THE ASIA BOOM : Training : Go-Go Growth Points Up Shortage of Skilled Labor : Many experts say Asia needs education more than it does infrastructure.

In Japan, they’re crying for telecommunications experts. China is scrambling for talented managers, while Malaysia needs technicians and engineers. The problem is even more basic in Thailand: Only 17% of the work force is educated beyond primary school, a liability likely to doom the nation to low-cost, labor-intensive industries unless corrected.

Asia’s go-go economic growth has dazzled the world, but as the region looks toward the future, a formidable obstacle looms large: a growing shortage of skilled workers and managers. In nearly every country, rapid industrial growth is outstripping the level of education and job skills in the local work force, sounding alarms from Jakarta to Beijing.

More than dealing with poor infrastructure and a deteriorating environment, many experts say that Asia’s most urgent need is massive investment in its own people.

“In our view, the biggest challenge of all facing Asia is education,” warned a recent report by the Hong Kong-based Political & Economic Risk Consultancy Ltd. “The problem is not simply too much illiteracy. . . . Rapid economic growth has led to a chronic mismatch of skills in some countries.”

That lament is echoed throughout the region. “I can get capital, but how do I get the talented people to make use of the capital?” moaned Guo Quan, manager of the Dalian Port Railway Co. in China, in a recent article.

The shortage of skilled labor does not merely threaten future growth. According to a recent World Bank report, roughly one-quarter of all investment in rail systems, power plants and other infrastructure is wasted through technical inefficiencies largely due to poorly trained operators.

“China can pump all the billions of dollars it wants into its phone and rail systems. It will be money wasted, however, unless those responsible for operating these systems are educated in efficient management techniques,” the Political & Economic Risk Consultancy report said.

Nearly every Asian country faces a shortage of engineers, scientists and technical staff. Malaysia produces 5,700 engineers annually; the yearly demand, however, is 10,000. South Korea plans to boost the number of engineering students from the current 280,000 to 340,000 in five years. To improve their practical skills, third-year students have begun receiving six months of on-the-job training at various industrial plants under a new government program; the term will double next year.

Even Japan, whose abundant base of engineering talent helped build its worldwide reputation for manufacturing prowess, has begun to sound alarms that its young people are losing interest in the field. The government recently formed a special committee, drawing members from every ministry, to find ways to increase the allure of science and technology.

Many countries also find shortfalls in management skills and English, the language of international commerce. For Kazuhiko Nishi, president of the Japanese software publishing firm ASCII Corp., the biggest difference in necessary job skills today compared to those when he started his firm 18 years ago is in English.

“It’s an absolute must,” said Nishi, a fluent English speaker who helped develop the nation’s first personal computer and the world’s first portable computer. “Eighteen years ago, the culture was very domestic. But today, everyone needs English, because interacting with the rest of the world has become a daily thing.”

Yet English skills are eroding in countries ranging from Malaysia to the Philippines. One reason is that nationalist movements have promoted use of the local language in schools over what is regarded as the language of colonialists.

Management training is also in critical demand. Despite China’s attraction, its inefficient state enterprises, employing 110 million workers who account for half the nation’s industrial output, are in serious trouble. Half of them are unprofitable--and bad management is the major reason, according to a China Daily survey in June of 2,586 money-losing enterprises.

“If China is to become competitive in world markets in anything other than labor-intensive products, the nation must produce more, and better, managers,” Asia Inc. magazine recently declared. “If it can’t or won’t, China--along with the rest of East Asia--will fail to fulfill its current economic promise.”

Japan, whose management systems have been widely studied and often imitated, also faces a pressing need to change, argues Wolfgang Lux, president of AMA International Management Center in Tokyo. Although the old hierarchical system stressing lifetime employment and seniority-based pay and promotions worked for a rapidly growing economy, the slowdown has sharpened the need to increase productivity through more creativity--allowing employees more freedom and individual responsibility, for instance--and technology, he said. Only 10% of Japanese offices use personal computers, contrasted with 50% in the United States.

The growing gap between labor supply and demand in Asia is causing high turnover rates, rapid salary hikes and increased job poaching--all of which slow down economic growth.

In the past 10 years, for instance, the Shanghai Jiaotong University Management School has lost an entire faculty of nearly 100 academics--poached by overseas universities and foreign firms.

To meet the growing crisis, countries such as Thailand are promising major investments in public education. But for the moment, the burden of education and training is falling on private firms.

In South Korea, some of the largest firms--Hyundai, Samsung and Pohang Iron & Steel, for instance--have started their own institutions to train better workers; the Daewoo Group has acquired a university. In a recent survey by a major South Korean newspaper, Pohang’s Institute of Science and Technology beat out prestigious Seoul University as the nation’s best center of higher learning.

Motorola Inc., the U.S. electronics giant, has set up a training center in Beijing to teach its Chinese employees everything from brainstorming and goal-setting to its corporate culture.

In Japan, Hitachi Zosen has engaged in massive retraining as the high yen has forced it over the past six years to shift from shipbuilding as its main business to a hodgepodge of everything from parking systems to tea production. Half the firm’s technical specialists and all of its general staff are rotated every four years to train them in the newly diversified areas.

“We have transformed into an all-weather outfit,” said Susumu Hirota, personnel manager.

Quicker fixes for the region’s labor woes include recruiting talent overseas. Take Sony Corp., for instance.

Ten years ago, Sony realized it could not live on TVs, video recorders and tape decks alone. So it decided to enter the tantalizing field of telecommunications--which, along with many other companies, Sony has identified as the key industry of the future.

There was only one problem: The firm knew virtually nothing about it.

Sony raided universities for experienced people in the field, but found “we could not rely only on Japanese human resources,” according to Yasunori Kirihara, general manager of corporate human resources.

So it recruited specialists from the United States and Europe and launched a joint venture with General Magic, a U.S.-based software firm.

The efforts came to fruition in September, when the joint venture introduced its first telecommunications product: “Magic Link,” a hand-held device integrating e-mail, fax, telephone, nationwide paging and other on-line services.

The venture represented a classic teaming of American software and Japanese manufacturing technology.

“To expand this business field took five to 10 years, and now we are just getting some results,” Kirihara said. “We didn’t know anything about telecommunications, and you can’t make decisions without the proper staff.”

The pool of telecommunications experts was limited in Japan, he said, in part because the government restricted the telephone business only to the giant Nippon Telegraph & Telephone. As it began to deregulate the industry in the late 1980s, the pool of experts grew, but shortages still pose a problem for Sony and others.

Taiwan and South Korea also rely heavily on overseas recruits--most notably their own citizens schooled and trained in U.S. universities or high-tech firms. In a reverse brain drain, thousands of scientists, engineers and other specialists have been wooed back home with lucrative job offers and patriotic appeals to help build up the motherland.

In Taiwan’s Hsinchu Science Park south of Taipei, for instance, 73 of the 150 companies were set up by returnees--many of them from such blue-chip firms as IBM, AT&T; and General Electric.

But to keep the engine of growth running in the long term, Asia has no choice but to radically upgrade its schools, analysts say.

The problems are diverse. Take Hong Kong, for example. Britain’s impending hand-over of the territory to China raises myriad questions about how to meld Hong Kong’s British colonial system with the Chinese educational structure after 1997. Classes are supposed to be in English, supplemented by Cantonese, but a recent survey showed only 30% of students knew both well enough to learn effectively. And the confusion is expected to worsen after 1997, when official languages are set to change to English and Mandarin.

In addition, the colony’s rapid shift from a manufacturing hub to a services center as factories moved across the border to lower-cost China has created a demand for retraining.

At Hong Kong’s Vocational Training Center, the government offers subsidized classes in everything from precision grinding to graphic arts for those who want to change trades or supplement their skills.

Adrian Tang, 32, is one who did. His firm once manufactured clothes and accessories in Hong Kong factories, such as the book bag he carries emblazoned with the slogan “Be Part of Tomorrow’s History.”

Now its products are produced in China, and he is studying the new skills of retail management and trade with the mainland to learn how to develop chain stores and merchandise garments.

“There is no such thing as a lifetime career here,” he said. “Everything goes on a three- or four-year cycle. But most Hong Kong people are very adaptable.”

Special correspondents Megumi Shimizu in Tokyo, Chi Jung Nam in Seoul, Maggie Farley in Hong Kong and staff writer Rone Tempest in Beijing contributed to this report.

Higher Education

Enrollment in colleges and universities more than doubled between 1980 and 1990 in China, Singapore and South Korea.

China: +132%

Japan: +10.%

Singapore: +130%

South Korea: +144%

Taiwan: +54%

Source: Human Resources for Science and Technology: The Asian Region