Half your skills came from work. Policy hasn't caught up

Where did you accumulate most of your human capital? You may think it was in school, but you would be forgetting an equally important setting: the workplace. Roughly half of your human capital was probably gained on the job. Yet, workplace skill development remains largely absent from the human capital policy agenda, which means we are missing opportunities to improve worker productivity and earnings. People build skills at work not only through formal training, but through experience: solving problems, using technology, interacting with colleagues and customers, adapting to new tasks, and learning from managers and peers. Factories, offices, and farms do not get adequate attention as settings where human capital is built. A job is not just an income. It is a learning environment. Most adults spend far more years working than studying. Farmers learn by experimenting with new techniques and technologies to boost yields. The self-employed develop skills to expand their businesses and increase earnings. Wage workers acquire (general and firm-specific) experience that can improve their performance or allow them to advance to jobs with stronger learning potential. Our global analysis of labor force surveys finds that work experience and education contribute roughly equally to the skills people carry through life, a finding backed by other studies across the globe (Figure 1). This is why the World Bank’s jobs agenda, which aims to help countries create more and better jobs, depends on what happens inside the workplaces as it does on the number of jobs created. A job is not just an income. It is a learning environment. Figure 1. Half of the human capital is built at work Workplaces in low- and middle-income countries do not foster sufficient learning Relatively few people in low- and middle-income countries have an opportunity to build human capital at work. Why? First, to build human capital at work, you need to be employed. In low- and middle-income countries, around 50 percent of women are out of the labor force, while around 20 percent of youth are neither studying nor working. Second, you need to be employed in a job that helps you learn. Evidence from our latest report Building Human Capital Where It Matters Homes, Neighborhoods, and Workplaces shows that employment in low- and middle-income countries is concentrated in jobs where little learning occurs. About 70 percent of workers in low-and middle-income countries work in small-scale agriculture, low-quality self-employment, or micro firms with fewer than five workers (Figure 2), a share that is only 20 percent in high-income countries. These low-learning jobs often involve limited technology adoption, weak management practices, and little exposure to new ways of working. Figure 2. Most people are in jobs that offer little opportunity for learning at work Looking at the wage-experience profiles of self-employed and wage workers, we find that even with the same gain in experience, earnings rise only half as much among the self-employed as among wage employees (Figure 3). This suggests that workers in low- and middle-income countries learn very different amounts depending on where they work. Because most workers are concentrated in self-employment, much of the learning potential of work remains untapped. Figure 3. Returns to experience are lower among the self-employed than among wage workers How can policies foster more learning at work? Policies to increase learning at work should focus on three key targets. • More people in jobs. Job placement services and apprenticeship programs help young people enter the labor market and start accumulating experience. Our review of programs in Brazil, Colombia, Côte d'Ivoire, and Uganda showed real gains in both skills and earnings. For women evidence from low- and middle-Income countries suggests childcare access significantly increases female labor force participation, though service quality and cost remain critical challenges. • More learning in existing jobs. Farmers benefit from extension services that combine advice with hands-on practice. The self-employed benefit from business and soft-skills training. Wage workers learn rapidly when they receive structured guidance at work, gain exposure to higher-skilled peers, or get access to new technology. For example, in Togo, a personal initiative program targeting small business entrepreneurs that was designed to develop proactive entrepreneurial thinking led to a 30 percent increase in profits — an impact that was three times the gains of traditional training and that persisted even eight years later. In India, a workplace on-the-job training for garment workers that focused on soft-skills — communication, time management, problem solving, decision-making, and effective teamwork — raised productivity among those who received training by more than 13 percent. These productivity gains even spilled over to workers on the same production line who had not been trained. To support these programs, governments can lower the cost to firms through co-financing schemes, training subsidies, and technical assistance. They can also support technology adoption. Digital tools reduce the cost and complexity of finding information, managing workflows, and staying connected. A review of evidence in six African countries, shows that firms with better internet connectivity were not only more likely to provide on-the-job training, but they also exported and sold more. • More jobs with stronger learning potential. Ultimately, more skill development at work requires broader economic transformation. Firm growth, technology adoption, managerial upgrading, and expanded education systems that develop relevant talent all matter. More productive firms create more learning opportunities. Better-skilled workers help firms become more productive and innovative. The two reinforce each other. Countries that break into this virtuous cycle can pull ahead. Bangladesh, China and Costa Rica provide three interesting examples. Under the Multi-Fibre Arrangement (MFA), export quotas on Korean garment producers created incentives to shift production to Bangladesh, which was not yet quota-constrained. In 1979, the Bangladeshi firm Desh Garments partnered with Korea’s Daewoo, which trained 130 Bangladeshi workers and managers. These skills spread as trainees established or joined other firms, helping catalyze Bangladesh’s garment industry. In China, growth in college-educated workers, particularly in science and engineering, boosted innovation, productivity, and trade. In Costa Rica, the government worked with firms and education partners to provide industry-specific training in high-tech. This co-investment in technical skills helped establish high-tech operations and later retain higher-value R&D activities in the country. The evidence is clear: learning does not stop at the school gate. Governments, firms, and development partners must treat the workplace as the learning environment it already is and build policies to match. The countries that act on this insight will create better workers, more productive firms, and faster-growing economies.