The Islamic Globe has had quite a few article exploring the dichotomy between the stated need for more employees with the difficulty that Islamic finance graduates have in finding employment once they complete their studies. I have had a number of emails from Islamic finance graduates looking for advice on getting a foot in the door of the Islamic finance industry and I don't have much advice, so the Globe's articles are illuminating, looking at the issue from the perspective of the industry, educators, and students and graduates.
Another data point is from the industry that is facing rising costs (with Malaysia as an example) from the lack of 'skilled' employees. The article I linked to suggests that Islamic banks in Malaysia should look to consolidate to cut down on their operating expenses. The CEO of Bank Muamalat says: "Costs have risen easily by 20% to 30% mainly due to the shortage of human capital and increased regulatory costs. Margins are falling and the only way to counteract this is to become bigger and more efficient".
What I understand from the Islamic Globe's reporting is that the types of skills the Islamic finance training programs provide are not enough focused on the actual application of Islamic finance, but are instead more focused on the background of what Islamic finance is in theory. However, I suspect my description is an oversimplification and Islamic finance training programs do provide some real-world training on the practice of banking. But still, without experience in actually doing the job, many people in training programs will still need additional time to get up to speed in a new job compared to bankers from the conventional industry switching to Islamic finance.
This is problematic because many people who have contacted me are reticent to enter the conventional financial industry because it is interest-based, and must rely upon the training they receive to prepare them for a career in Islamic finance. This will continue the trend of Islamic finance graduates having difficulty breaking into the Islamic finance industry, which would be disappointing since they could be a big asset to Islamic finance with their enthusiasm for helping the Islamic finance industry develop and become more 'authentic'.
This loss will not show up now, or even in the next 5 years, but will have a longer-term detrimental impact on the economy. The best approach I think is to continue to develop the industry's training programs, as well as the academic departments focused on Islamic finance, but also to add more internships and other forms of on-the-job training. If students are able to get experience while they are in school, they will be better able to enter the market with more skills (and connections) that will make it more likely that they will find a job when they graduate. This is, by and large, how conventional finance works. And it should be developed further in Islamic finance.
Perhaps, one of the ways this can be accomplished is if there is an endowment funded that will provide companies with funding for paid internships for students in Islamic finance programs, to provide students with the financial ability to take the internships that Islamic financial institutions may not otherwise provide if they had to offer a paid internship. Maybe this will only be necessary for a period of time until the consolidation that has been advised for years comes to pass and the Islamic banks reach a scale where they have the internal resources to support their own paid internship programs.
1 comment:
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