufacturing activity in
such public agencies as small industry service institutes offering an
integrated system of research, training, and advisory and extension
services. In addition to courses considered useful for small plants, such
as inventory control, work study and cost accounting, courses are
frequently held to upgrade skills or to introduce small industrialists to
new manufacturing equipment and processes and to inform them of
government policies and plans for the small industry sector (loan and
credit facilities, provision for modern workshop space on industrial
estates).
With a few exceptions, training courses for small industrialists in
developing countries would seem to suffer from two defects: firstly,
they are, by and large, " miniaturised " versions of those designed for
management personnel employed in larger enterprises or are " rehashed "
material taken from courses prepared in industrialised countries; and
secondly, insufficient attention is given to relating the course material
to the operational requirements of a particular manufacturing activity.
The effectiveness of such training efforts is therefore reduced, particularly
since very little literature exists on operational practices, structure,
needs and stages of development of small industries in developing
countries, and on the effects of given production technologies on operational arrangements in such enterprises. This area presents a wide field
for useful research in the interest of the design and execution of training
programmes for small industrialists.1
Guidelines for Training
The previous analysis of the nature of small manufacturing
enterprises and the problems they are facing in developing countries
would suggest a number of guidelines for the design and execution of
training programmes for working proprietors. They may be briefly
summarised as follows:
1

Useful material, such as case histories, describing specific operational practices
in small enterprises in developing countries, is being collected by various small industrial development agencies that operate in collaboration with the I.L.O. ; arrangements
are currently being made to collect, classify and interpret this case material for the
preparation of an authoritative handbook on management practices and training needs
of small industrialists in developing countries, to be published as a companion volume
to Services for Small-Scale Industry, Studies and Reports, New Series, No. 61 (Geneva,
I.L.O., 1961).

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(a) Training of small industrialists demands a comprehensive
approach to assist them both in developing the attitudes required to
cope effectively with problems of change and growth and in upgrading
their business skills. To this end, three main training methods should be
employed: classroom instruction, field observation, and training within
the enterprise.
(b ) To be fully effective, training should be supported by programmes
to raise the general educational level of the small industrialist so that
he may better understand the environment in which he works, the social,
economic and technical forces to which his enterprise is subjected, and
the contribution he may make, alone or in co-operation with other
small industrialists, to the progress of his business; adult education
programmes, adjusted for the purpose, may be suitably applied.
(c) Given the generally low educational level, most small industrialists
will find it difficult to translate abstract concepts explained in the classroom into practical action in their enterprises. Training programmes
should therefore make ample use of modern methods imparting knowledge in small, graduated steps, at each of which the trainee can check
whether he has absorbed the information before proceeding to the next.
Use should also be made of visual aids of all kinds, situations experienced
or witnessed rather than simulated ; on-the-job training, group visits,
in-plant training exercises, marketing clinics and other forms of training
by participation are preferable to desk study.
(d) As far as practicable, instructional staff should be recruited
from specialists working in industry, as such persons will bring to the
programme an understanding of business operations which professional
teachers seldom possess ; brief teacher training courses may be organised
to develop the required instructional and pedagogical skills.
(e) Ideally, all training programmes should be designed around a
single manufacturing activity, in order to integrate a variety of skills
into a single operational tool. In this way the small industrialist is better
able to see the interrelationships between various terms with which he is
familiar. Further, this approach will provide the small industrialist with
a better understanding of how critical a factor is interplay of commerce
and technology. For instance, he will see how production processes
affect commercial practices and how advanced production techniques
may increase the profitability of the enterprise.
(f) Advanced entrepreneurial and managerial skills can make their
full contribution to the progress of the enterprise only if reinforced by
other measures taken to promote the undertaking, such as the intro-

4 . TRAINING FOR SMALL ENTERPRISES

143

duction of modern equipment, joint action between small enterprises
to benefit from economies of scale, and, in general, government measures
to create an environment that is conducive to the development of small
enterprises. Therefore, training should not proceed in isolation but
should be designed as an intrinsic part of an over-all effort to develop
one particular manufacturing branch. In this way the effectiveness of
certain promotional measures will be enhanced : for example instruction
in elementary accountancy, including the preparation of financial
statements required by banking institutions, can be turned to account
when a loan scheme for small industrialists is initiated.
(g) The preparation of training programmes should begin with
systematic research into current operational practices in the small
industry sector. Groups of small enterprises engaged in similar manufacturing activities should be studied with a view to—
(i) identifying the technical, economic and managerial problems facing
the enterprise, and assessing what measures should be taken to
develop the manufacturing branch as a whole;
(ii) determining what changes should be effected in the current pattern
of management practices, and what additional skills the small
industrialist needs to make operations more effective;
(iii) designing a suitable training programme, including the selection
of the most effective training method, having regard to the
educational level and previous experience of the trainees.
(h) Training programmes should come up for revision at set intervals
so as to determine what course material has become superfluous or has
to be replaced because of developments in the manufacturing branch
concerned; particular care should be taken to omit information that is
not directly relevant to the operational needs of the enterprise so as not
to burden the small industrialist with knowledge that he cannot actually
apply in his undertaking.
(i) All training programmes initiated by public authorities for the
promotion of small enterprises should be carried out in close co-operation
with associations of small industrialists and representatives from industry
and the manufacturing branch concerned, so as to determine the effectiveness of the programmes and the changes which should be effected.
Since this training should ultimately be carried out by the trade associations themselves, with the co-operation of the public authorities, the
formation of such associations should be actively promoted, possibly
through a suitable system of incentives.

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(j) Training should have three broad objectives:
(i) to prepare enterprising persons who wish to participate in manufacturing industry in a proprietary capacity in the knowledge and
skills they need for the successful establishment and operation of
their business ;
(ii) to raise skills of existing small industrialists so as to enable them to
fully utilise the resources available to their enterprises ; and
(iii) to assist small industrialists with growth potential to achieve a
rational expansion of their enterprises.
(k) Training programmes to prepare potential small industrialists
should start at school—in technical and vocational training institutions.
They should be organised in close co-operation with the public agency
responsible for the promotion of small enterprises and should aim at
giving the students an understanding of the responsibilities of the work
and a chance to see at first hand under expert guidance actual operational
practices, both the handicaps and the advantages, in a small enterprise.
They should also grasp the elements of procedures to establish new
enterprises, such as obtaining sufficient finance ; selecting and procuring
equipment; supplies and materials; and making appropriate marketing
arrangements.
(I) Training for prospective small industrialists may proceed in two
stages :
(i) short appreciation courses to provide an understanding of the
nature and major aspects of an enterprise, and the operational
skills required for its successful management; such programmes,
not necessarily designed around a single manufacturing activity,
may help a prospective small industrialist to avoid mistakes frequently made by inexperienced persons, such as starting out with
insufficient operational capital, or without acquiring the necessary
technical knowledge;
(ii) courses of longer duration to prepare prospective small industrialists
for their future task, preferably organised for a single manufacturing
branch. Ideally, courses should be divided into two distinct periods :
the first prior to establishing the enterprise, and the second during
its initial operation. During the induction period, trainees should
receive instruction in entrepreneurial and managerial skills, including, as necessary, specific technical and administrative skills.
During the second period trainees established in business will
bring to the classroom their day-to-day problems; these will be

4 . TRAINING FOR SMALL ENTERPRISES

145

examined, solutions offered and, where necessary, additional
theoretical instruction given to fill the gaps. This phase should
particularly emphasise the application to the trainees' situations
of theoretical instruction imparted during the first part of the
training programme, ample use being made of in-plant training
exercises.
(m) Training to enable existing small industrialists to fully utilise
resources available to them may proceed in three stages :
(i) programmes organised, preferably in small groups, to familiarise
small industrialists with modern entrepreneurial and managerial
skills, using the self-education process of discussion of common
problems and possible solutions under expert guidance;
(ii) sufficient interest having been stimulated in modern entrepreneurial
and managerial skills, working proprietors and responsible staff of
comparatively larger enterprises in the small industry sector would
be further trained by specialised courses dealing with operational,
administrative, technical, financial and commercial questions,
wherever possible drawn from their own experience; they should
also be given expert help in applying newly learned skills to their
own enterprises ;
(iii) small industrialists should undergo periodic refresher courses designed to give them the information needed to adjust their enterprises
to new developments in technology, management and general
operational practices.
(n) Training of small industrialists who operate enterprises with
significant growth potential should concentrate on identifying and
eliminating bottlenecks and on preparing for the expansion of the
enterprises by teaching skills necessary for managerial, as distinct from
technical, functions. Field visits to larger establishments, organised on
lines similar to circuit schemes, often help to broaden outlooks.
(o) Consideration might be given to setting up and operating along
commercial lines, in association with the public authorities responsible for
training, a " model enterprise " where small industrialists can observe
and practise management skills in day-to-day operations. Such a set-up
would also provide teaching staff with the opportunity of carrying out
action-oriented research.
(p) The utility of the " model enterprise " can be enhanced by
organising it as a " training enterprise " which, in addition to setting an
example for observation and study, will also provide facilities to train

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new small industrialists and upgrade existing ones. Modern apprenticeship training methods for technical skill formation could be integrated
with on-the-job training and related classroom instruction in entrepreneurial and managerial skills. Further details of the functions which
a " training enterprise " might perform are given on page 147 below.
Practical Applications: Integration of Managerial Training
As suggested earlier, entrepreneurial training efforts are likely to be
more successful if conceived and implemented as an intrinsic part of an
over-all plan of action to develop the small industry sector. The lack of an
integrated approach is probably the most serious, widespread and persistent problem facing public efforts to develop small enterprises. For instance, new enterprises may be actively encouraged, while no provision is
made for the steady flow of raw material, and credit schemes may be
frequently initiated without appropriate guidance on how to invest the
borrowed money wisely. In turn, lack of knowledge of the operational
practices of the small industry sector and the absence of organisational
machinery to consult small entrepreneurs on the preparation and execution of public policies and programmes being designed in their interest,
lead to disappointing training results, frustration among entrepreneurs
owing to badly timed action, and their subsequent distrust of the efficacy
of publicly sponsored training schemes.
When attempts are made to develop a nation-wide, integrated system
of promotional services to assist all types of manufacturing enterprises,
irrespective of size or location, so many administrative difficulties arise
that a more effective approach might be training for groups of enterprises,
by geographical area and identical business and technical interests. Those
responsible for such training, together with an interested group of small
industrialists, would plan and execute enterprise group training programmes within the framework of the industry group as a whole. This
would call for a number of different kinds of investments—human, material
and institutional, preferably expressed in quantitative terms—which would
yield predetermined output targets within a specified time. To ensure the
effective utilisation by industry of the means at its disposal, special
planning, co-ordinating, motivation and control systems would have to
be developed so that the quality and scheduling of the programmes
would ensure the attainment of targets such as the creation of new
employment.1
1
A model for such planning and control systems may be found in the operational
practices of large multinational corporations that control a number of geographically
dispersed manufacturing establishments.

4. TRAINING FOR SMALL ENTERPRISES

147

While the most important contribution in human terms would
undoubtedly be that of raising levels of skills of small industrialists and
workers alike, the corresponding institutional measures would determine
the organisational form of training programmes, which could, for
example, be carried out by co-operative training societies. The advantages
of such an integrated training approach to small enterprise promotion
are evident. For instance, integrated training in improved foundry techniques would reduce wastage of raw materials frequently requiring the
outlay of scarce foreign exchange resources. (Funds formerly tied up in
stock would thereby become available for other more productive purposes ; this, in turn, will require training in financial management and the
rational selection of investment alternatives.)
Finally, the concept of the " training enterprise " mentioned earlier
might be particularly useful in countries in the early stages of industrial
development and lacking a craft tradition, including countries in Africa
south of the Sahara. There special " live situation " programmes would
be required to train small industrialists in entrepreneurial and managerial
skills and modern production technology. This might be done by establishing, as part of the industrial development programme of the country,
" training enterprises " with adjoining training bays, each catering for one
specific manufacturing sector and operating as a bona fide commercial
undertaking with its own capital and profit-and-loss account. Responsibility for keeping losses to a strict minimum and running the training-cumproduction centre would be vested in an instructor.
The courses would reproduce traditional European apprenticeship
arrangements, providing integrated on-the-job training in both the
technical and managerial aspects of the enterprise. Each trainee—selected
according to set minimum requirements regarding technical qualifications and experience—would work in a " training enterprise " with
people of closely related interests under the close guidance of the instructor. The programme could be based on the actual tasks and functions of
the owner-manager in the particular branch of activity, the length of
the training period varying accordingly; trainees would assume in turn
the role and functions of the working proprietor, including administration, record-keeping and costing. Supplementary classroom instruction
would be given in the training bays. At the end of the training period—
which might last up to two years—the graduate would be assisted to
establish himself as a small entrepreneur, possibly on an industrial estate
so as to facilitate the follow-up provided by the government extension
service. In this way, he would have the benefit of continuous advice and
guidance as well as common technical and service facilities to help him
operate his undertaking efficiently and profitably.

148

II.

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

THE TECHNICAL TRAINING OF SMALL INDUSTRIALISTS AND WORKERS

The Present Situation
On-the-job training is, by and large, in industrialised as well as in
developing countries, the main method through which workers acquire
the knowledge and skill necessary for effective participation in the
manufacturing industry. Such training is normally supported and
reinforced by technical schools and vocational training centres, particularly with regard to occupations with a high skill content like those
concerned with the metal and electrical trades. In these institutions
young people are introduced to basic industrial skills prior to, or in
conjunction with, receiving on-the-job training under actual production
conditions in the enterprise. Training programmes are organised mostly
along occupational lines; only in a few instances are training facilities
designed around a particular technology to be applied in small enterprises as a distinct type of industrial organisation. In the developing
countries training of the latter type is largely directed towards improving
handicraft skills for the development of the pre-industrial manufacturing
sector, such as handloom weaving and pottery. As regards the modern
small-scale enterprise sector, isolated efforts are being made to raise
levels of skills in certain occupations, normally in short supply, that
constitute a bottleneck in the growth of small enterprises, such as training
in blueprint reading, heat-treatment and metal-coating for the light
engineering trades, chrome-tanning to supplement the traditional
vegetable-tanning techniques, and the like. Promotional agencies like
the small industry service institutes are particularly active in the latter
type of training.
Notwithstanding the efforts of the public authorities in developing
countries to expand technical training facilities in order to meet the
increasing need for skilled personnel at the shop-floor level, the demand
for such persons invariably exceeds the supply. Moreover, the training
systems in these countries are conceived to serve the requirements of
government technical departments, medium- and large-scale industry,
and commerce. The same normally applies to the activities of the
vocational and technical education branches of the educational system.
In view of this it is not surprising that the existing training system hardly
contributes to the progress of the small enterprise sector.
The low level of technology in the small enterprise sector further
reduces the usefulness of the prevailing training system. Low levels of
technology restrict earning capacity; invariably, therefore, wages, including fringe benefits, paid in large undertakings for selected occupa-

149

4. TRAINING FOR SMALL ENTERPRISES

tions are appreciably higher than earnings of workers similarly engaged in
small establishments; wage levels in large modern manufacturing
complexes are often twice or even three times those found in small
industrial units located in backward rural areas. Under such circumstances it is understandable that young workers on completion of their
technical training, during which they are exposed to modern patterns
of behaviour and thought, are most reluctant to spend their working
life in small enterprises where earnings are low, working conditions,
welfare facilities and social security coverage sub-standard, and opportunities for advancement under progressive management invariably
limited.1 Moreover, those few people who join a small enterprise will
quickly discover that the level of applied technology does not provide
them with the opportunity to exercise their skills because their previous
institutional training has been related to technological practices and
organisational methods prevailing in larger industrial undertakings.
This will obviously lead to frustration and disillusion and to a desire to
seek employment elsewhere.
In addition to getting trained personnel from the public training
system, an increasing number of large-scale manufacturing enterprises
in developing countries provide opportunity for new entrants to acquire
skills or to upgrade them under special training arrangements within the
undertaking. Such training is being organised in " training bays " or
" vestibule schools ". These are training units, set up as an integral part
of the enterprise, in which the equipment actually used on the shop
floor is duplicated as closely as possible so as to provide training and
skills actually needed in the undertaking concerned. Obviously small
enterprises do not have the opportunity to establish their own in-plant
training centres. They could, however, overcome this disadvantage by
joining together and organising their training needs on a co-operative
basis. Unfortunately, such co-operative training arrangements, which
1
In Japan, for example, the wage differentials, as measured by cash earnings
according to trie size of the establishment were as follows in 1961 :

Number of
workers employed

500 and over
100 to 499
30 to 99
5 to 29

Wage index

100.0
74.5
61.7
49.3

To some extent the wage differentials reflect the skill differentials implicit in the scale
of operations. But detailed investigations have shown that the wage disadvantage of the
employee of a small-scale undertaking is real. A Ministry of Labour inquiry in 1954
showed, for example, that in a rolling mill the wage index for a male roller aged
between 30 and 35, with five to ten years' experience in the trade, would be 100 in an
establishment employing 1,000 or more workers, but only 66 in an establishment

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

are widely practised in Japan 1, do not exist in developing countries.
This is due partly to an absence of effective joint action among small
employers and between trade associations and vocational training
centres located in the vicinity of the small enterprises ; and partly to a
lack of understanding of, and guidance in, matters of skill formation
with special regard to the training needs of small industries under conditions of continuous and accelerated technological change.
As a result small-scale industry in developing countries still resorts
to the age-old informal apprenticeship system whereby the worker
learns the necessary skills and patterns and habits of work by observation, helping and imitating skilled operators until he has learnt to do
all the jobs of the trade. Only in the very small enterprises and in the
typically creative handicraft shop will the workshop owner, generally a
skilled person himself, endeavour to systematically initiate in the skills
of the trade members of his family when they join the enterprise, or
young people specially apprenticed to him to learn the job. The informal
apprenticeship training system no doubt performed a useful function in
the past when levels of applied technology were largely static and when
generation after generation of craftsmen used the same tools, equipment
and materials to manufacture largely identical products for a traditional
consumer market. The system is, however, becoming increasingly
ineffective, for the workers have now to be prepared for productive
employment in a dynamic society, characterised by rapid technological
progress, by changing consumer preferences, and by newly evolving
organisational patterns in commerce, trade and industry.
These informal apprentice-training arrangements have several
limitations: they tend to perpetuate, rather than correct, defective and
obsolete methods of work; they do not equip the young with the skills
required to modernise the industry; and they do not contribute to
standard performance in manufacturing. This latter disadvantage is
particularly unfortunate since it hampers production arrangements
mutually advantageous to both small and large enterprises, and places
the small plant at a disadvantage when competing in non-traditional
markets. The present informal apprenticeship arrangements must be
reinforced and expanded by modern systems of education and training
employing ten to 29 workers. These disparities are all-round and relate to economic and
social conditions of workers in small-scale and large-scale enterprises: they cover not
only wage levels but also working conditions, hours of work, security of employment,
social security, and welfare levels. See I.L.O.: Some Labour and Social Aspects of
Economic Development, Report of the Director-General, Fifth Asian Regional Conference, Melbourne, 1962 (Geneva, 1962), p. 68.
1
Keiji SOEJIMA: " A Break with Tradition ", in Training for Progress (Geneva,
I.L.O.), Vol. 3, 1963, No. 1, pp. 6-11.

4 . TRAINING FOR SMALL ENTERPRISES

151

if small industry in developing countries is to be rejuvenated by young,
well-trained workers with new attitudes and skills.
Like the small enterprise workers, small industrialists are also at a
disadvantage when compared with their counterparts in industrialised
countries. They, too, generally lack systematic training and formal
instruction in technical skills, since those with sound technical education
prefer, for reasons already explained, to seek employment in other
sectors. Those with an artisan background have the advantage of shopfloor experience, but they lack the education needed to upgrade themselves by independent study or other informal instruction. The absence
of a technically well-educated class of working proprietors, apart from
a small minority of graduates of technical schools, naturally inhibits
rapid technological change in the small enterprise sector.
Technical Training Needs of Small Enterprises
When deciding what arrangements would be best suited to meeting
the technical training needs of the small enterprise sector, a brief reference may be made to operational differences between smaller and larger
enterprises.
In the first place, the workers in small enterprises must be versatile.
In large establishments, especially those engaged in mass production,
workers are obliged to work one machine set to perform a specific task.
By contrast, the very nature of piece or batch production by the small
enterprise leaves much to the workmanship of the operator, who may
not proceed according to a predetermined schedule of operations and
who often has to use several different machines in order to produce the
finished article. Obviously, a worker who has to operate under such
conditions should possess a wider skill range than the operator in a large
engineering works performing only one job under continuous and close
supervision. With this greater versatility should go certain corresponding
human qualities, such as imagination and the ability to shift quickly
from one operation to another.
In addition, because of the small scale on which operations are
carried out, the small enterprise generally utilises, side by side, production
technologies of varying degrees of mechanisation and technical complexity. To take an example from the small machine shop: while the
nature and volume of work may warrant the purchase of a drilling
machine, the volume of milling work may be too small for a separate
milling machine, and a lathe may have to be fitted with additional
accessories for the purpose.

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

The position is further complicated in developing countries, where
technology varies not only within a single enterprise but also between
small enterprises belonging to one manufacturing branch, and even
more so between smaller and larger undertakings, where the gap in
respective technological levels is wide. This gap is the result of a variety
of factors. In general, capital is dear in developing countries; it is particularly so for small working proprietors who have limited access to institutionalised credit and who therefore have to avail themselves of informal
credit arrangements at significantly higher interest rates; this will obviously restrict the introduction of modern and more expensive equipment.
Additional factors that contribute to a low level of applied technology
in the small enterprise sector include a lack of technical information and
production know-how, lack of skilled personnel and, above all, the fact
that most modern equipment available on the market is designed for use
in industrialised countries with radically different resource endowments
from those prevailing in developing countries.1 In spite of all these
limitations, it is perfectly feasible to introduce advanced technologies
into small enterprises, but this will demand a far faster rate of skill
development than did their gradual introduction over a longer period of
time in larger enterprises. Thus, the carpenter in a developing country
who manufactures furniture by joinery work and hand assembly will
require substantial retraining when he has to operate more complicated
equipment such as the combined chisel-and-chain mortising machine,
or when he has to cope with veneer finishing instead of using brush and
paint.
Further, technical training in the small enterprise sector is not limited
to workers but will have to include small industrialists as well. To
operate his enterprise efficiently the working proprietor has to possess,
in greater or lesser degree, a profound knowledge of the technology in
which his enterprise operates, as well as manual and operative skills;
the extent to which such knowledge and skills are required will depend
on the type of manufacturing activity and scale of operations. Moreover,
in very small enterprises, the working proprietor may frequently have
to join production on the shop floor if the scale of operations does not
justify employment of a full-time technical specialist, or if he has to
supplement certain operative skills lacking in his workers. While it may
be sufficient for the working proprietor of a larger foundry to keep
abreast of advances in foundry technology, the small proprietor often
requires training in certain skills.
1

This question is examined in detail in paper No. 7 below.

4 . TRAINING FOR SMALL ENTERPRISES

153

There is a final important feature : the proprietor himself is generally
responsible for training his workers for a continuously changing situation
which demands new types of products and corresponding changes in
applied technology. The need for, and implications of, accelerated change
and adjustment should be understood not only by the working proprietor
but also by his workers, so that everyone involved realises the necessity
of co-operation in modernising the enterprise. The large establishment has
ample opportunity to manipulate labour productivity successfully by
selected organisational and managerial techniques and the utilisation of
capital-intensive technologies. The small enterprise, however, if it is to
continue to run at a profit, has to rely largely on the attitude and motivation, knowledge and skills of its working community, from the proprietor
to the workers. Progress in the small enterprise depends essentially on
social and technological change; while technological level is a critical
factor for the future of small business, even more will depend on the
personal initiative, the ability to adjust, the desire to innovate and to
progress, the wish to learn new things and to abandon obsolete notions
that will gradually lead to a more rational system of industrial organisation. To be really effective, a technical training programme cannot ignore
the problem of developing in the working community of the small
enterprise the attitudes necessary to turn advanced technical skills to the
best account. This will require a training system that will blend technical
instruction with personality development, which in turn will enable the
working proprietor to carry out his training task in the best manner
possible.
Guidelines for Training
The previous analysis of the current position would suggest that, in
framing a national policy for technical and vocational education and
training in support of industrialisation efforts, care should be taken to
ensure that it meets the conditions and requirements not only of larger
but also of smaller manufacturing industry. In the design and execution
of training programmes, therefore, consideration might be given to the
following guidelines :
(a) Technical training programmes for the development of small
enterprises should be fully integrated in the training policies for both
smaller and larger manufacturing industries. To ensure full and undivided
attention to the training needs of the small industry sector, it might be
necessary to establish one or more organisational units within the public
authority—or authorities—responsible for education and training in
both production and management techniques. Such units should be
concerned primarily with providing counselling services to government

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

agencies for small-enterprise development and other public and private
bodies, such as trade associations or co-operative training societies, in
all matters of technical and managerial training for all levels of the
labour force of small manufacturing enterprises.
(b) Technical training of working proprietors should be integrated
with training in entrepreneurial and managerial skills in order to ensure
that any large-scale public training effort should be initiated only when
the owner of the small enterprise has been convinced of both the need
and the advantage of technical training for industry; this will enable
him to fully utilise higher levels of labour skills in his undertaking. Moreover, training schemes should provide the working proprietor with a full
understanding of the interplay of management and technology and the
contribution that a progressive technology can make to the profitabiUty
of the enterprise. In particular, they should provide him with essential
advanced skills.
(c) Technical training for working proprietors, foremen and operatives should be designed to the largest extent possible around a particular
manufacturing technology, rather than organised along occupational
lines. This will not only create among trainees a common interest in the
skills being taught but will also aid learning by reference to production
processes with which they are familiar. In addition, it will increase their
skill range and thereby contribute towards the technical versatility required for successful operations in a small establishment.
(d) Because the resources in terms of funds and specialist manpower
required to design and execute such training schemes are necessarily
limited, priorities should be established firstly as to the manufacturing
branch or branches to which training efforts should be particularly
directed, and secondly, as to the sizes and types of enterprise that are
likely to benefit most from public training programmes.
(e) Under conditions where the demand for skilled personnel
exceeds the supply by a wide margin, and where larger enterprises will
command a premium over small establishments when employing workers
with adequate vocational preparation, it is unlikely that the normal
education and training system will contribute in significant measure to
raising skill levels in small industry. Technical training efforts, therefore,
should be directed primarily to training workers already employed in small
industry, rather than providing vocational preparation for new entrants
to the labour force, who will continue to find employment in large manufacturing industry. The success of publicly sponsored training programmes for employed workers will largely depend on the direct and

4. TRAINING FOR SMALL ENTERPRISES

155

visible contribution that higher skills can make to the productive efforts of
the small industrialists who are required to participate in them.
(f) Since on-the-job training without vocational preparation will
remain for years to come the machinery for technical skill formation in
small industry, training programmes should aim at gradually reinforcing
and completing the traditional informal apprenticeship system through
raising the technical content and adding elements of modern apprenticeship training practices, including the introduction of trade testing, the
provision for related classroom instruction and the upgrading and standardisation of conditions of employment. As the working proprietors
(including supervisors, foremen and key workers on the shop floor
engaged in the larger establishments of the small industry sector) are the
main agents for technical progress, steps should be taken to equip them
fully with the knowledge and skill required to initiate and carry out such
training.
(g) In designing the training programmes particular account should
be taken of likely changes in applied technology, methods of work, product choice and job content; this would be preferable to basing them on
existing manufacturing practices in small industry.
(h) In respect of new manufacturing activities, emphasis should be
placed on integrated technical and managerial training of groups of
prospective small entrepreneurs and key workers for the industry. Such
training programmes might be conceived on an ad hoc basis, leaving it
to a few established industrial pioneers to set the pace for others who,
encouraged and supported by suitable incentive and extension schemes,
would further expand the industry by setting up additional enterprises.
Practical Applications: Integration of Technical Training
Earlier in this paper (page 146) mention was made of the need to
promote the development of small enterprises through an integrated programme whereby a number of investments are expected to yield a number
of predetermined outputs. In projects of this kind, technical training
would feature as a prominent investment; the effectiveness of a training
programme organised on a group basis is likely to increase manifold if
the training effort is supported and reinforced by complementary measures taken in the interest of the enterprise group as a whole. Such group
training may be arranged under a scheme whereby several undertakings
associate, for example providing related instruction, ensuring the full
training of apprentices by rotating them among firms and employing a
full-time instructor or training officer for the planning, organisation and
n

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control of training. But most important is that such group training will
recuperate some of the advantages of the journeyman system, customary
in traditional European apprenticeships, which constitutes a period of
rotation designed to give the trainee a broader comprehension of his
trade, versatility in skills, knowledge of new methods and an understanding of the differences in operating conditions applying to his trade in
different areas.
The successful operation of joint training co-operatives requires
facilities to provide related classroom instruction in theoretical and
manual skills. This could be provided by technical schools and vocational
training centres. The great majority of these institutions operate in the
same manner as in industrialised countries: they generally follow the
normal scholastic pattern of day-time instruction with a weekly rest day,
interspersed with periodic holidays. Such an operational system may be
justified in high-income countries, but in developing economies it would
seem to constitute a waste and a serious under-utilisation of an important
resource. In these countries the technical schools and training centres
could probably double their output with little increase of investment in
fixed plant if they were geared to the training needs of small industries ;
this would also save appreciable public funds—including foreign exchange—invested in premises and equipment.
Obviously, numerous practical difficulties will have to be overcome
before training institutions can be fully utilised. Additional equipment,
more suitable for small enterprise operations, may have to be added;
special teaching aids will have to be developed to facilitate training of people experienced in industry but with little or no general education; extension service units will have to be located in the institutions to maintain
close liaison between training and industry and to ensure that all training
activities are integrated in over-all small industry promotion; additional
instructors will have to be employed and specially trained to cater to the
needs of groups of students accustomed to less elaborate manufacturing
processes. But the problems involved to effect these necessary adjustments would seem minor as compared with the considerable benefits that
will accrue when an apparently neglected resource in the national vocational education and training system is fully utilised.
Moreover, technical and vocational education and training institutions, utilised in the way suggested above, could easily double as technical
and managerial extension and information centres for small enterprises.
Training in advanced skills is not enough; a considerable amount of
technical follow-up is necessary in order to ensure that trained people,
both working proprietors and operatives, will fully apply their skills
under conditions prevailing in their own enterprises. Certain elements of

4. TRAINING FOR SMALL ENTERPRISES

157

technology are best introduced in industry through in-plant instruction.
Apart from the advantages for the enterprises thus assisted, it is likely
that closer contacts between training centres and industry will give the
teaching staff a better understanding of operational conditions in industry,
which will consequently better equip them for their training task.
One might further visualise a development whereby the technical
education and training institutions would include plant and equipment
for common production facilities (e.g. jobbing services in heat treatment
or buffing in leather processing), which the small enterprise cannot run
itself for reasons of cost or lack of specialised skills. Such common
production centres could also be used to provide in-plant training for
small industry personnel, thus allowing more intensive utilisation of
available staff and physical resources of technical schools and training
centres.
Further, with little additional effort, other facilities existing in large
firms and in military establishments could be utilised in the interest of
technical training for small enterprises. Many large undertakings,
including those operating in the public sector (such as the railways and
public works departments) maintain subcontracting arrangements with
small enterprises, or could easily develop such arrangements by promoting the creation of small units to provide them with the parts and
components they require; action of the latter type is being taken by
public sector enterprises in India with apparent success.1 Technical
training schemes would fit in logically in any subcontracting arrangement. This is particularly so since skill levels required to manufacture a
product successfully are best determined in co-operation with the parent
firm, which establishes specifications for the products to be subcontracted.
Similarly, large firms manufacturing or distributing industrial
supplies could usefully co-operate in government training schemes for
personnel engaged in small enterprises. For example, raw-material
processing plants (e.g., aluminium processing works) and trading firms
for the distribution of supplies (like those that market synthetic dyes)
frequently maintain as a part of their sales promotion and marketing
efforts industrial advisory services of which the small firms particularly
take advantage. Co-operation could be sought with these services in the
setting up and execution of training schemes for small plants, thereby
1
Under a^scheme initiated by the government-owned Hindustan Machine Tools
Ltd. in Bangalore highly skilled craftsmen are being selected and given additional
training so as to prepare them to operate small light engineering shops (10 to
20 employees per establishment) located on an industrial estate adjacent to the factory.
These small enterprises manufacture under subcontract certain parts and components
for assembly in the parent factory. Through periodic retraining arrangements the small
working proprietors are kept up to date in technical and managerial skills.

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taking advantage of an existing machinery which will save effort and
reduce cost. In all the instances described, training programmes could
establish an organic link between smaller and larger firms; this would
either improve performance in the manufacture of the subcontracted
products or provide for a more efficient utilisation of supplies marketed
by large firms.
Further, the many training facilities available in military establishments can also be used in the interests of promoting small enterprises.
As a result of technical training during military service to meet the needs
of the armed forces, many skilled people, such as mechanics and electricians, are regularly added to the civilian labour force. It would appear
that existing arrangements could be improved and expanded to ¿upply
the small enterprise sector with skilled personnel, without imposing
undue burdens on the military establishment. Firstly, consideration
may be given to introducing in the military establishment training in
occupations and trades in which the scarcity of manpower particularly
restricts the growth of the small enterprise sector. The required skills
could be identified in joint consultation with the national manpower
planning authorities and government agencies for the promotion of
small enterprises and the necessary training provided during military
service. Secondly, special training in entrepreneurial and managerial
skills could be given to military personnel who have been trained as
skilled technicians and have shown organising ability and leadership
talent during military service. Such additional training would help them
to successfully establish and operate as working proprietors small
enterprises in their particular technical specialities upon their discharge
from military service; such programmes would make a real contribution
to the development of small enterprises if the entrepreneurial and
managerial training were supported by industrial credit schemes. In this
way profitable use could be made of a large number of hours of low
military productivity of an army in peacetime.1
CONCLUSION

The previous discussion of the process of skill formation for small
manufacturing enterprises in its various aspects indicates that it is still
a developing concept requiring special efforts to ensure that it will fully
meet the objectives for which it has been designed. It is also an expensive
activity. This is obvious with regard to technical training programmes,
since these require for their proper execution rather costly equipment
' C . P. KINDLEBERGER: Economic Development (New York, Toronto, London,
Sydney, McGraw-Hill, 1965), pp. 109-110.

4 . TRAINING FOR SMALL ENTERPRISES

159

and material for the trainees to work on. But training in entrepreneurial
and managerial skills is equally costly in view of the scattered nature of
the industry, the variety of manufacturing processes carried out on a
small scale and the expense involved in associating capable staff with
such programmes. In addition, experience shows that training programmes which do not fully meet the practical needs of the small industrialist invariably lead to disillusion with the concept of training itself and
to rejection of the idea that the development of the enterprise can be
accelerated through the acquisition of advanced knowledge and skills.
Therefore, in order to ensure that moneys spent and efforts made in the
design and execution of training programmes will fully attain the set
objectives, the aims of training and its practical effect at the level of the
enterprise should be evaluated at regular intervals. To be fully effective,
such evaluation should be a specific activity of the authority responsible
for training for small manufacturing enterprises, and it should be
supported by an appropriate administrative machinery. Evaluation
carried out through the application of cost-performance analysis systems
is useful not only to correct defects and omissions as they become
evident in programmes under review, but also as a means of collecting
the elements for the preparation of future training programmes.

PART II
OTHER POLICY ISSUES

5. SOCIAL PARTICIPATION IN INDUSTRIAL
DEVELOPMENT

INTRODUCTION

The achievement of broad participation by the active population is
one of the three main aims of the campaign for the development of
human resources during the United Nations Development Decade.1
The desirability of such participation is recognised in numerous resolutions and declarations adopted by international and regional organisations, including a number of international instruments adopted by the
International Labour Organisation dealing more particularly with
the role of employers' and workers' organisations. However, insufficient
attention has so far been paid to the need to adapt these general principles to the specific conditions of the developing countries or regions
when industrialisation programmes are being prepared. The first steps
in this direction have now been taken within the United Nations family,
and the I.L.O. is giving high priority to the solution of this problem in
its programme for the development of social institutions.
Whether it be at the level of the nation, of a particular region, a
district or a single undertaking, any industrialisation programme implies
the application of a series of technical, financial and administrative
measures and calls for the settling of a great variety of economic and
social issues. The human problems involved are particularly numerous
and intricate, especially those relating to social and labour relations.
Industrial development, in fact, both calls for, and brings with it,
radical changes in the way of life and work of the populations directly
concerned, and its success depends to a large extent on their active
co-operation. They have to provide the manpower for industry and
must gradually adapt themselves to new conditions of life and work.
In the process of industrialisation, therefore, the creation of social
tensions and profound antagonisms is inevitable; they are the result of
changes in social and cultural conditions and cannot, like technical
problems in industry, be avoided by merely importing methods and
practices from the highly industrialised countries; a patient effort must
1
See United Nations, Economic and Social Council: United Nations Development
Decade: Proposals for Action, document E/3613 (New York, 1962), p. 25.

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be made to find solutions adapted to local needs and circumstances.
Frank discussion with the social groups involved is a condition sine
qua non of any true progress in this direction.
Another element in the success of industrialisation programmes is
the institution of effective machinery for communication and consultation, so that the public may be kept informed with regard to mediumand long-term objectives of industrialisation programmes and projects
and the methods to be used to achieve them, and so as to obtain all
opinions and suggestions likely to be useful in the formulation, and if
necessary modification, of projects or programmes in the light of local
needs and resources. Without such consultation, plans drawn up by the
administrative authorities and technical experts will have no real meaning;
they will be unlikely to arouse the active interest of the working population, and will be liable to encounter such economic, technical, social
and human obstacles that the achievement of any industrial objectives
—even in the most restrictive sense—will be impossible. In fact, it seems
that only by effective social participation can the population be induced
really to co-operate in industrialisation programmes or projects so that,
as they are implemented, such programmes or projects gradually become
a real factor in the economic and social development of the countries or
regions concerned.
Social participation in industrial development may today take a
great variety of forms. Traditional institutions or groups can play a
part in launching an industrial project in an area formerly untouched
by outside influences. Or again, local authorities, political bodies and
other local groups and voluntary associations may act as spokesmen
for the population. At a higher level, there may be governmental bodies
and workers' and employers' or other organisations, all with coinciding
or overlapping interests in particular industrial projects or programmes.
The success of social participation will, of course, also depend upon a
whole range of non-institutional aspects of social life; it is easier
to obtain the co-operation of the different social groups in the
various participation schemes if they are morally and materially
involved.
The aim of the present report is not to provide an exhaustive description of all the possible forms of social participation, but to highlight
those aspects which are linked to labour and working relations, without,
however, losing sight of their social context.1 For the purposes of this
1
Some aspects of social participation have already been examined elsewhere, in
particular by the United Nations (the part to be played by local authorities and the
problems encountered by public undertakings, for example), or are referred to in
other papers, particularly Nos. 3 and 8.

5. SOCIAL PARTICIPATION IN INDUSTRIAL DEVELOPMENT

165

report, therefore, social participation in industrial development is at
two levels:
(a) at the level of the individual, where it covers all measures aimed at
adjusting workers to the industrial way of life and creating a social
climate favourable to industrialisation, in particular by adequate
organisation of human and social relations in the industrial sector,
and especially in the industrial undertakings themselves;
(b) at the group level, where it may be defined as a combined effort by
various social groups (trade unions, employers' organisations,
co-operatives, etc.) which are independent of the State and which
represent economic, social or occupational interests, to co-operate in
the working of state institutions and in the process of industrialisation directly or indirectly sponsored by the government.
Although in practice it is often difficult to draw a clear line between
these two closely interrelated types of participation, a distinction between the part played by the individual in the group (the primary level)
and that of the group in society (the secondary level), facilitates examination of the innumerable problems of social participation and emphasises
the twofold nature of what follows.
At the primary level, the basic aim is to adapt industrial structures to
the concepts and mentality of a pre-industrial society by setting up a code
of practices and policies for the regulation of human and labour relations.
The success of social participation will depend above all on a whole
range of material and moral incentives for workers (prospects of social
or occupational promotion, of a better, more self-respecting life), since
these form the backbone of the various participation schemes at the
individual, group and institutional levels. Equal importance should be
attached to questions of collective relations between the organisers of
industrial development and the workers engaged in industry ; when these
are satisfactory they help to create a social atmosphère in which industrialisation can proceed smoothly, and to promote more active co-operation
by the population in the implementation of industrial development projects (Section I).
At the secondary level, participation of social groups in industrial
development may follow a number of patterns. In some cases, such groups
will be associated with the preparation of an economic development
project, policy or programme at the local, industrial, regional or national
level. In others, social groups will play a part in the implementation
of the projects, policies or programmes at the local, regional or national
level ; such participation may take the form of consultation only, or the
groups may have a voice in the decisions. In this report the term " social

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groups " is to be understood, mainly, as referring to workers' trade union
organisations, employers' associations and co-operatives; the role of
other representative groups will be mentioned in passing (Section II).
After examination of the main problems relating to social participation in industrial development in the first two sections, Section III will be
devoted to a number of questions which must be taken into account in
the framing and implementation of an industrialisation policy intended
to provide also for social participation.
I. INDUSTRIALISATION AND INDIVIDUAL AND
COLLECTIVE LABOUR RELATIONS

True social participation in industrial development is inconceivable
in an atmosphere of indifference, tension or constant social conflict, and
the first concern of the promoters of such participation should be to find
ways and means of bringing about the necessary adjustments. Apart from
the major political or constitutional tensions and conflicts, which are out
of the present context, the necessary adjustments must be made to ensure
satisfactory individual and collective relations between the industries
that are to be set up and the human elements that are to be used in them.
When measures of this type are being studied, the specific nature of
labour relations during the process of industrialisation is one of the key
factors to be considered. Where there is an industrialisation programme
or project, there is necessarily a pre-industrial society, usually predominantly rural and based on a variable range of " traditional " structures and
values. In such societies the notion of the contract for the hire of services,
and the importance in this respect of belonging to a group and of having a
certain status within that group, is almost non-existent; there are no trade
unions or workers' organisations; voluntary associations are unknown,
their place being taken by territorial or ethnic systems ; there are " natural"
spokesmen or representatives who can be designated in case of need by
the different social groups without any complicated formalities; the
attitude to the basic elements of social life, such as a sense of time, justice,
property and thrift, individual and collective effort, etc., is entirely different; there is a great diversity in the ways in which majority opinion is
established for the settlement of disputes of all types, or simply in methods
of communication.
In the past, there was very little knowledge about these features of
non-industrial societies, or they were considered as incompatible with
industrialisation, which was expected to develop out of the production
organisation and techniques evolved in advanced industrial societies
and to model itself closely on the lines of management and labour

5. SOCIAL PARTICIPATION IN INDUSTRIAL DEVELOPMENT

167

relations systems characteristic of such societies. Today, there is a better
understanding of pre-industrial society, and experience has shown how
many difficulties are encountered when an attempt is made to import
industrialisation methods from outside. We are consequently beginning
to recognise the need for social factors to be taken into account from the
outset in any industrialisation programme or project.
Individual Labour Relations
The first direct contacts between indigenous inhabitants and modern
industry will be contacts between individuals in the newly installed industries. It is generally at this level also that the origins of the tensions and
conflicts underlying industrial development are to be found. This means
that any attempt to obtain the direct co-operation of workers in the
industrialisation effort must start here.1
The great majority of countries in the process of industrialisation
have instituted more or less detailed regulations governing the legal
relationships between employers and workers, but these are often based
on the conditions found in industrialised countries, so that they are not
entirely suited to the mentality, desires and needs of workers coming
from a traditional rural environment. An employment contract freely
negotiated between partners considered to be equal does not compensate
such workers for the loss of status and security when they leave their
traditional homes, or for their inability, in new surroundings, to satisfy
their vital needs. Workers will generally tend to feel that their employers
are responsible, at least to some extent, for their living conditions and will
expect them to do something about them.
These extra-contractual responsibilities should, therefore, receive the
very careful attention of those responsible for development at all levels.
Problems of transport, housing, the supply of essential and other goods,
of drinking water, electricity, etc., can often be simply but adequately
solved with the resources an undertaking has at its disposal or can readily
obtain, whereas the individual worker has no possibility of solving them.
When such facilities are provided in collaboration with the workers
concerned, or their representatives, a favourable atmosphere for the
development of an industrial society will be created.
Although in some cases there are national regulations concerning the
adjustments to be made, a creative effort will always be required within
the undertaking itself if the industrial worker's status and conditions
are to be to some extent adjusted to the characteristic pattern of his
1

See Report on the World Social Situation, 1965, op. cit., Part II.

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original environment. This adjustment would be greatly facilitated by the
introduction of training courses to give workers a clearer picture of what
industrialisation means, of how it contributes to national and individual
well-being, of the relationship of their own work to what the undertaking
as a whole is doing, and of the place of the undertaking within the industry
and within the national and international economy. Above all, workers
should be acquainted with their rights and obligations under the labour
laws, including their right to join a trade union of their own choice.
Membership of a union can, in fact, help new workers in industry to solve
certain problems of their life and work and give them a sense of security
and a feeling that mutual assistance of the kind they used to enjoy in
their village or tribe is available in the new environment.
Staff Policies
The prime function of a rational and effective staff policy in a period
of industrial development is to adjust rural workers to the industrial
way of life.
Staff management in industrial undertakings is dealt with in another
part of the present report; we shall confine ourselves here to mentioning
a few of the delicate questions involved. They include work discipline
and the numerous procedures necessary for the smooth running of the
undertaking, such as recruitment, the fixing of wage and production
levels, the line of command, promotions, the settling of individual claims
and disputes, staff reductions and dismissals. There will be different
aspects to all these problems according to the circumstances, and it is
impossible to generalise. Nevertheless, there is no doubt that in the best
interests of industrial development, those in charge at the various levels
should classify these problems so that a coherent over-all policy of individual labour relations may be established in accordance with modern
concepts of social justice and prevailing local conditions.
Participation of Workers in Decision-Making within the Undertaking
Machinery for consultation and co-operation within an undertaking
is, of course, far more common in highly industriahsed countries, but
experiments in this direction are also to be found in the developing countries. Joint advisory committees, staff delegates, works committees and
similar bodies have been introduced into industrial undertakings in
several such countries, usually under foreign influence before their
accession to independence. New management bodies in which workers
participate have been set up in recent years, or are being studied, in
certain countries where industrial development is confined primarily to

5. SOCIAL PARTICIPATION IN INDUSTRIAL DEVELOPMENT

169

the public sector. These experiments are too recent and too little known
to be judged as a whole and can only be evaluated in the specific context
of a given undertaking, industry or country.
It is, however, certainly true to say that in the larger industrial undertakings the important point is that consultation and co-operation machinery should be set up in the early stages of development. This is in the best
interests of the undertakings themselves in view of the greater isolation
of the social groups concerned and of the shortage, if not complete
absence, of other means of contact that are available in more advanced
industrial countries, such as trade unions and other voluntary local
organisations, regional and industrial press, and group social and political
activities. In addition, the problems to be solved are much broader and
much more urgent, since it is a question of introducing in a short space of
time a whole system of industrial practices to meet local circumstances
and not merely of gradually adapting practices that have been worked
out and assimilated by successive generations.
In the operation of the machinery in question in the early stages of
industrialisation, the following elements are particularly important:
observance of local traditions when workers' representatives are designated and when forms and procedures for discussions, decision-making
and expression of opinions are being instituted; need to ensure adequate
status and protection for workers' delegates and to provide them with the
facilities to enable them to perform their duties satisfactorily. Procedures
which run counter to the local customs with which workers are familiar
are liable to fail in their purpose and to aggravate rather than diminish
existing social tensions.
The aims of systems for workers' participation in the running of an
industrial undertaking vary, of course, considerably. Although, as we
have seen, it is desirable to set up appropriate machinery to enable
workers to discuss their problems with the management for the purpose
of arriving at an agreed solution, the granting of more direct forms of
participation in the life of the undertaking is often inspired by a desire
to increase production and to integrate the worker more completely
into the industrial community. Special machinery is often set up to
provide workers with greater incentives (profit-sharing, wages linked
with productivity, etc.); in some cases, especially in the public sector,
workers are given certain managerial functions, often limited to social
services or certain aspects of the staff policy, but which may also be real
management functions, even on the economic side.
Finally, direct participation of workers in the management of
industrial production units may take the form of co-operatives, or other
similar organisations of a pre-co-operative or para-co-operative nature.

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This kind of participation may meet a number of objectives and may
take a great variety of forms. For example, the participation of farmers
in the creation of an undertaking designed to process their produce or
to provide other services such as transport or packing is often an indispensable feature of rural development programmes. The same is true
of handicraft or other small-scale industries, which can often benefit
from common industrial services. Schemes of this type can be very
valuable in the early stages of industrial development because they can
offset the lack of local employers with the necessary experience to engage
in such activities which, although essential, represent too small a turnover
to justify application of the techniques used in large-scale modern
industries and therefore tend to be neglected by the latter.
In most cases, undertakings of this type, if they are to develop and
achieve any standing, need solid outside support—material and technical
help and assistance in the training of supervisors, etc. This support
comes most often from public bodies specialising in programmes of
co-operative and rural development, promotion of small-scale industries,
development of industrial areas, etc., and can be usefully backed up by
the appropriate social and occupational organisations. Many national
plans give a good deal of attention to developing undertakings based on
producers' associations, for this is one of the most promising forms of
direct participation in industrialisation and modernisation by large
sectors of the population.
Industrial Relations
In view of the spectacular nature of industrial conflicts and the political
repercussions of the social tensions underlying them, governments,
industrialists and the general public have always paid special attention
to industrial relations. Employers, workers and their organisations can
do little to promote social participation in industrial development if
conflicts of interests dissipate their energies and leave them no time to
think about medium- and long-term objectives.
In the developing countries workers' and employers' organisations
are relatively new and have as yet had little time to establish machinery
to co-ordinate their relations with one another. In general, they have
neither the resources nor the experience necessary to enable them to
obtain the best results from voluntary procedures for bargaining and
settling collective disputes, which have, nevertheless, been made available
to them under the legislative provisions in most cases. In some countries
national development policies or programmes limit the freedom of the
parties concerned to conclude agreements, or even suppress it altogether,

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171

either by compulsory arbitration or under an over-all policy that is
more or less directly geared to the structure of national planning. In
many countries the national system for the fixing of minimum wages,
or the wage policy in the public sector, plays an important role in very
large sectors of the economy.
It will be seen, therefore, that collective relations in industry may be
established on widely varying bases according to local conditions, and
that they differ quite considerably from those usually instituted in the
industrial countries, where a more standardised system is generally
adopted, based on clearly defined factors of prime importance in production and industrial relations.
The situation in the developing countries means that the governmental authorities must take the initiative in promoting voluntary
negotiation or in arbitrating for the settlement of collective conflicts or,
from the outset, assume the main responsibility for fixing wages and other
conditions of work. In any case, real and adequately co-ordinated
participation of workers' organisations is the first condition for effective
and rational operation of the national machinery and an essential
element in any policy for the association of such organisations in programmes of industrial development. It cannot be expected that organisations will wish to involve themselves to this extent—in fact, they
cannot, without losing their influence on members—unless they are
also to have some say in decisions affecting the short-term interests of
the social groups they represent, at whatever level such decisions are
made. Participation in these day-to-day decisions will alone open the
door for joint study of the longer-term problems of development.
II.

WORKERS' AND EMPLOYERS' ORGANISATIONS AND THEIR
CONTRIBUTION TO INDUSTRIALISATION

As a point of departure for the direct and active association of
workers in industrial development, in particular through the social
adaptation of the population to industrialisation, the establishment of
individual and collective labour relations—the main aspects of which
were mentioned briefly in the preceding section—is essential if organised
social groups are to participate in the process of industrialisation.
The main problem in the establishment of industrial relations in the
developing countries is how to strengthen the voluntary workers' and
employers' organisations 1 so that they can assume direct responsibility
1
Some participation machinery can be given official status and independent
financial resources so that the voluntary organisations themselves are relieved of
certain tasks and expenses while continuing to exert their influence. Examples of such

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

for the representation of the respective interests and participate, on
behalf of those they represent, in the preparation and implementation
of industrial development projects and programmes.
The question of strengthening the employers' and workers' organisations, a prerequisite for their participation in industrial development
projects and programmes, will be examined in this section before going
on to study the machinery through which participation at this level can
be achieved. The problems that arise in the workers' unions are not the
same as those of the employers' organisations.
Workers' Organisations
Trade unionism is closely bound up with industrial development,
and the movement becomes familiar to all countries as the industrialisation process continues. In spite of the different experiences in this field
resulting from the economic, political and social conditions in the various
countries, it may be said that everywhere the trade unions have stimulated
industrial development. They are vigorous defenders of the workers'
interests, but they nevertheless help to relieve tensions, buffering the
shock of economic changes and easing the conditions in which they
take place. In this way the unions increase the effectiveness of the
national effort; side by side with the employers and other leaders of the
economy, they play an essential role in the establishment of the communication between social groups without which no democratic society
can grow.
Trade unions are relatively new in most of the developing countries.
Their growth is hampered by a number of familiar obstacles : the small
proportion of wage earners as compared with the total labour force of
the nation; the high degree of under-employment; low wages ; illiteracy;
lack of official recognition or of adequate statutory safeguards; inadequacy of material resources and lack of any organisational tradition
or experience; absence of competent supervisory staff. In spite of all
these difficulties, trade union movements in many developing countries
have made great strides in the last ten to 15 years. Apart from their efforts
to defend their members' interests, the trade unions of these countries
are extending their field of action by participating at a high level in the
preparation and implementation of industrialisation programmes x , and
arrangements, offering considerable material advantages to workers, exist in many
industrialised countries. They cover education of workers and trade union officers,
organisation of leisure and management of social services. In most cases they have
evolved over long periods; only very rarely was adequate attention paid to these
matters in the initial stages of industrialisation.
1
See below pp. 176-178.

5. SOCIAL PARTICIPATION IN INDUSTRIAL DEVELOPMENT

173

are attempting, at least in part, to solve the problems of workers as
members of the group, as producers or as consumers. In a number of
developing countries, several types of co-operative movement (transport,
consumer, housing, distribution, production, savings and credit, workers'
banks), and various social, educational and cultural services are being
created or expanded under the auspices of the trade unions. In some
cases the trade unions are assuming responsibility for primary education,
literacy campaigns and the vocational training of their members; they
help to create and run hotels, restaurants, canteens, nurseries, schools
and medical services, and operate public social security services. These
efforts on the part of the unions may appear modest, but in present
circumstances they are making a considerable contribution to development and industrialisation.
In attempting to define the part workers' organisations are called
upon to play in industrial development, it is not possible to ignore
completely the political and institutional framework in which they
evolve. In many cases the trade union situation has changed radically
in recent years as a result of political and economic reforms introduced
in various countries to consolidate the political leadership and to
mobilise all the available social forces for economic development and
rapid industrialisation. The trade unions thus find themselves dependent
upon a political or administrative machine in which their function of
defending workers' interests is pushed into the background. On the
other hand, as a result of this situation, the unions usually obtain official
recognition and status and are even, on occasion, able to extend their
activities. On the other hand, in countries with multiple political, economic and social structures, there are often very few militant trade
unionists, and in some cases sharp antagonisms make participation in
industrial development extremely difficult.
Nevertheless, however small the membership of the trade unions in
the majority of developing countries, and in spite of the initial difficulties
encountered by their leaders as they attempt to find their way among
the complex problems arising from the development of an industry or
undertaking, these are not permanent obstacles to contacts between
the organisers of industrial development and the trade unions. The very
existence of the unions is a sign of adaptation to modern usage. The
present weakness of the unions should not overshadow the real, if
somewhat fragmentary, part they play in establishing communication
among the mass of workers attracted to the new industries.
Those in charge of industrialisation are particularly well placed in
this respect to initiate and maintain useful contacts with the unions.
For their part, in addition to genuine recognition of their existence and

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of their potentialities as representatives of the workers, the unions,
especially at the early stages, need a whole range of material facilities
without which they cannot perform their tasks in an up-to-date and
effective manner. If they are to develop, and participate usefully in the
effort of industrialisation, they must be directly encouraged in a number
of ways. Even in some of the most highly industrialised countries such
encouragement is vital if the unions are to participate, for example, at
the consultative and planning stages. Assistance of this kind cannot fail
to promote industrialisation, on condition that it takes the form of
durable measures that are genuinely in the common interest and that
are not applied by rules which shackle the functional autonomy of the
organisations concerned and thus render their participation void of all
meaning.
The trade unions may need immediate assistance of many kinds:
premises for their secretariat and meetings; means of transport; compensation for loss of wages resulting from trade union activities; facilities
for the collection of trade union dues ; help in setting up educational
and social machinery. Particular stress should be laid on the importance
of promoting educational activities to enable the trade union organisations to participate fully in development planning. This involves
instructing workers' representatives at different levels in the aims,
principles, and methods of development planning and in the part the
unions can play in this planning. Such training renders service to
the nation and consequently the public authorities should support
the efforts of the workers' organisations on whose shoulders the
main responsibility rests.
Employers'' Organisations
The problems of social participation in industrialisation by the
representatives of the various sectors of the economy are different from
those relating to the participation of the workers' representatives, but
just as important. At the early stages of industrial development the
creation and organisation of representative groups of producers run
into difficulties on account of the great variety of categories involved:
indigenous farmers and planters in the sector who still follow traditional
methods or are in the process of modernisation; small local tradesmen
and craftsmen; heads of small or medium-sized businesses; persons
engaged in public undertakings and large international concerns which
exert a considerable influence on the economic life of the country.
It is nevertheless necessary to create organisations representing these
numerous categories if all sectors of the economy are to participate

5. SOCIAL PARTICIPATION IN INDUSTRIAL DEVELOPMENT

175

effectively in the preparation and implementation of industrial development projects and programmes. The participation of employers' organisations in the industrialisation effort has undeniable advantages since it
facilitates exchanges of views regarding the economic interests involved
and helps to throw light upon the advantages and disadvantages of
projects or programmes drawn up by technical services, and upon the
methods it is proposed to adopt. Institutionalised representation of
producers' interests is equally necessary for the purposes of ascertaining
the economic and social impactx of the introduction of new industries,
and of formulating social and labour policies (wages and other conditions of work, training workers, etc.).
In countries where the economy leans heavily on the private sector
there is generally a twofold representation of individual producers:
on the one hand, the chambers of commerce and similar organisations in
industry and agriculture, usually with an official status, their basic purpose being to represent the economic interests of the producers concerned; on the other, the voluntary organisations of producers or employers which are interested more particularly in social and occupational
problems.
In the early stages of industrialisation the formation of these representative bodies is often beset by difficulties. This is especially true of
the voluntary organisations subject to private law, since the official
bodies generally have greater resources from producers' compulsory
contributions and other sources of income provided by the legislation.
Nevertheless, official support is almost always vital to both types of
organisation if they are to play a real part in the numerous tasks inherent
in industrial development. It is often difficult, and it will remain so for
a long time to come, to bring about effective organisation of certain
types of producers, especially those in the handicrafts and small industries sector, and in the absence of representative organisations the
responsibility for safeguarding the interests of these categories is often
assumed by the government's administrative or technical departments.
The public undertakings are confronted with the same difficulty:
through lack of an adequate representative body, they have to find
their spokesmen in the appropriate government departments or services.
1
For example, increased production in a few newly established undertakings
using very modern techniques not infrequently causes a marked decline in the production of older sectors of the economy, and this can seriously prejudice the over-all
development prospects of a country or region. Consultation on a broad front among
the national producers is not, of course, a universal solution, since such situations
cannot always be foreseen or avoided, but it often serves to draw attention to the
inherent dangers and to ensure that industrial programmes or projects are adjusted
accordingly.

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This problem is particularly acute in countries where the public sector
absorbs a large part of the economic activity and where it may seem
desirable to establish separate representative bodies for the various
types of public undertaking or service.
If the real interests of industrial development are to be served,
questions relating to the representation of employers, and to the interests
of producers in general, must be studied very carefully, for there are
large economic sectors which, for various reasons, are liable to be
inadequately represented when industrial development policies and
programmes are being prepared or implemented. The guiding principle
of any policy aiming at the rational and really effective development of
new industries must be very wide representation of all sectors of
production.

Participation of Workers' and Employers' Organisations in the Framing
and Implementation of Industrialisation Programmes
The association of workers' and employers' organisations in the
framing and implementation of industrialisation programmes presupposes a genuine desire on their part to break out of the limited
framework of technological studies and purely economic considerations
of efficiency and profits, however necessary these may be. Such association in fact makes it possible to take account of the human aspects of
industrialisation, since the satisfaction of man's aspirations and material
needs is the basic aim, the ultima ratio, of the striving for development.
Participation of the organisations representing the active elements of
the population—who play the chief role in development—makes the
knowledge and experience of these latter available to those who are
preparing or implementing industrialisation programmes.
There are many ways in which workers' and employers' organisations
can participate in industrialisation programmes and their participation
may cover different stages of such programmes. Sometimes they participate in discussion of the general plan of industrialisation, or they may
collaborate at a later stage, when problems of the development of one or
several sectors of industry are examined or, again, they may help to
determine the manner in which the programme is to be implemented, or
contribute to the final phase and be associated in the supervision of the
practical work and in the evaluation of results. Participation may also
be at different levels (national, sectoral, regional, local) and be either
direct (the organisations being represented within the official planning
bodies) or indirect (by way of informal contacts between the organisations

5. SOCIAL PARTICIPATION IN INDUSTRIAL DEVELOPMENT

177

and the public authorities and departments in charge of industrialisation
programmes).
It is not proposed in this document to examine the various participation procedures and machinery in countries in the process of industrialisation. These vary enormously from one country to another, the variations depending mainly on political systems and types of governmental
bodies, on the strength and nature of the traditional institutions, the social
and cultural level of the population, the relative importance and administrative differences as between the public and private sectors of the economy, the type and standing of the occupational and economic organisations
representing the two sectors, the technical characteristics of the new industries and the size of the undertakings and, finally, the stage reached
in the industrialisation programme.
The International Labour Organisation has for several years been
paying special attention to methods and problems of participation in
economic development, and a number of studies have been made of the
various aspects of the question.1 Hereunder we refer only to certain of
the general guiding principles to be taken into account in the preparation and implementation of industrialisation programmes based on the
participation of workers' and employers' organisations.
It is sometimes possible, even without formal participation machinery,
to maintain contact between the promoters of industrialisation and the
representatives of the active population. This happens, in fact, in a
number of countries at very different stages of development and with
quite different political systems. Close, constant co-operation has been
established in such countries between the various social groups (workers'
and producers' organisations, etc.) and the public authorities. While
completely informal in some cases, this co-operation is in others the very
foundation of the constitutional structure, especially where there is a
single political party. It has been said that such systems have real advantages from the point of view of efficiency since, in certain conditions, they
can provide a means of communication between those in charge of the
programmes and the social groups involved in the various stages of their
1
See I.L.O.: Metal Trades Committee, Eighth Session (Geneva, 1965), Report III,
The Role of Employers' and Workers' Organisations in Programming and Planning in
the Metal Trades; Eighth Conference of American States Members of the I.L.O.
(Ottawa, 1966), Report of the Director-General: Social Development in the Americas
(Geneva, 1966), Ch. Ill; Working Paper Prepared for the African Seminar on the
Role of Trade Unions in Development Planning (Dakar, November-December 1966)
(Geneva, 1966). Several articles on this subject have been published in the International
Labour Review (Geneva, I.L.O.): an introduction (Vol. 93, No. 4, Apr. 1966, p. 331),
and a number of studies on the position in France (ibid., p. 337), Ireland (Vol. 94,
No. 1, July 1966, p. 54), the Netherlands (ibid., No. 3, Sep. 1966, p. 274), the Maghreb
(ibid., No. 4, Oct. 1966, p. 375), Byelorussia (ibid., No. 5, Nov. 1966, p. 449) and
Japan (ibid., No. 6, Dec. 1966, p. 511).

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application, and at the same time avoid public conflicts arising out of
differences of opinion because the government acts as arbitrator when
necessary. With all due regard to the contribution these systems can make
to acceleration of industrialisation, it has nevertheless been pointed out
that they run serious risks because the communication channels can
always be blocked and the initial enthusiasm of the active population may
gradually degenerate into indifference; their lasting participation is
therefore uncertain.
In multi-structured societies (competing political parties, workers'
and employers' organisations, etc.) there is a great variety of institutional
machinery for participation. In industrial development this machinery
generally takes the form of advisory councils whose competence can
embrace industry as a whole, or be limited to particular branches of
industry or certain definite questions (productivity, manpower, training,
wages, etc.). Various obstacles hinder the operation of these advisory
councils, especially in the early stages of industrialisation. It is rare, for
example, that adequate material means and technical and administrative
facilities are available to enable them to carry out the various and complex tasks involved in the study of a development programme. The
smooth running of participation machinery can also be upset by discord
between the social groups represented. The difficulties can only be overcome by a firm determination on the part of the authorities to achieve
development, combined with an informed search for the means and
techniques to make social participation effective.
III. NATIONAL AND INTERNATIONAL ACTION
TO PROMOTE SOCIAL PARTICIPATION

One of the essential elements in an industrialisation programme is the
establishment of a policy of social participation aiming at coherent and
sustained action at the local, national and international levels.
National Action
Whatever the particular local features, measures taken to promote
the active population's participation in the industrialisation effort must
be an integral part of the over-all plan for participation, and must take
into account the social, cultural and economic factors which determine
the form and method of participation. Isolated measures or reforms may
have their uses, especially when they serve as pilot experiments, but they
can do little in themselves to bring about a fundamental and lasting
change in individual attitudes and in the general social atmosphere.

5. SOCIAL PARTICIPATION IN INDUSTRIAL DEVELOPMENT

179

What, then, are the main elements of a policy for the promotion of
social participation in a given industrial development programme or
project ? A distinction should be made between the general principles of
such a policy and the methods used to apply it.
General Principles.
The general principles of a policy to promote all types of social
participation at all levels must be based on a thorough knowledge of the
social and cultural environment in which the new industries are to be set
up. Such knowledge is a prime necessity, and should be the point of
departure for any social participation policy, whether at the primary
level—i.e. at that of the interrelationships of individuals in the undertaking—or at that of the workers' and employers' organisations. First of all,
an inventory of the existing social structures, whether traditional or
modern, should be made and studied; the main functions of the different
social groups should be defined, their capacity for making a useful contribution to the industrialisation effort should be assessed, and the ways in
which they are to make such a contribution should be indicated (see above,
pages 166 to 167).
Another important factor in primary level of social participation is
the situation of workers who have recently left their original rural environment and are living under completely new conditions with a totally
different status. One of the high-priority tasks in the promotion of
social participation is, in fact, the institution of regulations, practices and
services to meet the needs created by industrialisation. Such provisions
must, of course, be closely adapted to local conditions (see above, pages
167 to 178).
The same applies to the establishment of collective labour relations,
whether within an industry or undertaking or at the national level. The
development of rational, coherent industrial relations adapted to the
requirements of industrialisation is an excellent means of promoting
social participation. Systems enabling workers to take part in the discussion of matters of common interest in an undertaking, or giving them some
material incentive to take an interest in production, open the way to
better utilisation of the available human resources and of the abilities
and spirit of initiative of workers attracted by the new industries. In some
cases, the direct association of producers or workers in industrial undertakings opens up a number of possibilities (see above, pages 168 to 171).
The development of organisations representing industrial workers,
employers and producers in general, is a way of promoting social participation, and for this reason it should be one of the principal aims of all

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

who are concerned with industrial development. The legislation and
industrial practices must, of course, be adapted to the circumstances but,
above all, attention must be paid to the problems with which these
organisations are faced as a result of their lack of the necessary material
means and of tried and tested leaders to fulfil the various functions,
especially when the organisations are called upon to take an active part in
industrial development. The organisations must also be guaranteed full
recognition in all the spheres of activity within their competence (see
above, pages 174 to 176).
Finally, workers' and employers' organisations cannot participate
in the framing and implementation of industrial programmes or projects
unless there is a real and active desire for such participation on the part
of those responsible at all levels. Such participation may take the form of
direct, informal contacts between industrial promoters and the social and
occupational groups concerned (trade unions, employers' organisations,
co-operatives) but in most cases it seems preferable to organise participation within some more formal, durable framework, such as advisory
boards comprising representatives of all concerned at the local, industrial
and national levels (see above, pages 176 to 188).
Methods of Applying the Policy.
Once the basic principles of a social participation policy have been
laid down, the methods of applying the policy must be studied. Promotion
of social participation should be given high priority at the policy and
technical levels, and when programmes are being prepared and the means
of implementing them are being determined due consideration should
be given to the prerequisites for such participation. Although the importance of the effort required in the information and public relations
sectors should not be underrated, it is evident that the aims of a policy for
the promotion of social participation cannot be achieved if the necessary
means are absent or inadequate.
The problems of social participation demand the co-operation of
those responsible and of experts in a wide variety of sectors and branches,
especially in the formulation of the legislative provisions relating to
participation machinery, in the necessary educational, training and information activities and in working out measures to ensure the satisfactory
operation of participation machinery.
The public authorities have a particularly important part to play.
They must shape the necessary adjustments in the administrative structures and procedures, and provide adequate training for personnel and the
essential material means and facilities, if their efforts to promote indus-

5. SOCIAL PARTICIPATION IN INDUSTRIAL DEVELOPMENT

181

trialisation are to be effective, whatever their other responsibilities
in regard to the development and management of the new industries.
Generally speaking, the labour ministries and authorities carry special
responsibility for the institution of structures and machinery to facilitate
workers' and employers' participation in industry, and for this reason
some special mention should be made of them. The co-operation of
these authorities is necessary, particularly in connection with individual
and collective labour relations, for the formulation of regulations
governing conditions of employment and other aspects of labour legislation and industrial relations, including the development of workers' and
employers' organisations, staff policies, and vocational training.
The industries themselves must find the necessary means to enable
them to discharge their primary responsibility towards their workers and
train the key personnel required. In co-operation with the public authorities, they must ensure that the necessary material conditions exist
for setting up and operating the machinery through which the social
groups concerned are called upon to participate in industrial development.
Finally, social participation in all fields requires the co-operation of
managers and leaders, promoters and other well-informed elements
conscious of their responsibilities, and there must therefore be a coherent
policy for the training of these key elements, adapted to the specific
needs of the various categories: workers and trade union officials,
managerial staff (including personnel managers) and administrators.
International Action
The United Nations and the specialised agencies have for several
years, in numerous declarations and resolutions, advocated participation
by the population as an essential condition for the acceleration of economic and social progress in the developing countries. In 1964 and 1966 the
International Labour Conference adopted two important resolutions, one
relating to the concept of democratic decision-making in programming
and planning for economic and social development and the other to
workers' participation in undertakings. These two resolutions indicate
the pattern of the I.L.O.'s future efforts and lay particular stress on the
need to intensify research and training in this field.1
The United Nations and the specialised agencies recently prepared a
number of programmes of practical activities relating to social participation. The I.L.O. itself is endeavouring to discern those particular aspects
1
See Official Bulletin (Geneva, I.L.O.), Vol. XLVII, No. 3, July 1964, Supplement I, pp. 69-70, and ibid., Vol. XLIX, No. 3, July 1966, Supplement I, pp. 46-47.

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of social participation which are directly or indirectly related to industrial
development and to which it is best able to make a useful contribution.
The International Labour Organisation has been for a number of
years concerned with the various aspects of participation by workers,
employers and their associations in decision-making at different levels.
The I.L.O. Metal Trades Committee made a study of the part to be
played by these organisations in economic and social planning and programming1, and reached unanimous conclusions on the subject. It
should also be remembered that the I.L.O. has for many years been engaged in a great number of activities for the promotion of social participation in development. The questions referred to in the first section of this
report (individual employment relations, staff policies, labour-management relations) have long been among the I.L.O. 's principal concerns in
its standard-setting and research activities and operational programmes.2
The Organisation has thus accumulated a vast amount of knowledge and
experience of most of these questions. Considerable documentation has
been assembled and various forms of technical co-operation have been
worked out: experts have been sent out to assist governments in the framing of legislation and institution of administrative machinery for its
application, in the development of research and training institutes, and
in improving industrial practices ; bipartite and tripartite study surveys
have been organised for groups of responsible elements; seminars have
been convened; trainees have been placed, etc.
Great emphasis has been placed in past years, particularly in a series
of reports presented by the Director-General to the International Labour
Conference, on the need for increased aid to workers' organisations, cooperatives, institutes responsible for the training of supervisors, and the
undertakings themselves. Since then the technical co-operation programmes have developed very considerably. The interest shown by many
developing countries in the I.L.O. Workers' Education Programme has
made it possible to devise a number of different measures that can be
applied by trade unions anxious to encourage social participation in industrial development. The I.L.O.'s programmes in the field of labour
administration are another contribution: here, the Organisation's
activities are more and more directly concerned with the need for increased social participation in economic and social development.
1

See I.L.O. : Metal Trades Committee, Report III, op. cit.
"Idem: International Standards and Guiding Principles, 1944-64, Labour-Management Relations Series, No. 24 (Geneva, 1965), which gives a list of the main
publications which have appeared since 1947. See also Certain Aspects of LabourManagement Relations within the Undertaking (Documents of a Technical Meeting),
ibid., No. 25 (Geneva, 1965).

5. SOCIAL PARTICIPATION IN INDUSTRIAL DEVELOPMENT

183

Most of the programmes we have mentioned have now been integrated
into the major programme for the development of social institutions
adopted by the I.L.O. Governing Body in November 1965 1 and giving
the over-all pattern of all the I.L.O.'s different activities related to social
institutions designed to promote industrial development. By virtue of
this programme, the I.L.O. is now in a position to place at the disposal of
all concerned a balanced and co-ordinated range of services with a view
to developing administrative and sectoral structures and labour relations
in industry.
The technical co-operation programmes worked out by the International Labour Office are available to governments wishing to develop
or strengthen their machinery for the promotion of social participation
in the industrialisation process. The development of social participation
in industry, in its various forms and at all levels, is also the main objective
of the research and study programme being at present implemented by
the I.L.O., whose resources and experience are also available, if necessary,
to those in charge of private projects or national programmes of industrialisation. A comprehensive programme of operational activities and
research, closely adjusted to the specific conditions of the developing
countries, is therefore at the disposal of national authorities and the
international community as a whole.
In addition to the innumerable possibilities offered by the I.L.O.
programmes in the fields of industrial relations, labour legislation, labour
administration, staff policies, co-operative and similar institutions, living
and working conditions, the training of key personnel for undertakings,
governments and all those concerned with industrialisation will find that
the programmes in question also provide solid bases, at the level of international technical co-operation, on which policies and programmes for
social participation in industrial development can be worked out and
applied.

1
See I.L.O. : Record of Proceedings, International Labour Conference, 50th Session, Geneva, 1966 (Geneva, 1967), Appendix XII, Second Report of the Working
Party of the Governing Body of the International Labour Office on the Programme
and Structure of the I.L.O., paras. 54-10, pp. 708-715.

6. EMPLOYMENT ASPECTS OF INDUSTRIALISATION
The primary aim of industrial development is to increase output
and income, not to provide jobs. But it is not a matter of indifference
whether the path of development is one that leaves many people without
work, or one that provides many new jobs quickly, utilising a country's
human potential as fully as possible for development. Governments that
have subscribed to the United Nations Charter and to the Constitution
of the I.L.O. have recognised an obligation to do all in their power to
provide productive work for those who need it, and the International
Labour Conference in 1964 adopted a Convention and a Recommendation concerning employment policy which called on member States to
declare and pursue as a major goal an active policy designed to promote
full, productive and freely chosen employment.
This paper advances six propositions and comments on them. The
propositions are—
A. The industrial sector in developing countries provides directly
only limited employment in proportion to the amount of capital invested,
but makes a long-run contribution to the solution of employment problems to the extent that it promotes rapid economic growth and development.
B. If too much weight is given to short-term employment considerations, countries may choose a product mix and types of technology
that do not make for rapid growth.
o

C. If too little weight is given to short-term employment considerations, countries may choose a path of development that leaves large
numbers of people unemployed or underemployed and fails to make
full use of their human potential for development.
D. Countries have accordingly to determine what their policy
towards employment in the context of industrial development is to be;
a useful distinction can be drawn in this connection between relieforiented employment on the one hand and production-oriented employment on the other.
E. The first and major element in a developing country's policy
towards employment in the context of industrial development should
be to make sure that all labour that can be employed productively in

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

the industrial sector is employed; and steps should be taken to implement this policy.
F. Some forms of international action may be helpful in this connection.
These propositions will be taken up in turn.
A. The industrial sector in developing countries provides directly only
limited employment in proportion to the amount of capital invested,
but makes a long-run contribution to the solution of employment
problems to the extent that it promotes rapid economic growth and
development.
It is well known that in most countries the amount of capital per job
provided in industry, particularly large-scale modern industry, is considerably higher than in agriculture and services. In China (Taiwan)
in 1961, average capital investment per person employed in manufacturing industry was NT$48,000, whereas the corresponding figures
were NT$20,900 in wholesale trade, NT$2,600 in retail trade and
NT$2,500 in miscellaneous service industries.1 In Italy the Vanoni
Plan estimated the capital directly needed for the creation of new jobs
over the period 1955-64 at 10 million lire per j o b in industries with

heavy capital requirements, 1.5 million lire in other industries and the
handicraft sector, and 1 million lire in tertiary activities.2 It should
further be noted that within the industrial sector capital per worker
tends to vary between different branches of manufacturing and often
also between establishments of different sizes.3 From the very rough
estimates of the growth of manpower requirements in certain key
industries in Africa, Asia and Latin America from 1965 to 1975 contained in paper No. 1 above, it is clear that these industries can be expected to absorb no more than a small proportion of the projected increase
in the labour force.
A major reason for the unemployment and underemployment
prevailing in so many developing countries is the very fact that their
economies are underdeveloped in the sense of having not yet developed
the knowledge and skills, the institutions, the infrastructure of power and
transport and the other forms of capital equipment needed to enable
full and productive use to be made of their human resources. To the
1

General Report, 1961, of Industry and Commerce Census of Taiwan.
Elements of a Programme for Raising Income and Employment Levels in Italy over
the Ten Years 1955-64 (Rome, 1955).
3
Some figures for Colombia, India, Mexico and the United States are given in
I.L.O. : Employment Objectives in Economic Development, Studies and Reports, New
Series, No. 62 (Geneva, 1961), p. 229, table 3.
2

6. EMPLOYMENT ASPECTS OF INDUSTRIALISATION

187

extent that industrialisation contributes to economic growth and development, it contributes to creating conditions in which employment problems can more easily be solved in the future. (This is not, of course, to
say that all industrial projects, even if badly chosen, will necessarily
contribute to growth and development. Still less is it to say that wellchosen projects in other sectors are not also needed for growth and
development; but this paper is concerned with the industrial sector.)
B. If too much weight is given to short-term employment considerations,
countries may choose a product mix and types of technology that do
not make for rapid growth.
The ability of a programme of industrial development to contribute
in the long run to the solution of employment problems may be impaired
if too much weight is given to short-term employment considerations in
the choice of industrial products and techniques. If people are given
unproductive work to do, including work of such low productivity that
what they produce is worth less than the incomes they receive in return
for producing it 1 , these incomes will have to be found, in part at least,
from sources that could have been used for other purposes, including
investment. If wages, or subsidies to the self-employed, were paid at the
expense of investment, this would tend to slow down growth. As was
pointed out in a recent I.L.O. report:
If a policy of employment creation is allowed to check the rate of growth,
it is very doubtful whether it can make for welfare. Furthermore, since growth
creates employment, it is very doubtful whether such a policy could make for a
lasting net increase in employment.
This is not the same thing as to say that it should necessarily be an objective
of policy to strive for the highest possible rate of investment with a view to
maximising the rate of growth. The price of relative abundance for the next
generation might well be tighter belts and a more unequal distribution of
income in this generation (because many people would be left underemployed)
than a country would wish to have. But most developing countries feel that to
attain their social objectives they need a rate of growth not slower but faster
than at present, and for this purpose need a high rate of investment, even if it
is not the maximum rate.2
The important questions in deciding what industries should be set up
(the choice of products) and what techniques to use (the choice of
methods) seem to be not how many jobs will be directly provided in the
1
For example, making things in cottages by hand methods that have to be heavily
subsidised to compete with more efficient machine production. (It may of course be
conducive to long-term growth to protect or subsidise an infant industry during an
initial phase if it is expected in time to be able to stand on its own feet.)
2
I.L.O. : Employment and Economic Growth, Studies and Reports, New Series,
No. 67 (Geneva, 1964), p. 134.

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

short run, but how much income will be generated directly and indirectly in the long run, and how much of this will be ploughed back for
further investment. It is the answers to these questions that determine
the increase in output of consumer and capital goods generated by an
investment project, and the magnitude of the demand for labour to
make the goods, though this depends also upon the techniques of
production.
C. If too little weight is given to short-term employment considerations,
countries may choose a path of development that leaves large numbers
of people unemployed or underemployed and fails to make full use
of their human potential for development.
It is not a matter of indifference whether the path of growth and
development is one that provides many new jobs quickly or one that
leaves many people for many years with no productive work to do.
The problem of finding useful and productive work for school-leavers
and others who need it is causing a great many governments considerable
anxiety on social and political grounds. Commenting on the view that
high capital intensity is desirable in developing countries as a source
of profits and therefore of savings and investment, Professor Arthur
Lewis has observed:
Unfortunately, that policy would be feasible only if the labour surplus
remained disguised and could therefore be ignored; it is not practicable when
the unemployed are roaming the streets and burgling your houses. Most
developing countries have to give the highest priority to providing employment
now rather than to maximising consumption or income or employment in
ten years' time.1
Nor is this necessarily a matter of subordinating considerations of
economic efficiency and long-term social welfare to considerations
of short-term social welfare. For there are reasons for thinking that,
often, fewer jobs are provided than would be advantageous even from
a strictly economic point of view (see pages 189 to 190 below).
D. Countries have accordingly to determine what their policy towards
employment in the context of industrial development is to be ; a useful
distinction can be drawn in this connection between relief-oriented
employment on the one hand and production-oriented employment
on the other.
Developing countries cannot afford a policy of providing jobs as a
form of relief regardless of the value or lack of value of what is produced.
1
W. Arthur LEWIS: " A Review of Economic Development" (Richard T. Bly
Lecture), in American Economic Review—Papers and Proceedings, May 1965, p. 14.

6. EMPLOYMENT ASPECTS OF INDUSTRIALISATION

189

But to the extent that countries can provide productive jobs, in the sense
of jobs yielding products whose value exceeds their costs, they can
avoid having to choose between measures to increase employment and
measures to increase production and real incomes: the same measures
will serve both purposes. Creation of production-oriented employment
is quite a different matter from creation of relief-oriented employment.
And if an intelligent and vigorous search is made for ways of providing
productive work for those who need it, it is likely that in all countries
neglected and unnoticed opportunities for making productive use of
underemployed manpower will be found.
For several reasons, it is likely that less labour is employed in the
industrial sector (and in other sectors) of developing countries than
would be desirable from the point of view of production and growth
alone, without giving any weight to employment considerations. If the
factors making for excessive capital intensity in the industrial sector in
developing countries could be corrected, the role of industry as a direct
provider of jobs could be considerably greater than it is. These reasons
include—
(a) A possible preference for modern capital-intensive labour-saving
industries and technology on grounds of prestige as distinct from economic advantage.1
(b) Asymmetry of promotion of the use of capital and labour respectively. This has at least two facets : (i) the fact that the managers or
directors who decide how much labour to employ may be, or may be
advised by, engineers from industrially advanced countries whose
training predisposes them to regard " labour-saving " and " efficient "
as virtually synonymous terms, while in countries where labour is
plentiful and capital scarce it would be more appropriate to identify
efficiency with the saving of capital ; and (ii) the fact that labour-saving
ideas are more often than not embodied in saleable pieces of capital
equipment, sales of which are assiduously promoted; " replacing capital
with labour, however, may take more than a purchase [of equipment]—
the manager might have to be converted to the subtleties of efficient
organisation, a far more taxing achievement ".2
1
This, of course, is not to deny that there are good economic reasons for selecting
some capital-intensive industries and technology in developing countries.
a
P. STRASSMANN: Technological Change and Economic Development (Ithaca (New
York), Cornell University Press, forthcoming), Ch. V. The author illustrates the point
by referring to one of many United States exporting firms which " has a large sales
force abroad armed with ingenious literature to coax entrepreneurs into adding
instrumentation to their plants. In Mexico the company conducts training courses in
the use of instruments sold. That kind of salesmanship is laudable. But who provides
it for the unskilled worker? "

190

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(c) Related to the last point, there are the difficulties of handling a
large labour force, and lack of experience of the problems of doing so. 1
(d) The fact that it is easier to reproduce existing designs than to
work out afresh the technical problems of designing a production
process. The vast bulk of technological research is carried out in industrially advanced countries with a view to solving problems encountered in
those countries, and the most appropriate technology for countries in
which unskilled labour is plentiful and capital is scarce may simply not
be known.
(e) The fact that " up-to-date " modern equipment may be imported
under foreign aid programmes under which donor countries require that
equipment be purchased from them (aid " with strings ").
(f) Tax incentives to reinvest profits ; benefits are obtained if
machines are bought, but not if workers are hired.
(g) The fact that the "private cost" (money cost to the entrepreneur)
of employing capital may often be less, and the private cost of employing
labour greater, than the real cost to society of doing so. This point is
taken up on page 194 below.)
It is believed that there is so much to be done in developing countries
in making sure that the employment of labour does not fall short of the
level that would make for optimum growth that attention can, and should
for the present, be concentrated on this problem. The present paper,
accordingly, does not attempt to go further than this or to discuss the
question whether, and in what circumstances, it might be reasonable to
forgo a certain amount of growth in exchange for a certain amount of
short-term employment by accepting a path of development (as determined by decisions regarding the product mix and the choice of techniques) that would not be optimum from the point of view of growth,
but that would provide more jobs more quickly.
E. The first and major element in a developing country's policy towards
employment in the context of industrial development should be to make
1
P. STRASSMANN, loe. cit., quotes as a by-word among industrialists in a Latin
American country the saying " menores obreros, menores problemas " (fewer workers,
fewer problems). He points out that both entrepreneurial hostility and benevolence
towards labour tend to yield the same reaction: mechanisation. "The hostile entrepreneur sees each worker as a potential trouble-maker and wants fewer of them. The
benevolent manager does not like to run a sweat-shop, exploiting his men's poverty
with backbreaking antiquated methods." Nobody would advocate the retention of
dangerous or unhealthy jobs, but dangerous or unhealthy features of jobs can often be
eliminated by providing relatively inexpensive equipment without abolishing the jobs
themselves. Plagued by breakdown and lack of spare parts, many maintenance engineers in under-industrialised countries must have been tempted to develop a slogan
" fewer machines, fewer problems ".

6. EMPLOYMENT ASPECTS OF INDUSTRIALISATION

191

sure that all labour that can be employed productively in the industrial
sector is employed; and steps should be taken to implement this policy.
This calls for lengthier and more extensive comment than the very
brief treatment accorded to the first four propositions.
In the light of what has been said above, the first and major element
in a country's policy towards employment in the context of industrial
development seems non-controversial. It would seem that every government, and especially a government facing a problem of surplus labour,
would wish to do all it can to make sure that as much labour as can be
employed productively in the industrial sector (and of course in other
sectors too) is employed.1 What are the possibilities of providing a larger
number of productive jobs in the industrial sector of developing
countries ?
So far as this is a matter of choice of products or of technology—
including, where appropriate, the installation of equipment that is secondhand or not of the latest design—the subject has been covered in another
I.L.O. paper for the symposium.2
But finding ways of using more labour to save scarce capital is not
only, perhaps not even mainly, a matter of installing less costly equipment
which needs more labour to operate it. Not enough attention has perhaps
been given to the scope for productively using more labour in conjunction
with given equipment. Three possibilities are worth looking into.
The first is more intensive staffing to reduce the idle time of machines.
The more costly a machine, the more important it is to keep it continuously working, even if this means that some of the men operating it are
less than fully employed. A major reason for low productivity in many
developing countries seems to be the high proportion of idle time of
many machines. The optimum degree of intensity of staffing existing
equipment, as well as the optimum choice of equipment, depends on the
ratio of wage rates to interest rates. A research worker who visited
glass-bottle factories in Mexico and Puerto Rico found that:
The mechanism for stacking hot newly moulded bottles on to a conveyor
going into a cooling oven was often out of order. In Mexico, two men with
tongs were always on hand to supplement the machine. In Puerto Rico, with
wages almost four times as high, such standbys were uneconomical and the
glowing bottles
went down a reject shoot until the mechanism was replaced
or repaired.3
1
In most countries surplus labour will probably have for the most part to be
absorbed outside the industrial sector, but the scope and opportunities for this are not
examined in the present paper. See I.L.O. : Employment and Economic Growth, op. cit.,
Ch. VI.
2
Paper No. 7 below.
8

P. STRASSMANN, op. cit.

192

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

On at least one occasion an I.L.O. productivity team, investigating a
textile plant in Pakistan, recommended taking on more workers in order
to increase productivity.
A second way of getting more output and providing more employment
with given equipment is to prolong the life of the equipment by better
maintenance. This can perhaps be regarded as a variety of more intensive
staffing.
Thirdly, there is the possibility of organising multiple shifts.1 If an
expensive machine can be worked for 24 or even 16 instead of eight hours
a day, there will be a considerable increase in output and employment in
relation to annual capital costs (interest and depreciation). This would be
true even if the length of life of the equipment depended strictly upon the
number of hours it had been in use and nothing else. In this case there
would be no saving on depreciation by substituting three shifts for one,
but interest charges would be cut by two-thirds. At the other extreme
would be a case in which the effective life of a machine depended entirely
upon its age and not at all upon how intensively it was used; this is the
case with any machine that becomes obsolete while it is still in perfect
physical condition. In this case two-thirds of the depreciation as well as
two-thirds of the interest charges would be saved. In the more usual case
where the effective length of life of a machine depends partly upon its
age and partly upon how intensively it is used, the saving would be somewhere between these two limiting cases.2
1

See on this subject M. KABAJ: " Shift Work and Employment Expansion ", in
International Labour Review (Geneva, I.L.O.), Vol. 91, No. 1, Jan. 1965.
2
An example may make the argument clearer. Suppose that the demand for a
certain product can be met either by installing three machines and working them eight
hours a day or by installing one similar machine and working it 24 hours a day.
Suppose the machines cost 8100,000 and the rate of interest is 8 per cent. In case A
the length of life depends only on intensity of use, and it is assumed that a machine
will last nine years on a one-shift system, but only three years if used continuously on a
three-shift system. In case B length of life depends only on the age of the machines,
and they are assumed to last nine years whether used on a one-shift or three-shift
system. Annual capital costs are made up of interest charges plus depreciation, the
latter being estimated by dividing the initial cost of a machine by its length of life in
years. The savings, in U.S. dollars, under a three-shift system compared with a
one-shift system would be somewhere between the following limits:

Cost of machine(s)
Case A
Interest
Depreciation
Annual capital cost
Case B

Interest . .
Depreciation
Annual capital cost . . .

Three machines
and one shift
(1)

One machine
and three shifts
(2)

300,000

100,000

24,000
33,333

8,000
33,333

57,333

41,333

24,000
33,333

8,000
11,111

57,333

19,111

Saving
(1-2)

16,000

38,222

6. EMPLOYMENT ASPECTS OF INDUSTRIALISATION

193

There would seem to be much scope for extending multiple shifts in
industry in developing countries, if the various difficulties in the way of
doing so—which are probably particularly great in smaller firms—can
be overcome.1 Since they seem to offer such a promising way of getting
more output and providing more badly needed jobs with the same
amount of capital, the reasons why multiple shifts are not more widely
used are worth investigating.
One important reason no doubt is that night work creates difficulties
for many workers and disrupts their normal living cycle. Housing conditions for industrial workers in developing countries (and in developed
countries too for that matter) are generally not conducive to rest during
the day, and the transport and other facilities they need on night shifts
may be lacking. These difficulties may be reduced if a two-shift instead
of a three-shift system is worked—for example work starting at 5 a.m.
and stopping at 9 p.m. Other difficulties may be eased by initiatives
taken by employers, perhaps in co-operation with local government
authorities, in matters relating to canteens, transport and housing. Even
so, workers who have a choice between working an ordinary day shift
and working an early or late or night shift on equal terms are likely to
prefer the ordinary day shift. But for many workers this is not the choice;
the choice is rather between working an early or late or night shift (at
least intermittently if shifts are rotated) and not having a job at all.
These workers would clearly be better off and would be able to make
their contribution to the development of their countries if a systematic
effort were made to overcome the obstacles in the way of operating a
multiple-shift system; and the savings in capital costs leading to higher
profits would make it possible to offer premium payments for working
night shifts.
A second reason for the limited resort to multiple shifts is undoubtedly
a shortage of various types of key personnel. Supervisors 2 are no doubt
among the most important. Who is to look after a second or third shift,
particularly in a small family business ? In countries where there is little or
no industrial tradition, labour unaccustomed to the discipline and rhythm
1
D . N. DHAR and H. F. LYDALL found that only 25 out of 206 small enterprises in
India worked two shifts, mostly with the owner's son or brother in charge. See their
The Role of Small Enterprise in Indian Economic Development (New York, Asia
Publishing House, 1962), p. 56. P. STRASSMANN, op. cit., found that in a sample of
industrial firms in Mexico, 18 per cent, of small firms, 35 per cent, of medium-sized
firms and 65 per cent, of large firms operated multiple shifts. But 81 per cent, of the
firms operating multiple shifts did so for compelling technical reasons such as keeping
furnaces going overnight.
2
Described by STRASSMANN, op. cit., as " perhaps the greatest bottleneck in economic development ".

194

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

of industrial life needs much supervision, and it is often difficult enough
to find suitably qualified supervisors even for one shift a day.
Process planners may be another category of key personnel in short
supply. The processing of materials and the production of components
in different departments of a plant need to be co-ordinated so that there
are neither bottlenecks nor surpluses that cannot easily be stored. If the
different departments get out of step under a one-shift system, the management can perhaps, in an emergency, organise an occasional second shift
in one department so as to enable it to catch up. There is no easy remedy
under a continuous-process system; if one department falls seriously
behind, the whole plant may be brought to a standstill.
Yet again, maintenance and repair are much more difficult with
continuous processes. Under a one-shift system breakdowns can be
repaired and routine maintenance can take place during intervals between
shifts. With continuous operations preventive maintenance has to be
dovetailed into the cycle. Carelessness or mistakes leading to breakdowns
threatening a stoppage of the whole works are apt to be much more costly
than under a one-shift system.
Thus, for various reasons, multiple shifts are liable to involve considerable difficulties for management. The difficulties of operating a two-shift
system, say 16 hours a day, are less than those of operating a three-shift
system. It is true that the advantages are also less, but very substantial
savings could still be obtained, and a two-shift system may be a practicable alternative to a single shift in conditions in which three shifts are not
feasible at all. We have seen that a two-shift system would permit the disadvantages of night work for workers to be largely eliminated or at least
greatly reduced.
These are some of the opportunities (other than those associated with
choice of products and technology, which are discussed in paper No. 7) for
providing more employment in the industrial sector in ways that will
promote, rather than impair, economic growth. For the various reasons
examined thus far, less employment may be provided in the industrial
sector of developing countries than it would be remunerative (both to
an individual entrepreneur and to society as a whole) to provide, at least
if certain difficulties could be overcome. But there is the further point
that employment that it would be socially worth while to provide, in the
sense that what would be produced would have a value greater than its
cost of production to society as a whole, may not be remunerative to
private entrepreneurs.
To quote from another I.L.O. publication 1 :
1
Employment and Economic Growth, op. cit., pp. 137-138. For an interesting discussi on of imperfections in labour and capital markets see P. STRASSMANN, op. cit., Ch. V.

6. EMPLOYMENT ASPECTS OF INDUSTRIALISATION

195

In a market economy employers must closely compare returns and costs
measured in terms of money.... However, the pricing system will promote
economically rational decisions if, but only if, money costs accurately measure
real costs, so that what an employer has to pay to employ labour or borrow
capital reflects their true scarcity or abundance.
But there can hardly be said to be an organised market or a market price
for capital in many developing countries. Finance may be made available
from public sources or with a government guarantee for some privileged types
of investment in the modern sector at rates of interest lower than would have
had to be paid in an open market, while usurious rates may be payable in the
traditional sector. While rates of interest for certain types of borrowing may
fail to reflect the true scarcity of capital, wage rates on the other hand may fail to
reflect an abundance of unskilled labour. Wages have to be looked at from two
points of view—as an income and as a cost. As an income, wages in developing
countries are often barely, if at all, sufficient to enable even urgent needs to
be met. . . .
But if there is much unemployment or underemployment even very low
wages may overstate the real cost of employing labour, in the sense of the value
of the alternative production there would have been if the worker had not been
employed where he is. The value of the alternative production forgone, so far
as the activities of the worker himself are concerned, will be nil if the worker
was wholly unemployed, and may be very low if he was greatly underemployed.1
It will be understood that nothing in this argument suggests that wages
regarded as incomes are higher than they ought to be. The argument is that
the money cost of employing labour overstates the real cost of doing so.
A good deal of emphasis is laid on this point in paper No. 7, but
it is equally relevant to the present paper. If the ratio of labour costs
to capital costs in terms of money were lower than it is, entrepreneurs
would more often find it profitable to resort to more intensive staffing,
better maintenance of expensive equipment and multiple-shift work.
Governments may wish to take account in their employment policy of
this common distortion of the structure of prices and costs in developing
economies. This point is elaborated below.
It may be added that the governments of some developing countries,
aware of the hardships often involved in trying to bring up a family
in urban conditions on the wages prevailing, particularly for unskilled
workers, have acquiesced in, or in some cases taken the initiative in
bringing about, rather rapid increases in industrial and other wages.
This probably tends to limit the growth of employment opportunities.
In a number of situations a hard choice has to be made between more
employment or higher wages for those already employed.
1
There may be other elements in costs to society that cannot be neglected. Unless
wage-earning employment can be provided on the spot, workers will have to move in
order to take it up and this will involve costs of transport. If they move to towns, they
will have to be provided with somewhere to live, and other forms of social capital.
They may also need various forms of training which, however desirable, cannot be
provided without costs. All these things will make demands on resources which will
constitute real costs to society. [Note taken from text quoted.]

196

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

If it is the policy of a government to do all it can to ensure that as
much labour is employed in the industrial sector as can productively be
employed there, the above analysis suggests that steps taken to implement such a policy should include the following:
(a) Promoting awareness on the part of the managements of industrial
enterprises, public and private, of (i) the importance of keeping employment considerations in mind, along with others, when taking decisions
relating to the composition of output and the techniques of production 1 ;
and (ii) the fact that opportunities for the productive employment of
labour in industry depend not only on the choice of products and
technology, but also on exploring the scope for more intensive staffing,
better maintenance of existing equipment and an increase in shift work.
In countries where national or regional productivity institutes or management development centres have been set up, these provide channels of
approach and technical advice to both public and private industrial
managements, and it seems appropriate that in their work considerable
emphasis should be given to employment considerations. Otherwise
efforts to increase productivity may make for unnecessary redundancy
and dismissal of workers ; and if these workers cannot find other jobs
any increases in productivity that may be achieved are likely to be
dearly bought in terms of welfare.
(b) Governments might wish to investigate systematically, in cooperation with employers' and workers' organisations, the reasons why
multiple shifts are not more widely employed in industry, with a view
to finding ways of overcoming the difficulties that at present stand in the
way of making wider use of them.
(c) Again in co-operation with employers' and workers' organisations, governments might wish to try systematically to identify the
categories of key personnel shortages of whom constitute major obstacles
to the employment of more labour in industry. Supervisors, process
planners and maintenance men may be among these categories, but there
may be others equally or more important.
(d) Having identified these categories of workers, governments
might wish (i) to estimate the numbers in each category who should be
trained in order to meet present and foreseeable future needs, and
(ii) to organise, or assist entrepreneurs to organise, " crash " training
programmes as an emergency measure and longer-term training arrange1
This point is mentioned for completeness, though the issues it raises are discussed not here but in paper No. 7.

6. EMPLOYMENT ASPECTS OF INDUSTRIALISATION

197

merits to ensure that the supply of personnel in the key categories will
keep pace with the demand for them.
(e) Governments which provide tax incentives for the reinvestment
of profits might wish to consider counteracting this bias in favour of
the employment of capital, rather than labour, by making an increase
in a firm's labour force as privileged for tax purposes as investment in
additional equipment.
(f) In taking decisions on the size and composition of the labour
force to be employed in industrial undertakings in the public sector,
governments might wish to base their decisions not on the market
prices of capital and labour, but on a system of " accounting prices " or
" shadow prices " designed to reflect more accurately the relative scarcity
of capital and labour. They might also, through appropriate fiscal
measures, give private entrepreneurs inducements to behave as though
capital were dearer and labour cheaper than the prices actually prevailing.
Such inducements may take various forms. Licensing systems can also

be used as a means of applying a certain amount of compulsion in
appropriate cases. For example, at the time of applying for a licence to
establish a new plant employers could be required to present a strong
and convincing case for the techniques they plan to adopt and give
information on the sources of supply of machinery, etc. Since these are
matters of general economic management, bearing just as much on
other sectors as on the industrial sector, they will not be further discussed
here.1
1
See I.L.O.: Employment and Economic Growth, op. cit., pp. 138-141, and idem:
Employment Objectives in Economic Development, op. cit., p. 72. See also A. QAYAM:
Theory and Practice of Accounting Prices (Amsterdam, 1960), and Mahbub UL H A Q :
The Strategy of Economic Planning: A Case Study of Pakistan (Karachi, Lahore,
Dacca, Oxford University Press, Pakistan Branch, 1963), pp. 42-45.
Although the subject cannot be pursued here, two difficulties about the " accounting prices " approach may be mentioned briefly. One is the difficulty of determining in
a scientific manner accounting prices that would reflect real scarcity in the sense that
they would just " clear the market " for capital and labour, leaving neither a shortage
nor a surplus of either; a perfect solution to this problem is unlikely to be achieved,
but even quite arbitrarily determined shadow prices could make for more rational
decisions than the present distorted market prices. A second and perhaps greater
difficulty is that attempts to correct the effects of the cost distortion, both in the public
and in the private sector, are liable to cost money, or to involve a loss of revenue, to
the State. It is all very well to say that employment of more labour would be economically rational in the sense that the additional goods or services produced would be
worth more than the social costs of employing the additional labour, but if the additional employment involves money costs that are not covered by the sale of additional
goods or services, how is the additional employment to be financed ? If it is in the
public sector, it will involve increased demands on public funds. Special inducements
to private enterprise to employ more labour are liable to involve either tax rebates or
special subsidies. Money spent to correct the effects of cost distortions may be very
well spent from the points of view both of productivity and of welfare, but such money
will have to be found somewhere.

198

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(g) Governments may wish to take due account, in decisions affecting
wages, of the effects of wage increases on employment opportunities.1
F. Some forms of international action may be helpful in this connection.
While a policy to employ more labour productively in the industrial
sector would need to be implemented primarily by direct and indirect
government action in the country concerned, some forms of international
action may be helpful in this connection. These may include the following:
(a) Increasing the emphasis placed, in the work of international
technical co-operation missions concerned with management development or productivity improvement, on searching for opportunities for
the productive employment of labour in industry.
(b) Increasing the emphasis placed, in the work of such missions
concerned with vocational training, on identifying and training categories
of key personnel, shortages of whom constitute obstacles to the employment of more labour in industry.
(c) International lending through such agencies as the International
Bank for Reconstruction and Development and regional development
banks might include the employment potential of various investment
projects among the criteria for lending. Lower rates of interest might
be charged on loans granted to finance projects that promise larger
increases in productive employment than others. In pre-investment
feasibility studies of projects carried out by lending agencies careful
consideration might be given to alternative and more labour-intensive
possibilities of production.
(d) A main reason for underutilisation of industrial capacity in a
number of developing countries is the shortage of imported materials,
intermediate goods and spare parts (which together might be called
" maintenance " imports) due to lack of foreign exchange. This, for
instance, appears to be the case in India. Where such bottlenecks are
important, it is worth while to examine whether, in providing international capital aid to the country concerned, some shift of emphasis
might be called for as between the financing of formation of fixed
capital and the financing of expansion of maintenance imports caused
by the growth of industrial capacity. With regard to Asian countries it
has been observed :
1

This subject is further discussed in paper No. 8 below.

6. EMPLOYMENT ASPECTS OF INDUSTRIALISATION

199

Foreign aid is a way out of this difficulty and has been so used by many
countries. But the preference of the donor countries for specific project aid has,
on balance, led to a greater expansion of the demand for imported maintenance
materials than the increase in the free aid which can be utilised for the purchase
of these materials. Thus, when a scarce resource is provided from abroad, the
donors do not seem to devote much care to ensuring that the resource is fully
utilised.1
In such cases a more balanced distribution between specific project
aid and capital aid not tied to specific projects could, by making available
to the country more foreign exchange for financing maintenance imports,
go some way towards bringing about fuller utilisation of existing capacity
and a greater immediate increase in employment in the industrial sector,
although the longer-term solution would depend much on the development of industries to provide import substitutes, and on export promotion.
(e) An increase in employment in the industrial sector, as in any
other sector, will lead to an increase in demand for food. The difficulty
of providing a commensurate increase in food supply, especially in
urban areas, is often a constraint on the rate of growth of industrial
employment. While most developing countries have taken steps to
expand their programmes of agricultural development, it will take
some time before these programmes can yield the expected additional
food output. During this interval, an expansion of international food aid,
more particularly through the World Food Programme, could be of
material help to those countries in raising the level of industrial employment without risking inflation.
(f) For countries in the process of industrialisation where labour is
plentiful and capital scarce, the comparative advantage of international
trade in manufactures normally lies with products requiring relatively
more labour and less capital. It has been observed that—
there is evidence that comparative cost conditions are changing to the advantage
of the newly developing countries as regards the production of certain manufactured goods, particularly those requiring a good deal of labour, such as
textiles, clothing, ceramics, pharmaceuticals, light electrical material and some
types of durable consumer goods such as bicycles and sewing machines.2
The development of industries manufacturing labour-intensive products
for export markets to earn more foreign exchange would at the same
time provide more opportunities for industrial employment that promote economic growth. The developed countries could do much to
help realise this potential comparative advantage by admitting manufactured exports of developing countries more freely to their markets.
1
2

Economic Survey of Asia and the Far East, op. cit., p. 41.
Employment Objectives in Economic Development, op. cit., p. 127.

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(g) As indicated above, because of the lack of adequate technological
research, the most appropriate technology for countries with an
abundance of labour and scarcity of capital may simply not be known.
In order that the technologies adopted in industrialisation may correspond more closely to their relative factor endowments, these countries
will have to make special efforts to promote technological inventions
and innovations directed at saving capital and making more productive
use of the available labour. There is, however, a limit to national efforts.
Furthermore, many technological developments of this nature might be
expected to meet the similar needs of a number of developing countries.
As emphasised in paper No. 7, there seems to be, therefore, a particular
need for concerted international action to foster such inventions and
innovations, including increased technical co-operation by international
agencies in these fields of activity.

7. PROGRESSIVE INDUSTRIAL TECHNOLOGY
FOR DEVELOPING COUNTRIES
INTRODUCTION

By the technology of an industry, for purposes of this paper, is
meant the processes, plant, machinery, equipment and tools used in it.
There are some industries in which, for practical purposes, there is little
choice of technology, or in which the superiority of one technology over
all alternatives is so great that it remains superior throughout the whole
range of variation in size of markets, in wage rates and in interest rates
prevailing in the world. But such a state of affairs is exceptional. In most
branches of industry a range of choice of technology exists; and even
where this is not true of certain central production processes it is usually
true of a variety of ancillary processes such as materials handling,
internal transport and packaging.
Those concerned with the industrialisation of developing countries
—private industrialists, the directors or managers of public industrial
establishments and officials in ministries of economics, planning, industry
or finance who guide industrial development by issuing or withholding
licences, permits or loans—are anxious to choose or encourage the
choice of the technology best suited to the needs of the country concerned.
The first part of this paper discusses certain factors affecting the choice
of industrial technology; the second part discusses sources of appropriate
technology and ways of increasing its availability; and the final section
examines measures that can be taken to promote the introduction of
progressive technology through the action of industrialists, governments
and international organisations.
I.

SOME FACTORS AFFECTING THE CHOICE OF INDUSTRIAL TECHNOLOGY

There has been much controversy over the relative merits of capitalintensive and labour-intensive technology in developing countries. On
the one hand, it may be felt—
(a) that the building up of an industrial sector employing the most
modern and advanced technology is the hallmark of an economically
developed country or of one determined to take its place as rapidly
as possible among these countries ;

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(b) that it is necessary to invest with the future in mind and that
machines and equipment which are not of the latest design will
rapidly become obsolete;
(c) that advanced technology exposes all who come into contact with
it to the forces of change and development, thus exerting a pervasive
influence on ways of life throughout society and in particular
enabling managements and workers to acquire the technical skill
and knowledge indispensable in a modern economy;
(d) that the industries with the greatest growth potential are those
employing advanced technology;
(e) that a high degree of capital intensity permits large profits to be
made and a large proportion of these to be ploughed back to promote faster growth.
On the other hand, it may be felt—
(a) that advanced industrial technology has developed in response to
the needs, and is designed to operate in the conditions, of industrially
advanced countries with large markets, relative abundance of capital
and entrepreneurial and managerial skills and a shortage of labour;
(b) that transplanting industrial technology to countries where it will
operate under conditions for which it was not designed can be an
expensive mistake;
(c) that countries should not seek to make a sudden, sharp break with
their past but should build on the existing foundations, developing
and adapting traditional skills, knowledge and techniques;
(d) that, where capital is scarce, the adoption of capital-intensive
technology will have the effect of concentrating it in a few large
plants while keeping the rest of the economy starved of capital,
and that this accentuates the dualism characteristic of developing
economies and societies, sharpening the contrast in living standards,
opportunities and outlook between the modern and the traditional
sectors and limiting the numbers who can be absorbed into the
modern sector and exposed to its modernising influences;
(e) that if, indeed, capital-intensive technology does enable a few large
modern plants to make large profits this does not mean that the
total profits, public and private, for the economy as a whole are
necessarily greater, or that more resources will necessarily be
invested, than would have been the case if capital were spread more
widely and thinly.

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203

These arguments cannot all be examined in detail in this paper but
comments will be made on some of them.1
It is sometimes thought that anyone who advocates the selection of
labour-intensive products and methods in developing countries is trying
to fob them off with something inferior. It is indeed highly likely that
industrial processes in the future will in all countries come to be carried
out increasingly by machines rather than by men. When one considers
the comparative advantages of men and machines, most of the advantages
in industrial processes seem to lie with machines.2 Where fabrication is
concerned, men can shape and combine materials with simple hand
tools by such actions as cutting, striking, twisting, rubbing and stirring.
However, men cannot attain great speed or high precision, and they can
work only within certain temperature ranges and in the absence of
poisonous fumes. Machines can do all these things and more, faster,
with greater precision and in a wider range of conditions. So far as
transport is concerned men can move limited weights rather slowly over
rather short distances ; machines can move heavy weights fast over long
distances. So far as control is concerned, men can look, listen, feel,
smell and taste; but here again their speed and accuracy are limited.
Nor do they respond directly to changes in voltage, humidity or chemical
states. Machines can do all these things. Men still have the advantage
over machines in analysis—in breaking information into components
for selective recombination with other data. And human beings have a
monopoly in personal services, that is in situations where the impact of
one personality on another is important. In industry other kinds of
work than those just cited seem likely to be done increasingly by
machines.
But this has not happened yet even in the developed countries. The
transition to more or less complete automation of industry, if it ever
comes about, may take several generations. During the transitional
period it is reasonable and indeed necessary, in the selection of industrial
products and processes, to take account of differences between countries
in factor proportions, factor prices and size of markets.
This suggests that countries in which capital is scarce and dear and
labour cheap and abundant would do well, in planning their industrial
development, to look for ways of using more labour and less capital.
1
For a review of arguments used in this controversy up to the time of its publication (and these arguments have not changed greatly in more recent years) see " Some
Problems of Investment Policy in Underdeveloped Countries ", in International Labour
Review (Geneva, I.L.O.), Vol. LXXVII, No. 5, May 1958.
2
The points which follow have been made by P. STRASSMANN: Technological
Change and Economic Development, op. cit.

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This is not a matter of being content with inferior, old-fashioned ways
of doing things. It is a matter of making use of an asset—abundant
cheap labour—that developed countries do not have, an asset which
gives developing countries an advantage, or a potential advantage, in
many lines of production. It seems likely that the least-cost combination
of labour and capital in an industrial process in a developing country
will often be one that provides more employment per unit of output
than the least-cost combination for the corresponding process in a
developed country. This is especially likely to be the case if the developing
country has a comparatively small market—and of course the size of a
market depends not so much on the size of a population as on its purchasing power.
Interesting work on the optimum combination of labour and capital
at different interest rates and wage rates has been done by the Netherlands Economic Institute.1 Among these studies are three which
compare (a) hand files with small electric grinders; (b) centre, turret
and automatic lathes; and (c) production of window frames with
planing and moulding or tenoning processes.
The choice of process depends both on the relation between wage
rates and interest rates and on the size of the market, which determines
the length of production runs. With short production runs it pays even
the developed countries with a high ratio of wages to interest to use the
most labour-intensive methods. In developing countries with a low ratio
of wages to interest the most labour-intensive methods will be the
cheapest except with a volume of production substantially greater
(from 1.7 to 15 times greater in the above-mentioned studies) than in
the developed countries.
But the full strength of the case for using abundant labour where
possible to save scarce capital in developing countries may not be
reflected in comparative costfiguresalone, for the costs of leaving human
resources idle are often not brought into, or are not accurately reflected
in, the calculations of planners. A pricing system will promote economically rational decisions if—but only if—money costs accurately measure
real costs, so that what an employer has to pay to employ labour or
borrow capital reflects their true scarcity or abundance.
It is clear that money costs and prices in developing countries often
do not accurately reflect real costs. In particular, capital often appears
cheaper than it really is (finance may be made available from public
sources or with a government guarantee for some types of investment
1
See the series of reports on alternative techniques of production (Rotterdam,
various dates).

7. PROGRESSIVE TECHNOLOGY FOR DEVELOPING COUNTRIES

205

in the modern sector at rates of interest lower than would have had to be
paid in an open market), and labour often appears dearer than it really is
(the real cost of employing a hitherto unemployed or greatly underemployed worker, in the sense of the production foregone by withdrawing him from what he was previously doing, may be almost nil). 1
In addition, the cost of foreign exchange often appears less than it
really is (if countries have over-valued currencies but do not want to
devalue, foreign exchange has to be rationed and allotted to successful
applicants at a price below what they would have been willing to pay
rather than go without). These cost distortions make it rational for
private enterprise, and the managers of public enterprises in so far as
they think primarily in terms of maximising the profits or returns of
their own undertakings, to choose a product mix and a type of technology
that use more capital and foreign exchange and less labour than is in
the best interests of the country as a whole. This has led to the suggestion
that governments, for planning purposes, should use not market prices
but " shadow prices " reflecting the best estimates they can make of the
real costs of different resources from the social point of view; and that
governments might also wish, through appropriate fiscal measures, to
give private enterprise inducements to behave as though capital and
foreign exchange were dearer and labour cheaper than the market
prices actually prevailing.2
The case for making sure that all the labour that can economically
be employed in the industrial and other sectors is employed is strengthened by the human and social costs of unemployment and underemployment, which have been stressed in paper No. 6. This would mean, as
suggested in that paper, that it would contribute to the general economic
and social welfare if private enterprise, and governments in both their
own operations and their policy towards private enterprise, attached more
weight than they do at present to employment considerations when
taking or guiding decisions regarding the choice of industrial technology.
This does not of course mean that labour-intensive technology should
always be preferred to capital-intensive technology. But perhaps the
following classification might be helpful as a guide to pohcy. Industrial
and other projects may be grouped in principle into four categories :
Category A projects: These are projects in which labour-intensive,
capital-saving technology, with existing methods and prices, yields money
economies in production. In all such projects there is a clear case for
choosing labour-intensive technology; the selection of capital-intensive
1
2

See on this subject paper No. 6, especially p. 195.
See paper No. 6, p. 197, subparagraph (f).

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technology for non-economic reasons, such as prestige, would involve
an evident misuse of resources.
Category B projects: These are projects in which labour-intensive
techniques, when used carelessly or in traditional fashion or without
adequate supervision, involve rather higher money costs than more
capital-intensive techniques would do, but in which there are opportunities (through better management, work study, better design of simple
tools, etc.) to adapt labour-intensive techniques to produce as cheaply
as, or more cheaply than, with more capital-intensive techniques. There
is a clear case for doing all that can be done at reasonable cost to transfer
category B projects into category A, and then to carry them out by
labour-intensive methods.
Category C projects: These are projects in which, even when all
feasible measures to improve the efficiency of labour-intensive techniques
have been taken, such techniques still involve higher money costs of production than would more capital-intensive methods, but do not involve
higher real costs (i.e. they would be cheaper if shadow prices accurately
reflecting real costs could be used instead of market prices). The simplest
way of counteracting the cost distortion would probably be to raise
interest rates, or at least to make sure that finance is not available on
subsidised terms.1 It might also be possible to operate something in the
nature of a negative employment tax or a subsidy for the employment of
labour; but there would be obvious possibilities of abuse, making such a
system difficult for developing countries to administer, and governments
would have to decide where the money was to come from.2
Category D projects: The difference between these and category C
projects is that the cost differential in favour of advanced technology is
greater than the cost distortion produced by the use of market prices
instead of shadow prices. There is no case on economic grounds for using
anything but capital-intensive technology in category D projects. A
question may arise as to whether a country in which capital is very scarce
should have projects of this kind at all; but a certain number of such
projects, even in very primitive economies, may be conducive to economic
1
This is not to suggest that governments should pay a higher rate of interest on
funds they borrow from advanced countries or through international agencies, but
rather that if they lend such funds to private enterprise they might maintain a profitable
margin between their borrowing rates and their lending rates, while if they use such
funds in the public sector they might for planning purposes use a shadow rate of
interest. It is recognised that raising interest rates on loans to private industrialists
might conflict, or appear to conflict, with a policy of encouraging rapid industrial
development; but funds no longer used to subsidise the capital costs of certain industrialists could be used to promote industrial development in other ways.
2
See also some suggestions in I.L.O. : Employment Objectives in Economic Development, Studies and Reports, New Series, No. 62 (Geneva, 1961), p. 72.

7. PROGRESSIVE TECHNOLOGY FOR DEVELOPING COUNTRIES

207

and social welfare, permitting for example the exploitation of natural
resources such as oil or deep-level minerals accessible only by capitalintensive methods.
This classification in four categories may seem somewhat theoretical
and schematic, but an attempt to assign industrial and other projects
included in, or competing for inclusion in, a development plan to these
categories, and to treat them accordingly, might well be useful for planners, private as well as public.
A country that chose to confine highly capital-intensive technology
to category D projects might thereby save much capital, which could be
used to provide more jobs and/or to raise the productivity of labour in
category A, B and C projects, resulting in a more even spread of capital
throughout the economy and a progressive adaptation of technology to
growing markets, knowledge, skill and availability of capital—hence the
use of the word " progressive " in the title of this paper.
Below are given some examples, drawn from the experience of
I.L.O. management development and small-scale industry experts, of
cases in which the transplanting of advanced industrial technology to
conditions for which it was not designed does not seem to have given
good results.
(a) Plastic Shoe Manufacture
One country imported two plastic injection-moulding machines costing
$100,000 with the moulds. Working three shifts and with a total labour force
of 40 workers they produced one-and-a-half million pairs of plastic sandals
and shoes per year. At $2 per pair these were better value than leather footwear
at the same price. But it is doubtful whether the country as a whole benefited.
The result has been that 5,000 artisan shoe makers have lost their livelihood
and the markets for the suppliers and tanners of leather, hand tools, cotton
thread, tacks, glues, wax and polish, eyelets, fabric linings, laces, wooden lasts
and cardboard boxes have been reduced, since none of these is required for
plastic footwear. As all the machinery and the material (P.V.C.) has to be
imported, whereas the leather footwear was based almost wholly on indigenous
materials and industries, the net result has been a decline in employment and in
real income within the country.
(b) Ceramic Plant
A ceramic factory making floor and wall tiles formerly imported its handoperated presses. As a result of close co-operation with local small engineering
workshops it was able to have replacement presses made locally, using castings
moulded from scrap metal in small foundries and machined on generalpurpose lathes and drilling machines. The tiles themselves were made from
indigenous clay deposits, and fired in kilns composed mostly of local refractory
bricks. Thus output, income and employment were stimulated in a number of
other industries and trades, e.g. scrap metal, foundry, carbon, refractory,
engineering, quarrying.
This multiplier effect was just beginning to make itself felt when it was
decided to build a modern large-scale ceramic plant in place of the existing one,

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with fully automatic presses, continuous tunnel kilns, etc. This equipment
required special steels and engineering skills, refractories with a high aluminiumoxide content, and technical know-how, none of which were available locally
(or were likely to be for many years). Therefore they had to be imported.
Also, because of the high speed of operation, very malleable clays were required,
and these too had to be imported. In the end the consumer got a poorerquality, dearer product because the breakage rate was higher owing to (i) inadequate temperature control in the tunnel kilns (technological inexperience),
and (ii) clumsy handling during glazing operations (inadequate supervision in
the new factory). Employment and net output declined in the ceramic and
allied industries listed above and the country's trading deficit widened.
(c) Tanning Industry
A tanning industry project in one country envisaged building a small
model tannery to act as a training centre and to demonstrate new techniques,
together with a number of new buildings to rehouse existing tanneries, thus
improving working conditions and separating the industry (with its obnoxious
smells) from living quarters. The total capital costs were projected as $2'/2 million for an output of 315 million per annum (a high capital productivity).
The buildings and some of the machinery could be made locally, so the import
content was small. Demand for leather was growing at 5 per cent, per annum
and labour productivity was expected to rise at this rate owing to improved
methods and conditions; thus the total labour force in the industry of 3,000
would remain the same.
This project was rejected on the ground that it was not modern enough.
In its place was substituted a scheme for a large government-owned tannery
estate, costing $15 million, equipped with the latest imported machinery and
with a total capacity 50 per cent, in excess of the existing firms. Labour productivity would be doubled, but the savings in wages would be more than
offset by higher capital (interest and depreciation) costs if a shadow interest
rate were used. The productivity of the capital employed would only be 25 per
cent, of the anticipated level in the first project. Employment in the industry
would be halved, the existing equipment made obsolete and the import bill
increased by more than $8 million. The present firms would be broken up and
experienced owners made redundant. Little improvement in quality could be
expected, because further foreign exchange to buy better hides and tanning
materials (which together with technical know-how were the primary determinants of quality) could not be afforded. In international terms the country
would end up not with the most up-to-date process, but with an expensive
" white elephant ", because heavy sole leather and even some upper leathers
were being replaced rapidly in world markets by synthetic materials.
The more modest scheme was thus not only more appropriate for the
particular internal circumstances of this country but also gave it greater
flexibility to take advantage of world technological developments when it had
the necessary resources (e.g. a petro-chemical industry).
Finally, two examples may be given of the successful use of technology
in industrial projects (in one case advanced technology) well adapted to
the needs and conditions prevailing in the developing countries concerned.
(a) Manufacture of Sewing Machines
An Asian country that had formerly imported its sewing machines decided
to promote its own sewing machine industry. A nucleus already existed in the

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209

small workshops manufacturing replacement parts for imported models.
Profiting from the temporary protection afforded by import restrictions, local
entrepreneurial initiative quickly appeared to co-ordinate and expand the
activities of these specialised workshops and to set up assembly units. In a few
years the industry, equipped with general-purpose lathes and drills, was
turning out models at 60 per cent, of the price of previous imports. The local
sewing machines had a more limited range of operations, and were less accurate,
but because of their lower price they had opened up a new market among
small-scale clothing and footwear establishments, thus increasing their efficiency. By 1966 import restrictions could be relaxed and the industry was
strong enough to have established a thriving export trade to neighbouring
countries.
(b) Fibre-Board Plant
A fibre-board plant was set up in an African country. This cost $2 million
and employed only 120 workers directly, because the higher pressures and great
bulk involved required very heavy machinery. However, it processed the
residue of sugar-cane and maize stalks, which would otherwise have gone to
waste. Thus the value added during the process was high and it provided
additional incomes to the farmers. The finished product was a good, cheap
substitute for certain kinds of wood for furniture and housing. This wood had
previously been imported, so foreign currency was also saved. The project
therefore served the national interest in several respects.
II. SOURCES OF APPROPRIATE TECHNOLOGY AND WAYS OF INCREASING
ITS AVAILABILITY

Various economic and social objectives of technical progress have
been indicated and some general guidelines have been suggested which
might be borne in mind by those who frame economic policy affecting
public and private investment decisions. But the problem does not cease
there. The optimum choice of technology can only be made if a full range
of alternatives is available. Unsuitable techniques are often applied because there is nothing else on the market except machinery designed to
meet other needs. The full spectrum of scientific and technical knowledge
must be brought to bear. The brand-new, the present day and the experience of the past are all potential sources which should be tapped.
Some sources are examined below in more detail and some ideas put
forward as to how their yield can be increased by international action.
New Designs
The most effective means of overcoming economic underdevelopment
would be to apply accumulated scientific knowledge to the solution of
the specific problems of the developing countries. There is undoubtedly a
great need for original designs which will incorporate recent inventions
but at the same time take account of the scarcity of capital and of certain
managerial and operative skills in the developing world. Innovation is

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required so that local raw material can be substituted in certain processes
for the different types which are imported at present. Varying climatic
conditions may demand new solutions to familiar problems. In India and
Britain working parties have been formed to undertake this research and
the United Nations Advisory Committee on Science and Technology is
keenly interested in the problems of adaptation of designs and methods.
Much valuable pioneer work has been done by specialist institutes like
the Tropical Products Research Institute in London.
Technological research institutes are now being set up in some countries with assistance from the Special Fund component of the United
Nations Development Programme. The Advanced Technical and
Vocational Training Centre in Turin is expected to contribute in this
field, as have the productivity centres and small industry institutes which
the I.L.O. is assisting in various parts of the world. But only the surface
of the problem is being scratched. More research of this kind is urgently
needed, preferably within the developing countries themselves so that
it is based upon first-hand knowledge of the local situation. Examples of
techniques on which further research is needed are the use of solar heat
to distil fresh water from salt water, and as a source of energy for industrial purposes; the processing of date palm fibres to replace wool and
hair in upholstery stuffing; and the extraction of creosote and charcoal
from the husks and shells of coconuts, and biological insecticides from
coconut oil.
Modern Technologies
As emphasised previously, modern technology can play a part. Not
to use the latest techniques at all would be just as wasteful as to use them
indiscriminately. What types are likely to pass through the screen that
has been proposed? Four main groups can be distinguished. The first
consists of technical know-how with little or no capital element. Improved
ways of making or growing things as a result of a deeper understanding
of the chemical, physical and biological properties of products and
materials fall into this category. The quicker this knowledge is incorporated into current practice the better, and extension services and demonstration units have vital roles in its dissemination. There would appear to be
no major economic obstacles, though social resistance may be encountered.
The second group consists of technology where the tool element can
be easily separated from the labour element. One particular process in a
series of operations may have to be performed by a particular machine if
consistent quality and precision in the final product is to be maintained.
The ancillary operations could be carried out by hand methods if labour
were abundant and cheap.

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211

The third category covers machines which replace non-existent human
skills, or skills which would demand the use of very expensive educational
facilities.
The fourth category embraces all those modern technologies that
may be the only effective means of exploiting a country's physical resources, which would otherwise lie idle and which form the basis of other
indigenous industries. An example might include the use of colour
charts, penetrometers and triaxial compression testing machines for
measuring the proportion of soil and clays, leading among others to the
manufacture of improved ceramic products.
Long-Established Designs
There may still be very great scope for the use of equipment which
has been superseded in industrially advanced countries because it is no
longer economic under present-day conditions in such countries, but
which may be employed profitably in the small industries and craft
workshops that provide the bulk of consumer goods and services in
developing countries. In these countries the most primitive production
methods still exist, even alongside large modern industries. In some
countries the potter's wheel is still unknown, wood-turning lathes are
turned by hand with a bow; bricks are fired in kilns that have to be
dismantled after every firing. Many designs exist in industrially developed
countries which are not to be found in catalogues and may have to be dug
out of the archives of patent offices and of long-established machinery
manufacturers. Trade associations could carry out such sifting and
collating, sponsored by United Nations or bilateral aid funds. The designs
could be sent to research institutes in developing countries, which would
disseminate the specifications and drawings to workshops and manufacturing firms and assist them with development.
The major international companies setting up subsidiaries in developing countries could contribute considerably in this. A large electrical
group in the Netherlands has shown the way by establishing at Utrecht
a pilot radio assembly plant for training future managers and technicians
to man their overseas factories. In this plant only simple and commonly
available tools are used and the complete process is " packaged " for
reproduction abroad. Some 20 countries are now producing radios
using techniques developed at Utrecht.
The Intermediate Technology Development Group in the United
Kingdom, formed in 1965, is gathering substantial support and has
already provided assistance and advice to a number of countries in
Africa, so far mainly in connection with rural activities. It is currently

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producing an illustrated buyers' guide to British tools and equipment,
entitled Tools for Progress, which lists 31 categories of inexpensive
equipment and tools under the main headings of agriculture, metalworking and machine maintenance, power, and water supply. Subheadings
include handicrafts and small-scale industries, and transport and handling.
The examples given above are indications of what might be appropriate " new " technologies to replace existing ones. These should be regarded as steps and not platforms. In each industry, improved techniques need
to be introduced successively over the years so that productivity is raised
progressively. Some concrete examples of such processes and techniques
are given below.
(a) Bakery industry. Steam-pipe ovens which ensure an even dispersion of heat by means of coiled steam pipes; drawplate ovens in
which the loading and unloading are speeded up by putting the plate
of the oven on wheels and rollers ; T-arm kneaders in which a single
reciprocating arm kneads the dough in a rotating mixing bowl. This
equipment is more advanced and efficient than bricklined, open-flame
ovens and hand mixing, but is much less capital-intensive than turboradiant travelling ovens or continuous mixers.
(b) Ceramic industry. Hand-operated jiggers for forming plates,
semi-automatic presses for tiles, gravity-fed extruders for pipes. These
are all superior to traditional methods but less expensive than tunnel
kilns and fully automatic equipment.
(c) Shoe industry. Simple sewing machines (first introduced in 1859)
for stitching the sole to the upper and insole. This is quicker than hand
stitching but may be more appropriate than vulcanising or injectionmoulding equipment for soling in some countries.
Second-Hand Machinery
This is really a special case of the previous category. Second-hand
machinery is often less complex than present-day machinery, so it is
easier to operate and maintain where certain skills or experience are
lacking. It is usually much cheaper than new equipment. Thus a given
investment fund may go further and the output in relation to the capital
input will be high. It can usually be adapted and reproduced more
readily in the indigenous engineering industries. There seems to be little
doubt that imported second-hand machinery would find a ready market
and, if selected judiciously, could raise productivity and efficiency over
a wide area.

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213

Some of the widespread resistance to second-hand equipment stems
from a fear of being landed with worn-out, obsolete machines, as well
as a rejection of what seems to be " second-best ". These inhibitions
may weaken when it is realised what a large market exists in the most
advanced countries for this surplus equipment. Indeed, in certain countries the sale of second-hand equipment exceeds that of new. For example,
in the United States, whereas " the dollar value of new metal-cutting and
metal-forming machines sold exceeds that of the second-hand, the
annual turnover in number of units sold is greater for the latter than for
the former: the ratio is currently about 2 :1 ".1 All in all, it would seem
to be preferable to prevent abuse and disappointment by more rigorous
inspection and by dealing only through reputable specialised importexport agencies in this field, than to forgo the potential advantages of
second-hand plant altogether. An example of comparative costs when
using a second-hand and a similar new machine tool is given in tables I
and II below.

TABLE I. COSTS AND OUTPUT OF ALTERNATIVE
SOLE-STITCHING MACHINES

Price
Interest rate on loans
Yearly output
Number of operatives
Annual wage cost
Fuel and power costs
Light and floor space and insurance
Repairs and maintenance* . . . .

Second-hand model

New model

81,000
5 years
15 per cent.
50,000 pairs
1
8500
850
850
875

85,000
10 years
15 percent.
70,000 pairs
1
8500
850
850
8100

1
Servicing costs are higher for the new model because foreign engineers and spare parts are required,
whereas the older, simpler machine can be repaired by local personnel.

This example is based upon actual costs, which have been rounded off
for simplicity. Thus, despite the fact that the new sole-stitching machine
has a 40 per cent, greater productivity and double the anticipated working
life of the older model, its cost per pair is 80 per cent, higher. This is
because capital costs are high and wages low. In this exercise material
costs are assumed to be constant.
1
United Nations Centre for Industrial Development: Report of Expert Group on
Second-Hand Equipment for Developing Countries, 7-22 December 1965 (New York,
1966), p. 5.

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

TABLE II. ANALYSIS OF DIRECT LABOUR, FUEL AND
CAPITAL COSTS WITH ALTERNATIVE SOLE-STITCHING MACHINES
(U.S. dollars)
Second-hand
model

New model

275
50
50
75
500

875
50
50
100
500

Total . . .

950

1,575

Cost per pair . . .

0.0190

0.0225

Depreciation and interest
Fuel

III.

MEASURES TO PROMOTE THE EFFECTIVE INTRODUCTION OF
PROGRESSIVE TECHNOLOGY

This final section is concerned with measures which can be taken by
industrialists, governments and international organisations to ensure
optimum selection of appropriate industrial technology.
Industrialists and Employers' Organisations
Many industrialists in developing countries and elsewhere have set
up industries without having had previous industrial experience and
without formal management knowledge. Except in the most advanced
companies, costing and accounting systems are rarely sufficiently developed to provide accurate analysis of costs on which the economic
performance of existing or proposed investments can be judged. Lacking
also technical knowledge and information about alternative processes
or plant, many industrialists buy their equipment on the recommendation
of the machinery manufacturers or their salesmen, who may not be
concerned to ensure that it is the most suitable for the conditions it will
have to operate in. As a result they may find themselves saddled with
plant that is uneconomic, even from the point of view of the firm. This
can also happen in the case of public undertakings.
It is therefore in the interests of industrialists themselves to ensure—
(a) that they fully understand the conditions in which they have to
operate, including the relative costs of the factors of production.
This is best ensured by sound management development and training
at all levels;

7. PROGRESSIVE TECHNOLOGY FOR DEVELOPING COUNTRIES

215

(b) that they obtain full information on the choice of processes and
plant available to them and expert advice on its selection.
Employers' organisations and trade associations might form documentation centres providing technical information likely to be of interest to
their members, and might arrange for the provision of expert services,
to be paid for by the users, when major purchases are involved.1
Governments
It has been stated earlier that it lies in the hands of those responsible
for economic planning to ensure that the real social costs of investment
decisions are known and understood. Training courses for planners in
feasibility studies and cost-benefit analysis techniques to increase the
rationality of investment decisions are being provided by U.N.I.D.O.
It must also be ensured, by legislative, fiscal and other measures, that
those responsible have the means of enforcing decisions that are in the
broad national interest. Such measures might include—
(a) the formulation and publication of industrialisation policy statements ;
(b) higher official interest rates on capital investment to raise the price
of capital vis-à-vis labour costs. This would tend to bring more
labour into productive employment and increase the propensity
to save 2 ;
(c) measures to ensure that importers have to pay the real cost of
foreign machinery and materials and that a proper evaluation is
made in feasibility studies ;
(d) state-financed hire purchase and rental schemes with lower interest
rates for locally made equipment and imported second-hand
machinery;
(e) encouraging the setting up or expansion of indigenous machinebuilding industries, initially to provide capital equipment of a simple
type that can later be developed and diversified into the manu1

In Iran the Industrial Management Institute supplies experts to accompany
industrialists going abroad to purchase plant and machinery. Substantial savings
have been effected in this way. See I.L.O.: Regional Seminar on Marketing, Employment and Management Problems of Industrialisation in Countries of the Near and
Middle East and North Africa—Conclusions and Papers. Management Development
Series, No. 2 (Geneva, 1965) (mimeographed).
2
It is in no way suggested that governments should pay a higher interest rate on
loans from international or bilateral sources.

216

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

facture of more advanced equipment. Associated with this might be
rewards for local inventions and patent protection for adaptations
of foreign designs ;
(f) the formation of customs unions with other States at similar stages
of development and with complementary resources. These would
encourage a new international division of labour and a competitive
stimulus for efficiency, while avoiding one-sided encounters between
rich and poor nations in the fields of international trade and technology;
(g) setting up central documentation and information centres to keep
track of past and current technical developments throughout the
world, working in liaison with international and other national
services;
(h) subsidising research institutes attached to industry associations,
especially for the development of appropriate technologies;
(i) the provision of service institutes and common facility services,
possibly on co-operative lines, for small industries and artisan
workshops, which would provide extension services and technical
training in the use of new equipment;
(j) the provision of vocational and technical education and training
at all levels in conformity with the planned needs for manual,
technical and managerial skills. Firms setting up their own training
facilities might be provided with financial assistance.
Action by International Organisations
Few developing countries have the resources to undertake the steps
necessary to ensure the optimisation of their industrial technology
without assistance from outside. Several international agencies within
the United Nations system are deeply involved in the provision of
technical co-operation services in most of the fields mentioned above
as being suitable for government action. Proposals for action by international organisations for the promotion of progressive technology
might include—
(a) The setting up by U.N.I.D.O. of a central documentation and
information centre on industrial processes, plant and equipment
providing for each industry information on the range available to
suit different conditions of operation and levels of industrial development. Advice on selection could be provided to government centres
and industry associations.

7. PROGRESSIVE TECHNOLOGY FOR DEVELOPING COUNTRIES

217

(b) Assistance to industrial research institutes in the development of
suitable processes and plant. U.N.I.D.O. is already active in this
field.
{c) Assistance in the establishment of service institutes, common facility
services, and co-operatives for small and artisan industries. The
I.L.O. is providing this kind of assistance.
(d) Assistance in vocational and technical education and training and
management development. U.N.E.S.C.O. and the I.L.O. are
providing such assistance.
CONCLUSION

Whether action along the above lines will be taken depends in the
final analysis on how convincing a case can be established for the arguments which have been advanced in this paper. Where they have been
applied in the field the results are promising. They appear to open up
new avenues for a dynamic attack on poverty in the developing countries,
in which the progressive and widespread introduction of new methods
(new compared with the traditional ones) could lead to a better use of
the current resources of these countries and achieve a more rapid and
sustained growth to be shared by the whole people.

8. WAGES AND INDUSTRIAL DEVELOPMENT 1

INTRODUCTION

The success of a country's efforts to promote industrial development
will depend partly upon the level, structure and rates of increase of wages
and salaries.2 These will be among the factors that determine whether
the country's industries, actual or potential, have an advantage or disadvantage compared with industries in other countries competing for
sales in the home or foreign markets. They help to determine the distribution of resources between consumption and investment; they also have
much to do with the degree of success of a country's industrial sector in
attracting, retaining and adequately motivating the managerial, professional and technical staff and skilled and less skilled workers needed for
industrial development.
In market economies the impact of market forces and collective
bargaining on the level, structure and rates of increase of wages cannot be
controlled but can be influenced by governments. It is becoming widely
recognised that government policy influences wages in a variety of ways
and that decisions about wages must take into consideration the indirect
effects they will have in promoting or retarding economic growth and
industrial development. In other words, the governments of newly
industrialising countries are coming to feel the need for a wage policy
integrated into their over-all plans for economic, social and industrial
development.
A national wage policy must be concerned with all sectors of the
economy, but has particularly important implications for the industrial
sector because—
(a) This sector typically relies much more heavily than others on
wage-earning labour.
(b) Industrial development thus increases the importance of wageearning employment.
1
This is one of the subjects discussed in I.L.O. : Report of the Director-General,
Report I, International Labour Conference, 50th Session, 1966, Part I: Industrialisation and Labour (Geneva, 1966), pp. 52-59.
2
In the rest of this paper the term " wages " is taken to include salaries; but it is
well to bear continuously in mind that the level and structure of the remuneration of
managerial and technical staff may be of special importance in industrialisation
programmes.

220

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(c) The industrial wage-earning labour force is the main point of
impact of modern technology and organisation on traditional society. To
the extent that it promotes or retards the successful adaptation and utilisation of the labour force for industrial development, wage policy or the
lack of it has a major influence in promoting or retarding dynamic change
throughout the economy and society.
(d) The handling of wage questions has a substantial bearing on the
number of industrial disputes and on the climate of industrial relations,
and hence on the level of productivity in so far as this is affected by these
factors.
Having a wage policy means deciding on at least two things : first,
what kinds of wage movements a government will encourage or discourage, and second, what instruments it will use to influence wages. Many
governments of both developing and developed countries cannot be said
to have a wage policy in the sense of having thought out and formulated
their views on these two questions. Many probably have not felt a need
to do so. But a national wage policy may well be considered more necessary and more feasible in developing countries than in developed ones.
It may be considered more necessary because all, or nearly all, governments want to be able to exert an influence over such things as the rate of
investment, the level of prices, the balance of payments and the volume
and structure of employment. These matters are influenced in various
ways, notably through monetary and fiscal policy, but also through
decisions affecting wages. The governments of developed countries have
at their disposal a wider range of instruments other than wage policy for
exerting such an influence than have the governments of developing
countries, many of which do not have the institutions upon which fiscal
and monetary policies depend. Lack of a wage policy thus probably
leaves a bigger and more serious gap in developing than in developed
countries in the range of instruments available to governments for guiding
economic development and implementing economic plans, including
plans for industrial development. It may be more feasible for the government of a developing country to apply a national wage policy if only
because a larger proportion of all wage and salary earners in the country
are likely to be government employees than would be the case in a country
with a developed market economy; and, as an employer, a goverment has
much influence over wages in general.
In deciding on the objectives and instruments of wage policy, governments should take full account of the views of representative organisations
of employers and workers, and should consult them for the purpose.
Decisions on these objectives and instruments raise a number of difficult

8. WAGES AND INDUSTRIAL DEVELOPMENT

22Î

questions about which not nearly enough is known. At its 48th Session, in
1964, the International Labour Conference adopted a resolution concerning minimum living standards and their adjustment to economic
growth which called, among other things, for a programme of research
that would help to throw light on these questions. Work on this programme is proceeding. In the meantime an exchange of views and experience on the objectives and instruments of wage policy in the context
of industrialisation would be valuable.
OBJECTIVES OF WAGE POLICY

If it is accepted that important objectives of wage policy are to ensure
that the general level, the rates of increase and the structure of wages
and salaries should be such as to promote and not retard a country's
industrialisation efforts, what are some of the major considerations to be
borne in mind in seeking to influence wages ?
The General Level of Wages
As regards the general level of wages, such propositions as the following might command a wide measure of agreement:
(1) The general wage level should be high enough to call forth a
sufficient supply of manpower for industrialisation, including the building up of the necessary infrastructure.
(2) It should be high enough, as a minimum, to meet the basic needs
of these workers in the industrial environment. From the point of view
of promoting industrial development this is necessary to ensure that they
can work efficiently; but it is also—and basically—a matter of giving due
consideration to the human needs of workers as men and women and
not merely as factors of production.
(3) The general wage level should also ensure workers, over a period
of time, a fair share in the fruits of economic progress, giving them a
level of living that maintains a reasonable relationship to that of other
sections of the community, including farmers, peasants and entrepreneurs.
Once again, this is partly a matter of ensuring that industrial workers are
sufficiently satisfied with their position in relation to that of other social
groups to constitute a stable, committed and productive labour force,
but basically it is a matter not of expediency but of social justice.
(4) The general wage level should take due account of capacity to pay,.
capacity to meet foreign competition in home and export markets and
capacity to provide productive work for a rapidly growing labour force
which in many countries already includes a great many unemployed and

222

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

underemployed. It seems that the degree to which it is possible to expand
employment depends to a significant extent on the level of the wage paid
to newly employed workers and that in a number of situations a choice
will have to be made between more employment or higher wages.
Such propositions as these are easier to formulate than to apply, and
in some situations their compatibility may be called in question and
compromises may have to be made.
The "Room for Wage Increases "
The practical problem confronting a government is likely to present
itself not so much in the form of the question " What would be the
optimum general wage level for this country ? " as in the form " What
room is there for wage increases in the situation in which this country
finds itself this year ? " The main source of wage increases is, of course,
increased production. Unless there is an increase in the supply of goods
that wage earners buy, higher money wages will not lead to higher living
standards—they will raise prices, or reduce employment. Governments
that have adopted economic development plans or programmes have
necessarily, in the process of so doing, taken a view as to the rate of
increase which they expect or intend to promote in the national income
and in its main components. Plans often go wrong, and unrealistic plans
may be of no help in making sensible decisions on wage questions. But
a plan that is realistic at the time it is drawn up (even though it will have
to be modified later to take account of unforeseen changes) can be a great
help. The planned or projected increase in average income per head
provides a starting point for a rational decision as to the rate at which
wages should be encouraged to increase.
This does not mean that governments will necessarily favour equal
rates of increase for all incomes. A government might, for example,
decide that average wage incomes should be encouraged to increase
rather faster than the average of all incomes. It might favour this because
of evidence that wages were in many cases too low to cover the cost of
living at a level satisfying the basic needs of workers and their families
or because it believed that the share of national income going to entrepreneurs and landowners was more than was needed in order to call
forth a sufficient supply of enterprise and investment capital.1 Or a
government might decide that in the national interest wage incomes, for
a time at least, should preferably rise rather more slowly than the average
1
No government, of course, would regard wage policy as the only instrument for
«nsuring an equitable distribution of the fruits of economic progress; fiscal policy,
including the progressive taxation of large incomes and perhaps capital gains taxes and
land taxes, has an important part to play.

8. WAGES AND INDUSTRIAL DEVELOPMENT

223

of all incomes. It might consider that its growth targets could not be
attained without raising the rate of investment, using for this purpose a
high proportion of annual increments of production; or it might consider
that the main feature of a policy for minimum living standards should
be the provision of productive employment for unemployed or underemployed workers, and that this should have priority over a policy for
raising the wages of those already employed. It seems important in any
case that governments, having determined their major policy objectives
in terms of investment, employment, the balance of payments, and so on,
should ascertain what these objectives imply as regards the room for
wage increases.1 Or a certain rate of increase in wages may be taken as
one of the policy objectives, in which case other objectives will have to be
accommodated to it.
If a government decides that the national interest demands a wage
policy calling for some patience and forbearance on the part of workers,
asking them to adapt their demands to the pace and requirements of
economic growth, and to make special efforts to improve their qualifications and performance before any substantial increase in their earnings is
possible, such a policy will be felt to be inequitable and will prove unacceptable to workers and their representatives, unless accompanied by
two things : first, an equitable fiscal policy to ensure that any wage restraint
is matched by similar restraint on the growth of other incomes, at least
after payment of taxes ; and second, on effective policy to promote the
economic growth in the name of which wage restraint has been called for.
In taking a view about the " room for wage increases " governments
will wish to bear in mind, among other things, considerations relating to
costs, prices, the balance of payments, the rate of investment, the rate of
growth, the level of employment, and the motivation of the labour force.
The last of these points is perhaps more conveniently discussed in connection with the structure of wages, to which we turn on pages 228 to 234 ; the
other points are discussed briefly in the following pages, necessarily in
rather general and theoretical terms, since there has been very little
systematic study of these considerations in developing countries.
Costs.
The extent to which higher wages will raise industrial costs depends
partly upon the proportion of wage costs to total costs in industrial
production, and partly upon how far, if at all, productivity increases in
response to higher wages. If labour productivity does increase, the extent
1
It will be important to know, for example, whether wage incomes may be allowed
to rise more rapidly or must be prevented from rising as rapidly as in the recent past.

224

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

to which this will offset the effects on costs of an increase in wages will
depend on whether the increase in productivity is costless (apart from the
wage increase) or whether it is achieved only at the cost of increased
capital or managerial inputs.
In many economies, including developing countries, the share of
wage costs in total costs of industrial production is less than 25 per cent.,
often much less.1 This suggests that even fairly substantial wage increases
might often have only rather moderate effects on cost levels in the
industrial sector. However, since the products of some undertakings are
the materials or the bought-out components of others at later stages, an
increase in wages may, for plants in later stages of production, raise the
costs of materials and components as well as of labour (though not if the
materials or components are imported or are purchased from the subsistence sector).
The effects of wage increases on productivity call for much more
thorough study than they have yet received. A distinction may be drawn
between productivity increases achieved with and without increased
capital investment. It is well known that wage increases give entrepreneurs
an incentive to substitute capital for labour. This will increase the productivity of the labour they continue to employ but will require investment resources and make capital scarcer in the rest of the economy.
It is sometimes said that if (and to the extent that) productivity increases
without any increase in capital investment, this will offset the effects on
costs of higher wages, and that there are three reasons why this may
happen. The reasons are as follows :
(a) entrepreneurs may organise the work more efficiently and make
better use of the services of their workers when they have to pay
higher wages;
1
The following statistics, relating to certain countries for which information is
available for a recent year, show the percentage share of wages and salaries in the
gross value of production in the extractive and manufacturing sector:

Country

Percentage
share

Africa:
Ghana (1964)
18
Morocco (1961)
15
Mozambique (1961)
18
Tunisia (1962) • • • • • • •
}4
United Arab Republic (1961) . 10
Zambia (1963)
23
Latin America:
Brazil (1962)
18
Ecuador (1963)
12

Country

Percentage
share

Asia:
China (Taiwan) (1962) . . .
Japan (1962)
Turkey (1962)
Industrialised Countries :
United States (1963) . . . .
United Kingdom (1958) . . .
Federal Republic of
Germany (1962)

10
12
14
24
22
16

Source: Derived from data contained in Statistical Year Book, 1965 (New York, United Nations,
1966).

8. WAGES AND INDUSTRIAL DEVELOPMENT

225

(b) the physical efficiency of workers may improve if, with higher
wages, they become better fed and healthier;
(c) the psychological adaptation of workers to their work may improve;
as they may become more anxious to give satisfaction and retain
their jobs, absenteeism and labour turnover may fall.
The first of these reasons seems likely to operate only if there are
increased managerial and supervisory inputs, involving either an increase
in time and effort expended by an existing staff or an increase in the size
of the staff. In connection with points (b) and (c), it seems that, while
higher wages may in certain circumstances increase the workers' capacity
for work and their willingness to accept the discipline and demands for
a higher level of output, unless management knows how to bring this
about and makes the necessary effort it is unlikely to occur spontaneously, at least to any very significant extent.
It is highly desirable that more should be known about the conditions
in which, and the extent to which, higher wages may be expected to
lead to higher productivity without increases in capital investment.
Cross-section studies that show high wages associated with high productivity in some firms and low wages associated with low productivity
in others are not conclusive evidence that higher wages lead to higher
productivity. In the first place, the high-wage, high-productivity firms
may employ more capital per worker; in the second place, they may
attract and retain the pick of the labour force. For them a high-wage
policy may be good business; but this may show only that there is room
for a certain number of high-wage firms in the line of business concerned,.
not that all firms would make higher profits if they paid higher wages.
Prices.
If higher wages lead to higher costs, entrepreneurs are likely to try
to recoup this by charging higher prices. To the extent that they succeed,
the costs of higher wages are passed on to consumers. To the extent
that consumers buy less than they would otherwise have bought, production and employment will fall, or will rise less than they otherwise
would have done, and the costs of higher wages will be shifted in part
to those who lose their jobs or fail to find jobs. The jobless are likely to
be poorer than the wage earners; consumers, on the average, may be
either richer or poorer than wage earners depending on whether the
products in question are articles of mass consumption or luxury goods.
The Balance of Payments.
Producers for an internal market, if they are all simultaneously
required to pay higher wages, may not have too much difficulty in

226

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

raising prices. But producers for export, facing competition from other
countries, may find it harder to do so, and the same situation arises
if producers for the home market have to meet competition from imports.
In these two cases, higher wages tend to place producers under a competitive disadvantage that will threaten to reduce the country's export
earnings or increase its import bill.
Investment.
The view that higher wages are bad for economic growth and
industrial development because they divert resources from investment
to consumption is over-simplified. It postulates that higher wages
transfer purchasing power from entrepreneurs, who save and invest,
to wage earners, who consume. It is true that wage earners in developing
countries can seldom save much. But, as stated above, it is by no means
certain that wage increases divert purchasing power to workers from
entrepreneurs. The burden may be shifted in whole or in part to consumers or to the jobless. Even if higher wages are paid for out of profits,
it is not certain that this will be at the expense of domestic investment;
it might be at the expense of conspicuous consumption or the purchase
of overseas assets.
The effect of wage increases on the distribution of resources between
investment and consumption thus seems very uncertain. Their effect on
the character of investment seems more predictable. To the extent that
they induce entrepreneurs to substitute capital for labour they tend to
divert some capital from labour-using to labour-saving projects. Some
capital that could have been used to provide new jobs and increase
production tends to be used instead to replace labour in existing uses.
Growth.
If and to the extent that higher wages do divert resources from
investment to consumption (we have seen that it is by no means certain
that they will have this effect) this will be bad for economic growth in
circumstances in which growth is limited by a shortage of capital—and
there is no doubt that this is the case in most developing countries most
of the time. It is sometimes argued that a diversion of resources from
investment to consumption will be good for economic growth and
industrial development, because it will enlarge the market for industrial
products. This contention raises a number of complicated issues. It is
pointed out, for example, that in spite of the general shortage of capital
there is often a great deal of unused industrial capacity in developing
countries. Even when this is true, it is not certain that the reason is lack

8. WAGES AND INDUSTRIAL DEVELOPMENT

227

of demand. It may be evidence, rather, of a lack of balance in a country's
investment programme, some equipment having been brought into
existence before it can be used because materials, power or complementary equipment or skilled labour are not yet available in the quantities
needed. Even if there is a lack of demand, it is not certain that higher
wages will remedy the matter. Normally an increase in wages transfers,
rather than creates, purchasing power (unless the banking system creates
additional money with which to pay the higher wages). The people
from whom the purchasing power is transferred—entrepreneurs, consumers or those who lose their jobs—will have less to spend. The contention we are examining seems to assume that the purchasing power
that higher wages transfer to certain workers comes from entrepreneurs
who would have spent it neither on consumption nor on investment
goods. While this is conceivable, it is rather a special case, and it is not
certain that higher wages will be the best remedy. Governments might
prefer to boost demand by increasing their programmes of public
investment or public consumption.
Employment.
Finally, higher wages have effects on employment. This is perhaps
less relevant to industrialisation programmes than the other considerations on our list, since the primary concern of such programmes is to
stimulate industrial production rather than employment. But, particularly in countries with surplus labour, it cannot be a matter of indifference
to a government whether an industrialisation programme provides a
reasonable number of jobs or leaves masses of people jobless. In most
ordinary circumstances it must be expected that when they have to pay
higher wages some entrepreneurs will employ fewer workers, not necessarily than they have employed in the past, but than they would have
employed at lower wages. Very little is known, however, about the
degree of responsiveness or elasticity of the demand for labour in developing countries in the face of wage increases. In one developing
country, Puerto Rico, it was estimated that between 1949 and 1958 a
change in wages could be expected to be associated with an approximately equal proportionate change in employment in the reverse
direction.1
This necessarily very inconclusive discussion of factors influencing
the " room for wage increases " points to the need for more systematic
study of the effects of higher wages in developing countries.
1
L. G. REYNOLDS and P. GREGORY : Wages, Productivity, and Industrialisation in
Puerto Rico (Homewood, Illinois, Richard D. Irwin, 1965).

228

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

The Structure of Wages and Salaries
Having assessed what order of magnitude of total and average wage
increases seems compatible with other national objectives (though being
ready to review this in the light of changing circumstances), governments
are also likely to have views on the distribution of the total available for
wages and salary increases among different categories of workers. There
seem to be two main criteria to be borne in mind in this connection:
equity and productivity. Ideas of equity are largely subjective, but it is
generally considered inequitable that certain workers should be paid
less than the " going rate " in a country for work of a given degree of
skill and difficulty. Considerations of equity may also favour raising
the wages of unskilled workers more than those of skilled workers.
The productivity criterion will favour distributing wage increases in
whatever way will promote economic growth and the social progress
that this makes possible. Broadly speaking, this means seeking to
adapt the structure of wages and the methods of wage payment so as to
give workers the strongest possible incentive (i) to acquire needed skills;
(ii) to take jobs in which there is a shortage of labour; and (iii) to improve
the quantity and quality of their output in their chosen jobs. In some
countries it is also important to provide incentives for a larger number
of workers to commit themselves to an industrial way of life.
In many ways the dictates of equity and of productivity coincide in
matters of wage structure. In the case of the occupational wage and
salary structure, the differentials that are needed to induce workers to
learn higher skills will often also be accepted as a just recompense for
their willingness to undertake the training required. Interregional and
inter-sectoral wage and salary differentials of a reasonable magnitude
may also be regarded as equitable in so far as they compensate workers
displaying the required mobility for the trouble involved. There are,
however, occasions when equity and productivity requirements are in
conflict. For example, if international freedom of movement is maintained, the wage or salary in the case of certain highly skilled workers
may need to be considerably higher than is considered " fair " in the
context of the country in question if these workers are to be dissuaded
from emigrating to richer countries.1 Where equity and productivity
1

" Middle-class earnings are much higher in relation to average earnings, or to
the earnings of small farmers or unskilled workers, in the less developed than they are
in industrial countries. This is partly due to the greater shortage of middle-class skills,
but it is also due to the greater mobility of the middle classes, as between richer and
poorer countries, which enables them to demand in poorer countries as high a standard
of living as they could get in richer countries." (W. A. LEWIS : The Theory of Economic
Growth (London, Allen and Unwin, I960), p. 228.)

8. WAGES AND INDUSTRIAL DEVELOPMENT

229

requirements are in conflict, the question of how much weight should be
given to each is a policy problem. In the present paper, dealing as it does
with how wage policy can help to promote industrial development, our
main concern is with the productivity aspect of the wage and salary
structure. But we have already insisted (on page 221) that wage questions
cannot be treated in the light of what is expedient only—even for so
important a purpose as industrial development—but call for due consideration of the needs and dignity of workers as men and women.
Moreover, it should be appreciated that a wage system that is regarded
by a significant part of the community as being, in some sense, inequitable
can endanger the industrialisation process on account of the social
unrest it generates as easily as if it failed in its economic objectives.
Three aspects of the efficiency of the labour force that are strongly
influenced by the wage and salary structure were identified above.1 These
are closely linked with, respectively, the long, medium and short terms.
Thus, occupational wage differentials should be such that they help to
ensure that in the long run a sufficient number of people acquire the
skills and qualifications necessary for industrial development. More
immediately, it is important that wage differentials are such that the
labour force, given the skills that it possesses, is appropriately allocated
between regions, sectors and industries. Thirdly, in the short run, it
is necessary that the system of wage payment be such that workers are
encouraged to perform reasonably well in the jobs where they find themselves.2
It should be emphasised that in each of these three roles wage policy
needs to be accompanied by other measures. Thus, the appropriate
manipulation of occupational wage differentials by itself is quite insufficient to yield the required pattern of skills in the labour force or to
bring about a general improvement in the capabilities of workers in
developing countries. The provision of training facilities is equally or
even more important; so is good management of the labour force,
including the provision of opportunities for promotion and recognition.
But a suitable occupational wage structure can provide incentives for the
acquisition of the skills that are required, though wage differentials are
not the only way of doing this : non-pecuniary job advantages may also
be used. Similarly, some regional and sectoral redistribution of a labour
force will occur automatically in response to the distribution of job
1

See p. 228.
See Report on the World Social Situation, 1965, op. cit., Part II of which, prepared
by the I.L.O., contains a much fuller treatment of the subject of incentives in industry
than can be attempted here.
2

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

vacancies *, and can also be promoted by an appropriate housing policy.
Providing more information about the situation of the labour market,
reducing the costs of mobility and breaking down certain barriers of
tradition can all help to make the labour markets of developing countries
operate more smoothly and promote the mobility and structural changes
which the industrialisation process requires. In the case of performance in
a given job, incentives to greater effort can be afforded by schemes that
provide for worker-management co-operation, and by applying moral
incentives.
Skill Differentials.
It is difficult to generalise about whether, in relation to efficiency
requirements, occupational differentials are too wide or too narrow in
developing countries. In the first place, the pattern differs considerably
from country to country, and in the second, the picture varies from one
part of the occupational wage and salary scale to another. Thus, it may
be that manual skill differentials are often too narrow at the lower end
of the wage scale to afford sufficient incentive for the acquisition of minor,
though by no means unimportant, skills.2 This " bunching " of wage rates
at the lower end of the scale can be largely attributed to the existence of a
wage " floor " which, in developing countries, is relatively near to the
average. Several factors are responsible for this, among them the need to
pay a minimum wage for unskilled workers that is high enough to attract
workers from the traditional agricultural sector on a permanent, full-time
basis. Such commitment on the part of workers is vital if there is to be
sufficient time and incentive to train them for higher skills.3
There is little doubt, however, that in many developing countries
certain occupational differentials are, in general, not only too wide but
frequently lie in the wrong direction. This is particularly true in the case
of differentials between certain non-manual occupations and manual
skills which, despite the greater shortage of workers in the latter category,
clearly favour the former. Some impression of the size of these differentials in developing regions, and the contrast with the situation in developed
1
There is some evidence that the distribution of job vacancies has contributed
more than wage differentials to the redistribution of the labour force in developed
countries. See O.E.C.D. : Wages and Labour Mobility (Paris, 1965). This mechanism is
likely to be at least as important in developing countries, given the reserve of unemployed workers they frequently contain.
2
H . A. TURNER: Wage Trends, Wage Policies and Collective Bargaining: the
Problems for Underdeveloped Countries, (University of Cambridge, Department of
Applied Economics, Occasional Paper No. 6 (1965)), p. 19.
3
It has been proposed that the wage structure could also promote such commitment by providing for relatively large wage increases after one or two years'
service with the same employer (Report on the World Social Situation, 1965, op. cit.,
p. 45).

8. WAGES AND INDUSTRIAL DEVELOPMENT

231

regions, can be gathered from the following data comparing the wages of
garage mechanics with the salaries of bank tellers :
MEDIAN OF GARAGE MECHANICS' WAGES AS A PERCENTAGE
OF THE MEDIAN OF BANK TELLERS' SALARIES, BY REGIONS
Region

Africa
Asia
Latin America
Western Europe
Australasia
North America

Percentage

67.4
99.2
65.8
101.3
121.2
125.8

Source: Derived from data presented in " Results of the I.L.O. 1963 October Inquiry ", in International Labour Review, Vol. XC, No. 1, July 1964, Statistical Supplement.

Such anomalies in the wage structure are due partly to imperfections in
the labour market, and partly to the strong influence of traditional views
and concepts of status. In any event, it is clear that the skill and occupational differentials which derive from current systems of wage determination in developing countries are by no means in full accordance with
productivity requirements.
Allocation of the Labour Force.
The wage structure can play an important role in promoting the
required sectoral and regional distribution of the labour force. It has
already been pointed out that the minimum rate offered to unskilled
workers can help to ensure that the industrialisation process is not held
up by a shortage of labour from the underemployed reserves in the rural
sector. This may be important in very early stages of industrialisation,
but in most developing countries now the problem is rather one of finding
jobs for unskilled workers than workers for unskilled jobs. No less
important, however, is the impact of the wage structure on the distribution of labour within the industrialised sector. If wage differentials are
such that they attract labour to those areas and sectors—export industries
and infrastructure activities—where development is first generated, they
can do much to promote the industrialisation process. There is certainly
evidence that workers do respond to such differentials. Thus, " in West
Africa the migrant who leaves the village for income earning outside has
many alternatives before him, knows about the differentials that exist in
the different kinds and places of work, and tends to migrate where
(other things equal) returns are greatest and conditions best ". 1
1
Elliot BERG: " French West Africa ", in W. GALENSON (ed.): Labor and Economic
Development (New York, 1959), p. 197.

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HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

Efficiency on the Job.
The method of wage payment adopted for a job can have a very
powerful influence on the speed and effectiveness with which an employee works. Attention has already been drawn to the manner in which
the " commitment " of an employee to the industrial labour force, and
thereby his value as a worker, can be strengthened by the general level
of his remuneration. Usually, however, the discussion of methods of
payment and the effectiveness of the labour force in developing countries
centres on the question of the desirability and extent of use of piece
rates.
In general, conditions would appear to favour a greater use of piece
rates in developing than in developed countries. There are several
reasons for this: there is a stronger quest for basic human necessities;
the nature of many of the tasks in these countries lends itself to piecerate systems ; workers in developing countries vary considerably in their
efficiency; and, where investment is more risky though no less expensive,
employers wish to limit the size of overhead costs and make maximum
use of their equipment, objectives which are promoted by the use of
piece rates. Given, on the one hand, the attraction of making wage
payments highly variable with respect to output and, on the other, the
limitation imposed on this goal by the fact that in developing economies
much remuneration is already in the form of non-variable allowances,
it is not surprising that, in India for example, surveys have revealed
" a widespread application of incentive schemes ".1 Even so, in developing countries as a group, there is probably considerable scope for
the extension of payment by results in industry.
Not all work, however, lends itself to payment by results. One
essential condition is that the work flow can be measured. Another is
that output bears a direct and measurable relationship to labour performance, either of the individual or (if a group incentive scheme is used)
of the group. When the range of labour performance is limited and is
strictly dictated by the technical requirements of the task, there is no
logical basis for payment by results, since changes in output would be
due to factors other than labour performance such as the flow of raw
materials or freedom from mechanical and power breakdowns. To the
extent that these conditions are becoming more widespread in industry,
the scope for payment by results may tend to narrow with the passage
of time, as it appears to have done in some centrally planned economies.
However, some developing countries try to take advantage of their
1

Report on the World Social Situation, 1965, op. cit., Part II, p. 71.

8. WAGES AND INDUSTRIAL DEVELOPMENT

233

relatively abundant supply of labour, and to cope with their shortage
of capital, by utilising more labour-intensive techniques than would be
remunerative in countries in which capital was cheaper and labour
dearer. Hence the scope for payment by results in industry in developing
countries may remain wider than in developed countries so long as there
is a substantial difference in the proportions in which labour and capital
are available.
The conditions mentioned at the beginning of the last paragraph are
necessary for the operation of a system of payment by results; but for
its successful operation another important feature is efficient management to ensure sound methods of production, reliability of equipment
and good industrial relations. Indeed these aspects of management are
often so critical in the operation of payment by results that it is a moot
point whether the stimulus to better work provided by the system, or
the standard of management required for its operation, deserves the
credit for increased productivity. It is important that the introduction
of any payment by results scheme should proceed at all stages with full
consultation of the representatives of the workers affected.
Job Evaluation.
A topic that cannot be developed in this paper for lack of space, but
that should not be passed over in silence, is the contribution that job
evaluation can make to the establishment of a satisfactory wage structure.
In the words of an I.L.O. study—
Job evaluation may be defined simply as an attempt to determine and
compare the demands which the normal performance of particular jobs makes
on normal workers without taking account of the individual abilities or performance of the workers concerned.1
There appears to have been progress in job evaluation in recent years
in the following respects :
(a) The field of application of job evaluation methods has been extended. The I.L.O. study just cited emphasised that these methods
had chiefly been applied to manual work because of the difficulties
attending their extension to managerial and supervisory occupations ;
some progress seems to have been made in overcoming these
difficulties.
(b) New methods of applying job evaluation techniques have been
developed.
1
I.L.O.: Job Evaluation, Studies and Reports, New Series, No. 56 (Geneva,
1960), p. 8.

234

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(c) Workers' organisations seem more favourably disposed than in
the past to the elaboration of wage structures based on jobevaluation.
INSTRUMENTS OF WAGE POLICY

Governments that have views on the desirable level and structure
of wages, and want to encourage certain wage movements and discourage
others, will also have to decide what instruments to use for this purpose.
The main instruments available in most countries are minimum wage
fixing, and the determination of the wages and salaries of government
employees.
Systems of minimum wage fixing are of many different kinds. Sometimes minimum wages are fixed by industry or region by wage boards
more or less on the model of the British wages council system; this is
the case in many Asian, African and Latin American countries. Sometimes there is a national minimum wage on the pattern of the French
guaranteed inter-occupational minimum wage 1 , as in French-speaking
African countries. Even when there is a national minimum wage, this
may not apply (because of difficulties of enforcement) to certain sectors
such as agriculture and domestic service, or to firms below a certain size.
Sometimes, as in the United States, the minimum wage is a sort of
safety net spread well below the prevailing level of wages, the purpose
of which is to prevent any individual wages from falling too far below
the general level. In other cases, including many developing countries,
the minimum wage is effectively the going rate for most of the workers
covered by it. Sometimes minimum wages are fixed only for unskilled
work, skill differentials being left to be negotiated in collective or
individual agreements; in other cases there are more or less elaborate
schedules of minimum wages for different occupations.
The extent and directness of the influence on the level and structure
of wages that governments are able to exert through minimum wage
fixing vary. This influence is weaker, for example, when the minimum
wage system merely spreads a safety net below the prevailing level of
wages than when most workers are paid at the minimum rates. But
even if only a minority of workers have their wages directly fixed by the
government, usually in consultation with employers' and workers*
representatives 2, wage determinations may have a much wider influence.
1

Salaire minimum interprofessionel garanti (S.M.I.G.).
The I.L.O.'s Minimum Wage-Fixing Machinery Convention, 1928, and Minimum Wage Fixing Machinery (Agriculture) Convention, 1951, insist on such consultation.
2

8. WAGES AND INDUSTRIAL DEVELOPMENT

235

In every country there is a certain rigidity in the structure of wages.
If some workers get higher wages because of a wage determination,
others may demand and get higher wages too, employers recognising
that there will otherwise be conflict and dissatisfaction at the upsetting
of accepted wage parities and relativities.
This same tendency towards rigidity in the wage and salary structure
likewise increases the influence of a second instrument of wage policy—
namely the decisions made by a government in fixing the wages of its
own employees. In developing countries, where most workers are
peasants, not wage earners, not only is the government usually by far
the largest single employer of labour, but it often employs a very substantial proportion of all wage earners. In these circumstances the level
and pattern of wages it establishes for its own employees cannot fail to
exert a major influence on the level and pattern of wages throughout
the economy.1 In some West African countries, for instance, wage
negotiations in individual firms have very largely waited on the decisions
made concerning the pay of government employees—decisions which,
though subject to joint discussion, are of course a responsibility of
governments themselves.
Two other instruments of wage policy may be mentioned briefly.
One is that in many countries governments have power to decide whether
or not to extend the provisions of a collective agreement to other employers and workers who are not bound by it as contracting parties.
The other has to do with the role of government-appointed mediators or
arbitrators in case of industrial disputes. It is sometimes said that the
role of mediators or arbitrators is to help the parties to find, or themselves to find, terms on which a dispute can be settled, and that in this
role they cannot be briefed or instructed by governments without forfeiting the confidence of one or both of the parties to the dispute. It is for
governments to decide whether they wish to use mediation and arbitration machinery to promote the settlement of disputes on any terms
acceptable to the parties most directly concerned, or whether they wish
to use such machinery as an opportunity for bringing wider considerations of the public interest to bear in the search for a settlement.
!• Finally, consideration might be given to the advantages of trying
to. forge a new instrument of wage policy in developing countries,
namely a simple standard scheme of job classification and grading, as
has been suggested in some I.L.O. technical co-operation reports. This
could be a first step in the direction of applying job evaluation techniques
1

Governments may also influence the wages and conditions of work of workers
employed by private enterprise on public contracts.

236

HUMAN RESOURCES FOR INDUSTRIAL DEVELOPMENT

(see pages 233 to 234 above). There is no doubt that the present structure
of wages in many developing countries is chaotic and not related to their
present needs. It reflects a shortage of literate workers, which is gradually
being overcome through education, and it tends to undervalue technical
skills. Anomalies will probably be slow to yield to the pressures of
demand and supply unless some public guidance is given. An attempt by
governments, in consultation with representatives of employers and
workers, to group occupations into a relatively small number of broad
skill categories and to indicate what, in their view, would in normal
circumstances constitute a reasonable proportional relationship between
the wages of the different skill categories might play a valuable part in
helping to bring about—by example, persuasion and, if possible, agreement—a wage structure better adapted to the needs of industrialisation
and economic growth.
INTERNATIONAL ACTION

Action by international organisations can do much to help developing
countries both formulate and implement a wage policy. Assistance in
the formulation of wage policies that promote the industrialisation
process can proceed along two paths. First there is a need to consider
the many and complex relationships that exist between the level and
structure of, and changes in, wages and the various elements of the
industrialisation process. The need for more understanding of the
relationships briefly discussed on pages 223 to 227 above has been
emphasised. National studies of these relationships will be extremely
valuable. But, in addition, comparative international studies can be
carried out by international organisations, which may help to clarify
broad general principles of wage policy. The I.L.O. intends to undertake
further studies of payment by results and job evaluation in the context
of the need for developing countries to achieve industrialisation as part
of the process of economic growth. Problems of wages in relation to
industrialisation were among the subjects studied at an interregional
seminar on the determination and protection of wages organised in
Denmark jointly by the I.L.O. and the Danish authorities in August
and September 1967. Similar meetings might be organised within the
framework of future technical co-operation programmes.
There is also a need for general principles to be adapted to the
particular economic and social conditions that obtain in a given country.
The technical expertise that this requires is frequently not available in
developing countries and is everywhere in short supply. The necessary
expertise may be provided at the international level in the form of

8. WAGES AND INDUSTRIAL DEVELOPMENT

237

technical co-operation; the I.L.O. recruits and sends to developing
countries experts who advise governments, on request, about the objectives
and instruments of policies relating to wages. Advice can also be made
available in regard to the installation of appropriate systems of payment
by results, and in regard to the use of job evaluation techniques.