SDC

1
SDCs EI and Skill Development

• Some remarks on
• costing, pricing and financing Skill Development

2
SDCs approaches and key mid-term priorities for
Skill Development
make Skill Development responsive to labour
market developments
Cooperation between the state, private sectorand
civil society
develop theskills, especiallyof poor people
costs financing
urbanand
ruralareas
Skill Developmentin rural areas
linkingbasic educationand Skill Development
constant exchange of experienceamong all
stakeholders
3
The purpose of costing

• Deciding on resource allocation (human and
  others).
• Justifying bids for external funding.
• Strategic orientation of course programmes.
• Knowing costs prerequisite for proper pricing.
• Assessing economic viability of Skill
  Development, a training providers programme or
  individual modules.
• Determining fees for trainees.
• Etc.

4
Approaches to pricing

• Cost-based pricing approaches
• Cost recovery or
• Profit-making
• Demand-based pricing approaches
• Deciding on the price on what is obtainable at
  the market,
• Sponsor-determined pricing,
• Strategic pricing approaches (e.g.
  market-penetration, politically motivated pricing)

5
The challenges in costing and pricing Skill
Development

• Costing and pricing of training are often
  neglected or done the amateurish way.
• Lack of easily applicable costing instruments
  suited for providers with little institutional
  capacity.
• Training providers striving for institutional
  autonomy need to start this exercise with proper
  costing and pricing.

6
Financing Skills Development Who pays?
government
donors
public interest
businessorganizations
communities
trainee
employer
individual interest
7
Fund raising mechanisms

• public
• taxes
• levy systems
• donor funding
• etc.

• private
• fees
• in-house training
• donor funding
• etc.

• mixed
• cooperative systems (e.g. apprenticeship)
• government incen-tives to companies for training
• matching grants
• fees subsidies
• etc.

8
Fund allocation mechanisms

• Input-oriented on the basis of costs for
  production factors.
• Output-oriented on the basis of delivering an
  agreed product.
• Tenders.
• Market-oriented financing through voucher
  systems.
• Subsidies aiming to push interests or a political
  agenda.
• Etc.

9
What EI does in the areas of costing, pricing
and financing Skill Development

• Pursuing a holistic approach by combining issues
  of costing/pricing and fund raising and fund
  allocation.
• Providing information, instruments (esp. cost
  calculation and pricing) and lessons learnt.
• Ensuring that information is shared among all
  parties involved in costing/pricing and
  financing.
• Advising in the decision-making processes at all
  levels.
• Promoting costing and pricing as instruments for
  the pro-active management of training
  institutions.