Workforce systems are increasingly realizing that technical training alone is not enough to prepare young people for sustained employment.

For decades, youth workforce programs across low- and middle-income countries (LMICs) have largely been designed around a straightforward assumption that if young people acquire technical or vocational skills, employment will follow. Governments, funders, and training providers have therefore invested heavily in technical and vocational education and training (TVET) and sector-specific workforce programs aimed at preparing youth for identified labor shortages. Despite these investments, the share of youth aged 15-24 not in employment, education, or training remains persistently high across low- and lower-middle-income countries (27.9% and 22.6%, respectively).

To explore this shifting landscape, the Education Finance Network spoke with Amit Shah, Executive Director of EFN member Bridges Outcomes Partnerships, about how workforce systems are evolving beyond narrow technical training models toward more holistic approaches centered on long-term employability. The conversation also explored how results-based financing models can help support this shift by aligning funding with sustained employment outcomes. Shah explains: “Employability… is about not just being able to secure a job, but sustain a job… It means that you’re not just trying to create a vocational expert, you’re trying to create an employee.” This distinction matters because sustaining employment requires far more than technical competency alone. To stay employed, young people must also be able to communicate effectively, collaborate within teams, adapt to changing workplace demands, and navigate increasingly uncertain labor markets.

Research increasingly supports this broader understanding of employability. The World Economic Forum’s Future of Jobs Report 2025 identifies “resilience, flexibility and agility,” “leadership and social influence,” and “motivation and self-awareness” as the core skills with the highest demand from employers globally. Similarly, UNICEF’s Global Framework on Transferable Skills argues that transferable skills help young people “become agile, adaptive learners and citizens equipped to navigate personal, academic, social and economic challenges.” As labor markets become more dynamic and career pathways less predictable, these capabilities are increasingly recognized as core components of long-term employability.

As governments in LMICs prioritize sustained employment approaches, some are shifting funding models to incentivize long-term outcomes over training delivery alone.

Governments and funders are using results-based financing (RBF) to drive this shift. RBF refers to funding models in which at least some payments are tied to the achievement of predefined and verified results (e.g., job placement and retention) rather than funding service delivery upfront, thereby shifting some financial risk from funders to service providers. RBF approaches can take several forms, including performance-based contracts, performance-based loans, and impact bonds, which differ in how financial risk and incentives are shared across governments, funders, and service providers. When well designed, these approaches can help improve job prospects for young people by shifting focus from inputs, like providing training, to employment outcomes, such as remaining in a job for a set amount of time.

In practice, RBF instruments are complex to design because job access and retention are influenced by many factors beyond training quality, like labor market conditions and individual effort. They also require robust data systems to define, measure, and verify outcomes, which depend on infrastructure that can be difficult to establish and maintain. For more information on RBF and its design challenges, see Instiglio’s report on RBF in TVET programs.

The growing emphasis on job retention as a key outcome is changing how workforce programs are structured and funded. As the World Bank notes in the report Building Better Formal TVET Systems, many RBF programs now use payment metrics that span “from outputs, such as training received, to outcomes, such as job retention 6 months after graduation.”

These incentives naturally elevate the importance of transferable and social-emotional skills. Shah explains that “the social-emotional learning skills and the interpersonal skills probably fall more into that retention category.” In practice, technical training may help someone qualify for a job, but skills such as communication, teamwork, and adaptability often determine how well they perform in hiring processes and whether they succeed in the workplace and remain employed over time. As a result, building transferable skills is becoming central to workforce systems design.

Results-based financing (RBF) is creating space for more holistic employability models that emphasize transferable skills.

In its TVET Systems report, the World Bank states that RBF helps workforce systems “increase focus on intended results; align actors’ incentives with these intended results; and support iterative adaptability, which creates more flexibility for providers to adjust services.” Compared to traditional TVET funding that rewards training delivery, RBF incentivizes providers to support the broader capabilities that drive sustained employment. Shah captures this shift in organizational thinking: “When you start thinking about paying for employment outcomes, you need to start thinking a bit more holistically about what employability looks like.”

In practice, this creates space for TVET providers to invest in activities that may previously have been difficult to justify, including coaching, interview preparation, workplace readiness training, mentorship, and social-emotional learning. The World Bank notes that with RBF, “providers can have greater flexibility to innovate, learn, and adapt their programs to increase impact.” Shah similarly observes that many TVET providers have long wanted to provide more holistic support but were constrained by rigid funding structures: “There are providers who want to really support people into employment, but feel a bit limited and frustrated by the way that existing systems are often funded.”

Artificial Intelligence and labor market disruptions are further strengthening the case for transferable skills and adaptability.

The rise of AI is intensifying concerns about how quickly technical skills may become outdated. Shah notes that “in certain careers, the value of technical skills is potentially falling very, very quickly,” particularly in fields such as coding where AI tools are rapidly automating junior-level tasks. Consequently, workforce systems may need to place greater emphasis on preparing young people for labor markets increasingly shaped by AI and rapid technological change. Still, Shah cautions against moving too quickly to redesign workforce systems around uncertain assumptions about AI and the future of work: “We’re still exploring at the edges… of thinking through, okay, what does employability look like in the world of AI?”

This uncertainty itself reinforces the argument for broader transferable skills. In labor markets where future technical demand is difficult to predict, capabilities such as communication, adaptability, critical thinking, and collaboration may provide young people with greater resilience across changing economic conditions.

The future of workforce development may depend less on training young people for specific jobs and more on preparing them for careers that evolve over time. 

While technical training remains important, sustainable employment also depends on whether young people can communicate effectively, collaborate with others, and adapt to changing work environments. Results-based financing instruments are helping to drive this shift toward transferable skills in job training, but they are not a perfect solution and remain complex to structure. Ultimately, as labor markets become less predictable, workforce systems must go beyond technical skills alone and focus on equipping young people with transferable skills to adapt and remain employed over time.

This blog was authored by Luke Denton, Associate Consultant at Dalberg Advisors, with contributions from Amit Shah, Executive Director of Bridges Outcomes Partnerships.

Disclaimer: This article reflects insights and views shared by the contributor in an interview.