Addressing human capital challenges in PNG project implementation
Recruiting and retaining national specialists is extremely difficult in Papua New Guinea, so ADB is trying a new approach to build human capital for its projects in the country.
In 2013, when I came to Papua New Guinea (PNG), the country was enjoying the peak of the benefits of one of the world’s largest liquefied natural gas projects that had sent the costs of almost all commercial goods and services skyrocketing. It was not a good time to have construction project as everybody was competing for scarce resources, with many experiencing cost overruns. An even bigger challenge was recruiting national staff and consultants.
Although we always prefer hiring locally, we experienced difficulties in hiring national staff as consultants or for project implementation units for ADB-funded projects. After several job advertisement extensions and re-advertisements yielded no results, the positions were reluctantly converted to international positions. This translated into delays of 1-2 years, compounded by cost overruns, as some critical activities were dependent upon these consultants.
This prompted me to look into the human capital situation in PNG, with the focus on speedy implementation and one question in mind: Why was it so difficult to recruit national specialists, let alone retain them?
PNG has a population of 7.6 million (as of 2011 census), only 15% of which live in urban areas whilst most reside in rural and remote areas. In the last 20 years, only about 43% of its population has completed grade 8-12 secondary education while less than 3% finished tertiary education. Less than 23% of the national workforce are wage earners; 13% are employed in the private sector and the remaining 10% have public sector or government jobs. Over the past decade, formal employment has grown by an average of 6% per year. Although this figure is expected to decline due to weakening oil and commodities prices, PNG has created on average 100,000 new jobs in both the public and private sectors each year since 2010.
The number of foreign workers coming to PNG has been steadily growing, up a net 34,000 annually since 2007 and taking 34% of new jobs. In contrast, since 2012, PNG’s 8,000 university and 3,000 non-university graduates have taken up 11% of the new jobs. In 2014, a survey by ADB’s PNG resident mission covering more than 80 consulting and contracting companies found that about 30% of employees in these firms are university graduates, that about 40% of staff are from overseas and that almost all firms employed foreign workers.
It then became apparent to me why it was so difficult to recruit national specialists. The job market effectively absorbs all tertiary-educated graduates, and even then, staff numbers are being supplemented by foreign workers. In other words, the PNG job market demands educated workers more than it domestically produces.
To address this lack of human capital we need targeted capacity building and a platform for continuous training, as the current situation makes it difficult for not only recruiting but also retaining local staff. On the one hand, the quantity of university graduates and skilled workers in PNG is still below the market demand, and tends to decline. On the other hand, the quality needs improvements. Therefore, and keeping expedient project delivery and implementation in mind, it is critical to quickly increase the quantity of skilled and semi-skilled workers while concurrently safeguarding their quality.
As a short-term solution for our PNG project, we decided to recruit staff with and without university degrees, particularly fresh graduates who were put under the wing of international and senior national specialists. Contractors were regularly encouraged to train local staff and increase their employment as part of corporate social responsibility programs. This also helped provide social acceptance as having local workers builds local trust in the project. After 18 months the results were promising as monthly progress reports showed improvements in the engagement of local workers and a small but noticeable decline in project delays due to work stoppages, road blockades, and other social disruptions that are fairly common in PNG.
A more mid-term solution is a targeted capacity building program with a focus in increasing the quantity of skilled and semi-skilled workers in tandem with increasing their quality. This is an activity we are implementing in future ADB projects.
In addition, we are currently planning to increase the project implementation unit capability with effective delivery methods such as embedding into contractors’ and consultants’ scope of work provisions such as: (i) on-the-job training; (ii) technical and vocational training (TVET) programs at public schools; (iii) regular training workshops with communities; and (iv) supporting existing TVET institutions with experts trainers or skilled tradesman and specialists. The indicators to measure the delivery and impacts were (i) number of people trained; (ii) number of public schools visited and participated in the training, (iii) TVET institutions assisted; and (iv) trainees employed. This needs additional investment as payment milestones will be linked to these indicators.
Building human capital in PNG for good project implementation requires wrestling not only with quantity and quality issues, but also allocating additional investment. If planned carefully, it will improve the overall project delivery and reduce the potential delays as well as cost overruns.