Harnessing PNG’s Hidden Workforce:Turning the Black Economy into a Driver of Jobs and Sustainable Growth

TOM LEPATU

October 2025

Key Points

• Assess the skill gap syndrome and its impact in PNG’s economic development.
• Identify the current skilled workforce gaps and the mismatch between industry needs and training institutions graduates.
• Explore and analyze the challenges to develop an effective skilled workforce.
• Identify the strategic policy actions to develop skilled workforce in PNG and align education with labour market needs.
• Recommendations for policy change to address the skill gap to stimulate national development in Papua New Guinea.

Introduction

As we are celebrating our 50th Anniversary, we need to take stock and reflect critically on the development trends in terms of integral human development in Papua New Guinea.

The nation is as good as its people. The people make up the nation. Since independence, human capital development issues have not been addressed properly by all levels of government and it’s becoming a growing concern which can be attributed to the current socio-economic problems facing our nation’s progress and security issues.

Every human being is an intelligent person created and endowed with unique inherent abilities and talent. People are the greatest resources in a country and if their welfare and value are not carefully being optimized, then they cannot contribute significantly to the nation building. Their potential or purpose is not maximized to contribute meaningfully in this nation.

The PNG government, through appropriate legislation and policy frameworks, must ensure that all citizens have equal opportunities, addressing the inequalities that exist in the current education system.

The nation must be governed according to the spirit of the National Constitution, whereby everyone is given an equal opportunity and empowered to participate meaningfully in the nation’s development.

However, it’s a tragedy, in that we have failed to some degree to develop fully the human resources of this nation to contribute meaningfully in the nation building. The two quotations support my propositions. According to the former Education Minister, Hon. Lucas Dekena, he stated that “high schools will be empowered to incorporate Technical Vocational Education and Training (TVET) along with Christian ethics into their curriculum, equipping students with not only a strong academic foundation but also practical life skills and ethical values.” “This approach ensures that when students graduate, they step into the world ready to make a positive impact with both their knowledge and integrity.” Under the new TVET policy, all students will have the right to progress from grade eight through to grade twelve, preparing them for tertiary education or vocational training. This change will bring an end to a system that has, in the past, left many young people in rural and underserved communities with

limited options for their future.
According to the Prime Minister Hon. James Marape, he stated that “Education is the great equalizer, and we want every  young Papua New Guinean to be empowered with knowledge, skills, and the confidence to create positive change,”

In PNG, by comparison, there are 15 percent of the people engaged in formal employment compared to about 85 percent of the people engaged in the black economy.

Background of the Skill Gap in PNG

PNG is a developing economy, and integral human development is the key indicator to determine our national development and growth. It is the people with appropriate skills and knowledge which are the integral part in nation building. At the moment, there is no correlation between population growth, human resource development and national development.  The nation will not develop in all aspects until the people are literate, skilled, educated and employable.

In 2024, Papua New Guinea’s population was about

10.76 million, with roughly 186,000 births annually; reflecting a growth rate of 1.78 percent (World Bank, 2025).

Papua New Guinea’s potential labour force in 2025 is estimated at approximately 3.69 million people, with a forecast employment rate of 52.31% and a youth unemployment rate hovering around 3.8% in 2024, though this figure doesn’t capture the extent of underemployment for the approximately 80,000 annual graduates. The focus for increasing potential labour force participation is on transitioning smallholder farmers to commercial agriculture, developing Small and Medium-sized Enterprises (SME), and leveraging the temporary employment opportunities from the resource sector.

Potential labour in national development refers to harnessing a nation’s workforce to drive economic growth and improve living standards by optimizing skills, addressing unemployment, and leveraging both domestic and international labor mobility, as seen with seasonal worker programs in Pacific nations. To maximize this potential, countries  like Papua New Guinea (PNG) need conceptual frameworks and national policies for labor migration, improved skills training, integration of the informal sector, and support for rural development to ensure inclusive growth and avoid hindering local employment.

Challenges In Skill Gap Issues

PNG cannot progress effectively without addressing the core issue which is human capital development. We see that the skills gap negatively impacts national development. The following are some of the challenges facing skill gap scenario in PNG.

1. Geography: communication, transport and access to facilities is limited in many locations.
2. Insufficient data: there is insufficient and poor-quality data about graduate outcomes, undermining advocacy with government and industry.
3. Insufficient progress on accreditation and standards: TVET reforms are still at an early

stage. Insufficient (i) funding and resources (ii) qualified trainers, (iii) work to marry different accreditation standards & (iv) engagement by many training institutions.

4. Enablers and Disablers for Success Inadequate coordination: between donor programs, and between training providers undermines progress towards reform of the TVET system.
5. Cultural and Gender barriers: perceptions limits participation for women. TVET is viewed as a poor post school option, limiting take up by young people.
6. Insufficient political will: limited political will or interest to provide resources for policy follow- through and implementation undermines reform efforts.

Legal and Policy framework pertaining to human development

a)  Governing Legislations

Papua New Guinea’s labour laws, governed by the Employment Act 1978, detail minimum wage of K3.50, standard working hours (44 hours per week as of a 2022 update, with possible variations), and over time rates. It encompasses: employment contracts, annual  leave,  maternity  leave,   work   permits for foreigners, wages and deductions, dispute resolutions and rules for employing females and young persons. The governing legislation comprises of the Employment Act 1978, Industrial Relations Act 1962 and Employment of Non-Citizens Act 2007.

b) Strategic Policy Context

We need to understand that Human capital development plays a pivotal role in advancing economic growth and economic development. The National Skills Development Plan (NSDP) features technical education as one of the key drivers of this development agenda. It  clearly  maps  out  the goals, strategies and targets to transform technical education. In so doing, it would have achieved the policy targets of addressing Access to Quality Education, enhancing skilled labour force and supporting social growth and economic development. Through enabling legislation, legislative amendments, the National Skills Development Agency and the Industry Skills Groups, DHERST will coordinate with the relevant agencies and Higher Education Institutions to implement this plan.

The Papua New Guinea Vision 2050 envisaged for Papua New Guineans to significantly participate   in nation building and economic growth. This may only be achieved through a literate, knowledge-

based society. Skills and knowledge development is an integral factor in strengthening the foundation of a knowledgeable society. The National Skills Development Plan (NSDP) is derived and builds upon other major government policies namely: PNG Vision 2050; PNG Development Strategic Plan 2010-2030; Medium Term Development Plan III; Marape Manifesto; Social, Law & Order Sector Framework 2019-2022; and the National Higher and Technical Education Plan 2021-2030. These major government policies acknowledge the current skills shortages and skills gaps and how they will be addressed to ensure that all citizens participate and benefit sustainably from employability and productivity which increases GDP, workforce growth and competitiveness.

c) Policy and Legislative framework governing TVET in PNG

There has been an undertaking by the National Government to reform the Higher Education Sector by way of NEC decision in 1995. The transfer of functions of all post-secondary institutions from different ministries to the Office of Higher Education.

Thus, we see that the 2017 Reform Act 2020 provided the legislative framework to effect the 1995 NEC Decision. In 2021, Department of Higher Education Research Science and Technology (DHERST) Implemented the 1995 decision whereby all the TVET institutions in Department of Education (DoE) and other ministries were transferred to DHERST.

In 2021, we see that the National Skills Development Plan 2021 – 2025 was launched together with the National Higher and Technical Education Plan 2021- 2030. The focus on Education and training is on educating and training our graduates to be readily employable for domestic, regional and global labour markets relevant for the 21st century.

d)  National Skills Development Agency (NSDA)

The National Skills Development Agency (NSDA) was established as a secretariat within DHERST in 2019. The intent of the National Skills Development Agency was to provide an enabling platform for oversight, regulation, planning and development of national skills capacity. The Agency is demand-driven, industry-led with the overall objective to contribute to national economic growth and development through a demand driven curriculum and industry led approach to Skills development based on labour

market demand and government priorities.
The National Skills Development Agency has representatives of people from Government departments, Industries, Employers, Civil Society and higher and technical education institutions who collectively advise the Department on the skills demanded in the country.

The NSDA will be developing curriculum based on industry demand and requirement so that it rectify the mismatch of skill gap in the country to some degree.

Therefore, NSDA is the vehicle  that  will  drive  all the policy and training necessary to minimize the shortage of skilled labors in Papua New Guinea.

Overcoming the Skill Gap and creating pathways to human capital development

a)  Community based Appropriate Technology Centers

It’s about time we need to practice bottom-up strategies to foster national development. We need community focused appropriate technological training to upskill the people to add value to their lives so that they can become creative and useful in their society. For example, teach mothers sewing and baking skills and teach men carpentry and motor mechanic skills.

b) Industry based training/education

All the programs in the universities, colleges and vocational centers must be reviewed and aligned with the industry’s needs so that once students graduate, they can be employed easily.

c)  Translate all English taught programs into Pidgin and local language

The discrimination we have in the education system is that lessons are being taught in English. If we translate all programs in universities and colleges into local languages and Pidgin then it will enable everyone to be educated with skills or knowledge, and their lives will change. For example, In China, everyone is taught in Chinese which makes it easy, accessible and open to all the citizens.
D) Promote startups and SME

Encourage more business development officers to the grass root level and create proper pathway and incentives so that they can venture into new startup and become economically self-reliant in life.

e) Integration and certification of people without formal education

Encourage the creation of grass root business hubs whereby the local talents are tested and recognized with a formal certification by the industry through a recognized body so that they can be able to have equal excess  in  securing  employment  just  like  any skilled labour with a proper qualification. For example, my cousin did Primary  school  only,  but he can fix industrial generators and currently he is employed by New Enga Hospital to look after three generators.

f)  Government financial support for unemployed graduates.

The government should develop policies that address graduate unemployment by linking educated youth with existing credit and enterprise programs. Instead of direct subsidies, unemployed university and college graduates could access targeted start-ups or the recently announced agricultural credit scheme that could enable small- scale agribusiness and value-chain ventures. Such programs can be implemented in  partnership  with commercial banks, microfinance institutions, and the National Development Bank to ensure sustainability and job creation.

g)  Investing in existing workforce

Implementing upskilling and reskilling programs for current employees to close internal skills gaps, rather than solely relying on hiring external talent.

h) Invest in innovation

Encourage innovation and prepare the workforce for technological advancements to seize opportunities in a transforming global economy.

i) Build capacity for self determination

Develop the capacity of Papua New Guineans to manage their own development, resource and industries, rather than relying on external solutions.

j) Promote Downstream Processing:

Establish more manufacturing and processing industries to add value to PNG’s raw materials, creating diverse job opportunities across various fields.
k)  Implement Internship Programs:

Government policies for internships can help graduates gain essential work experience while still in school, making them more attractive to employers.

l) Support Entrepreneurship and Agriculture:
Provide young people with access to loans and support to start their own businesses or engage in the agriculture sector, which has potential for growth. This can be leveraged by the Agricultural Credit Scheme to expand youth participation in  agribusiness, agr-processing and value-chain development.

Policy recommendations for improving the skillgap deficiencies in PNG

a)  Invest in Innovation

Encourage innovation and prepare the workforce for technological advancements to seize opportunities in a transforming global economy.

b) Build Capacity for Self-Determination

Develop the capacity of Papua New Guineans to manage their own development, resources, and industries, rather than relying on external solutions.

c) Foster Regional Collaboration

Encourage stronger collaboration between Pacific countries, as well as with regional partners, to align

policies and priorities and share best practices.

d)  Align TVET with Industry Needs

Focus on developing modular, short-term, and flexible TVET programs that directly address current and future industry requirements in Papua New Guinea.

e) Strengthen Partnerships

Foster collaboration between universities, vocational schools, and employers to ensure curriculum are relevant and provide the skills needed by the local economy.

f) Support Training Providers

Provide support to both TVET and private training providers to develop their capacity and deliver effective training programs.

g)  Promote Inclusive Training

Ensure access to training for all, including sensitization and training on gender and disability considerations and outreach to the informal sector.

h) Introduce TVET Early

Integrate TVET concepts into primary education  to build fundamental skills and awareness from a young age.

i) Political Will and Support

Regardless of which political party is in the government, there must be consistent support, especially grants towards implementing targeted upskilling and reskilling programs, strengthening technical and vocational (TVET) and lifelong learning, foster public-private partnerships to ensure training aligns with the industry needs for labour force in the country.

Conclusion

Papua New Guinea’s  greatest  untapped  asset  lies in its people – particularly the vast majority working outside the formal economy. Bridging the skill gap, reforming education and training, and linking young people to opportunities through initiatives such as the Agricultural Credit Scheme can turn the “black economy” into a foundation for inclusive and sustainable growth. By investing in human capital, promoting entrepreneurship, and aligning policies with industry needs, PNG can transform its hidden workforce into a driver of national development and shared prosperity.

About the Christian Professionals Network

PNG Christian Professionals  Network  Inc.  formerly known as TSCF Graduates  Network,  is an interdenominational Christian professionals’ network. We are driven by purpose and passion to see a new PNG. We connect, inspire and empower our members to positively influence the seven spheres of influence (family, church, education, business, arts and entertainment, media and government). The vision of the Network is to produce Christlike leaders to positively influence PNG and beyond through an effective Christian professional network. We actively network with like-minded Papua New Guineans to share knowledge and experience through Minds-Meet, Emerging Leaders Summitt, CPN Connect, and Peace Ambassadors to influence sound biblical and ethical decision-making process and peace building. Our objective is to see Christ- like people Centered servant leaders raised in every sphere of influence. Leaders who love the Lord and strive to see this nation transform.

Tom Lepatu is the National Director of the Tertiary Students Christian Fellowship (TSCF). He has 16 years of experience engaging in the youth and church spaces.

This think piece was prepared with support through the PNG-Australia Partnership Building Community Engagement in PNG (BCEP) program.