Getting ahead of the curve: skills policy in a changing global economy

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Today’s post is from Dr Neil Lee, senior economist at The Work Foundation.

Skills are increasingly important for economic success. Technological change, globalisation and the rise of the ‘knowledge economy’ have all favoured highly skilled workers. When the recession hit, the sharpest rises in unemployment – in the UK at least – were amongst those with fewer skills. This was particularly the case for young people, with youth unemployment reaching crisis point in a number of countries. The global economy has changed, and workers across the OECD need the right skills to succeed in it.

This makes the ministerial meeting held yesterday to discuss the new OECD skills strategy an important event.  The skills strategy will guide discussion on how OECD countries can create the skilled workforces they need to compete in an international knowledge economy. So what priorities should the ministers be discussing?

For national economies to come out of the crisis, there needs to be a focus on high-level skills. Across the OECD, employment rates are higher for those with degrees than without. To create jobs in an innovation-rich economy requires specialists with postgraduate education. In many OECD countries, increasing numbers of young people are taking postgraduate degrees, and the returns to postgraduate education are often high. Those with high-level skills are more likely to be in employment, and are increasingly likely to create new jobs.

But skills are important for everyone, not just those with degrees. As the strategy shows, youth unemployment is in double digits in most OECD countries. Part of this is due to the recession, but other structural changes in some economies are exacerbating these trends. The skills required for young people entering the workplace are changing. In economies increasingly based on the service sector, young people’s first jobs are more likely to be in personal services than on a factory floor. Employers need to be confident that young people have the necessary skills in customer service, time-management and teamwork.

Young people need to develop soft skills to work, but these soft skills are often only developed while in work. The result is a Catch 22 for many young people from disadvantaged backgrounds. The solution lies in ensuring young people are properly supported when taking their first steps into the labour market, with meaningful work experience that encourages realistic expectations of employment and the skills they will need to succeed. Some OECD countries such as Germany are better at this than others.

While it is extremely important to ensure young people have the necessary skills to enter the labour market,  governments also need to continue to focus efforts on lifelong learning. The international economy has undergone important changes over the past few decades.  Increasingly, the economies of OECD member states are based on the production, dissemination and use of knowledge. The skills required for these new environments evolve over time, and workers need to be able to catch-up.

Yet a focus on the supply of skills is not enough.  In the UK, Slovenia and Greece, over 40% of employees feel they could cope with more demanding duties at work – their skills are underutilised. Such problems are caused by poor business models and management being unable to effectively use the skills of their staff. Tackling poor skills utilisation is an important means of both raising productivity and boosting the demand for skills.

OECD Ministers face a number of significant challenges. In the short-term, they need to address economic crisis, the problems of youth unemployment and the question of how to return to growth. In the longer-term, they will also need to ensure their economies can grow sustainably. They need policies to address youth unemployment now, whilst also continuing to ensure their workforces are able to succeed in the knowledge economy. We need solutions to these difficult questions – and skills will play a crucial part in all of them.

Useful links

See more blogs on skills at oecdeducationtoday

OECD work on skills

OECD work on employment

OECD work on education

OECD Week 2012

OECD Week Paris, May 22-24: From Indignation and Inequality to Inclusion and Integrity

Recovering from the crisis is about returning to economic growth that can sustainably deliver better lives in all senses of the word – jobs for today and the education and skills for the jobs of tomorrow, healthy environment, and equal opportunities.

Economic growth is the foundation stone, but the crisis taught us that it has to be the right kind of growth. In many countries, people are rising up – indignant about inequalities and what they see as a lack of transparency and accountability from their governments and institutions. They are calling for new approaches that focus on growth, fairness and inclusion and address corruption, the rising cost of living and social spending cuts.

Expectations are high for international organizations such as the OECD to help governments in their efforts to find sustainable solutions. It’s a daunting task, but one we can attain if governments and citizens work together. OECD Week 2012 in Paris is a key moment for achieving this and comes on the heels of the success of the OECD’s 50th Anniversary last year.

What happens during OECD Week?

OECD Week combines the annual OECD Ministerial Meeting and Forum. The Forum, a public event, brings together ministers, business, labour, civil society and academia to share policies and ideas. It feeds into the Ministerial Meeting, where government leaders and ministers discuss issues on the global agenda. Turkey’s Deputy Prime Minister, Ali Babacan, will chair this year’s Ministerial, supported by vice-chairs Chile and Poland.

Highlights of the week include the semi-annual OECD Economic Outlook, as well as three major new reports – the Skills Strategy to ensure that today’s children and young adults are well equipped for tomorrow, the final report of the Gender Initiative and the Development Strategy.

The Forum – 22-23 May
Politicians, business leaders, academics and civil society will discuss and debate ways to shift from indignation and inequality to inclusion and integrity. With record numbers of young people looking for jobs, the middle class squeezed out of the system, financial regulation failures, and faith in governments and other institutions waning, how best to restore trust and integrity in the system and find innovative paths for more sustainable, equitable and greener growth?

Which policies are delivering better lives? The OECD’s Better Life Index, launched in 2011, offers people a chance to say what matters most to them – education, jobs, a nice home, clean air, money – and see how their country measures up. An updated version of the Index, to be released at Forum 2012, includes new dimensions for gender and inequality as well as two new countries, Brazil and Russia.

The Ministerial – 23-24 May
Ministers will focus on policies for a sustainable – jobs-rich, green and equitable – economic recovery. In this context, they will discuss ways to encourage people to learn and maintain skills – the global currency of the 21st century – and encourage gender equality so women can fulfil their potential. As the economy of one country depends on the economy of all, ministers will also discuss the benefits of a more open trading system and look to strengthen partnerships with developing countries and their relationship with the Middle East and North African region.

Green and smart: ICT jobs for tomorrow

No job for a lady? Ada, Countess of Lovelace,the world’s first programmer

There used to be adverts on buses and trains saying “If u cn rd this u cd gt a rly gd job”. At the time, I nvr figured out what the jb was, but now I realise it was probably to write software for texting applications. Like everything else, sms had its origins in Victorian love poems (and if you don’t believe me, look at this). However, when clever Charles Bombaugh was writing about loving “U 2 X S,/ U R virtuous and Y’s”, the only programmer in the country had been dead for about 20 years, and the computer she wrote the algorithm for, clever Charles Babbage’s analytical engine, was never built.

The memory of Countess Lovelace (for it was she) lives on in the programming language Ada named in her honour, but today most programmers are men, or boys (they’re getting younger every day). Women account for only 30% of ICT sector employment and 20% of ICT specialist occupations. Both categories are recruiting and resisted the impacts of the crisis more than most, and companies are looking abroad to fill the gaps, either by recruiting immigrant workers or offshoring the tasks.

Companies and governments are also facing a new challenge according to a report prepared by OECD analysts Christian Reimsbach-Kounatze and Cristina Serra Vallejo: developing the competences for a “greener and smarter” economy. The link with “smarter” is obvious, but at first sight, it’s hard to see what’s green about ICT. Electronic waste is one of the fastest growing types and according to the UN, around 40 million tons of waste from electrical and electronic equipment, WEEE, are generated each year from the products we throw away. In 2005, visitors to London could see the Weee man, a 7 metre high giant composed of the estimated electrical and electronic waste one UK citizen will discard in a lifetime.

There’s also what’s sometimes called “digital waste”, the terabytes of forgotten emails, photos, videos and so on kept online. It all has to be physically stored somewhere, along with the files we actually use, and server farms and the data centres that host them have an impact on the environment through the electricity generated to run the equipment and cool the buildings. Google for instance said that its offices and data centres emitted over 1 million tons of carbon in 2010, claiming that the figure would have been twice as high without efforts to reduce its footprint.

Data centres and other ICT infrastructures are increasingly vital for all sectors of the economy, and green growth strategies will require people capable of both greening ICT itself and helping ICT to make other activities greener. ICT skills and employment: New competences and jobs for a greener and smarter economy (the OECD report mentioned above) argues that promoting ICT skills in the green and smart economy pays a double dividend by encouraging job creation and accelerating the transition to green growth.

The jobs wouldn’t just be in the sector itself. Employment in the ICT industry and employment of ICT specialist skills each accounts for up to 5% of total employment in OECD countries, but ICT intensive-users account for more than 20% of all workers in all branches. A car mechanic I know told me that when he started working 30 years ago, the first thing you did when a car came in to the repair shop (apart from telling the client it was a big job and would be ready on Tuesday) was to get your hands dirty poking around the engine or jacking it up, whereas now you start by plugging it in to a computer. And hundreds of other jobs across the whole skills range now need knowledge of ICT as well.

A clear and widely accepted definition of what a green job actually is doesn’t exist yet, therefore the report uses a definition from another OECD study: “…jobs that contribute to protecting the environment and reducing the harmful effects human activity has on it (mitigation), or helping to better cope with current climate conditions (adaptation)”.

On that basis, some of the new jobs will be in the ICT sector, writing software or developing and manufacturing environmentally efficient semiconductors and other products for instance. Other green jobs will be related to greening the economy, for example working on the systems that operate wind farms or installing and maintaining the equipment that smart buildings use to control lighting and temperature.

Given the potential of ICT to boost both green growth and employment, it’s surprising to learn that only a minority of governments are explicitly promoting green ICT-related skills and jobs according to an OECD survey.

Useful links

OECD work on ICT skills and employment

OECD work on green growth

Are boys and girls ready for the digital age? Report from OECD-PISA on how proficient 15-year-olds are in gathering and processing information from printed and digital material:

  • On average, girls outperform boys in digital reading; however, the gender gap is narrower than it is for print.
  • Among boys and girls with similar levels of proficiency in print reading, boys tend to have stronger digital navigation skills and therefore score higher in digital reading.

Listening, learning … and getting creative

The Second OECD youth video competition has just been launched, with education and skills as the theme. We asked the six youth co-organisers of the 2012 edition for their thoughts on the importance of education, why they think young people should speak up, and how they got involved in this competition.

Little did we know that when we were creating three minute videos for the OECD’s first global youth video competition early in 2011 that a few months later we would actually be co-organising the next competition! In May 2011, we were invited to Paris as winners of that first competition and our worlds suddenly became a whole lot bigger. For three exciting days at the OECD Forum we had a unique opportunity to observe and even participate in a global convergence of innovative ideas and forward-looking approaches to addressing the major social and economic challenges of our time, including climate change, poverty, gender inequality, underdevelopment, financial instability and unemployment.

What particularly struck us was the conviction of so many people at the OECD when they spoke about the importance of listening to young people and what we have to say about important issues. Their view is that it is not only valuable, but essential, for the next generation to get involved today in finding solutions to major global challenges. So when the OECD asked us to team-up with them to launch a second global youth video competition, we jumped at the chance.

As a group of young people, some of whom have recently completed third level education, we believe that many of the problems facing the world today are born of ignorance, intolerance and lack of education. We know that issues cannot be solved by taking a “band-aid approach”, but that solutions should always address the root cause of any problem. For us, there is no better long-term solution to a problem than education.

Education is a powerful economic indicator in any country: social progress and economic development are closely linked to academic ability and competitive skills among the labour force. Equally, a comprehensive and well-rounded education creates smart, compassionate and open-minded individuals – and consequently societies that are much better equipped to tackle environmental, social and financial issues, not only locally, but globally.

Young people have an important role to play: we must continue to remind decision-makers and political leaders that the problems they are facing today are the same problems we will have to tackle tomorrow – unless we work together to achieve equitable and sustainable solutions, not just for today’s generation but for future generations.

We are delighted that, after a public vote, education has been chosen as the theme of the 2012 youth video competition and we are very excited about seeing creative and innovative ideas from other young people around the world that will hopefully challenge our current ways of thinking about this topic. We also look forward to meeting the competition winners in Paris next May, so we can share with each other the incredible journey we have embarked on since stepping forward to express our ideas to the world.


Alina, Desiree, Hew, Javier, Stephanie and Vidhya

Policies promoting education and training must go beyond employability


Encourgement, cooperation and sharing...

This post comes from Roland Schneider of the Trade Union Advisory Committee to the OECD (TUAC). It summarises TUAC’s submission to the meeting of education ministers taking place at the OECD today and tomorrow.

Education, training and learning have become important action points for trade unions across OECD member countries. Unions have spread the learning message in a variety of ways: through social dialogue and collective bargaining with employers, through taking part in the governance of vocational education and training (VET) systems; through innovation such as the establishment of union learning representatives providing support for workers in taking up training opportunities; as well as to insist that employers increase their provision of training and demand for skills.

TUAC’s submission to today’s meeting of education ministers at the OECD warns against taking an excessively utilitarian view of the purposes of education. It is essential to defend the broader value of education in enhancing the ability of individuals to contribute to the wider cultural, political and civic life.

Government policy on education must not neglect the right of all individuals to undertake learning as an intrinsically worthwhile activity. Policies to promote education, training and lifelong learning must go beyond a focus on employability alone; they must continue to be guided by a broad vision of the purposes and benefits of education.

A prevailing financing gap in education does not allow for spending to be slashed

As Education at a Glance 2010 points out, education is a large item of public expenditure in most countries. However, the data show that before the crisis most governments had not increased spending on education in line with growth in national income. Against the background of a prevailing financing gap in education, it was significant that the education sector benefited in many countries from the implementation of fiscal stimulus packages.

These packages provided important funds for investment in infrastructure, including educational buildings, as well as in training. However, the shift to austerity policies raises major risks. The challenge of making public finances sustainable must not be taken as an excuse to cut education spending. Students can’t acquire world class skills in ill-equipped, broken and battered schools, staffed with poorly paid teachers. Public spending on education has large and rising benefits for individuals as well as for society a whole.

Budget cuts in education would have large adverse consequences on institutions, staff and quality of education provision through reductions in teaching and support staff, reduced availability of teaching and learning materials, larger class sizes, suspended construction projects and less maintenance of buildings. Moreover, it would disproportionately harm those who are most vulnerable by creating new barriers for the disadvantaged.

OECD work on vocational education and training must go beyond employability

Another challenge to be addressed is to base skills policy on more realistic expectations of what can be achieved. An open and honest debate is necessary about how education and training policy can contribute to sustainable growth, decent work, social justice and inclusion. Vocational education and training policy cannot focus narrowly on the supply of skills, assuming that skills, once created, will automatically be utilized to their full potential.

Governments must attempt to integrate VET policy into a wider package of contextual factors and determinants that shape the formation of skills as well as their use. VET policy must in particular take into account the workplace and industrial relations context in which skills are created and mobilized and thus ensure union involvement in the design and implementation of training policy, as well as in the assessment and subsequent revision of curricula. Governments must also tackle underinvestment in training by employers by encouraging them to increase the levels of investment and commitments regarding skills development and training.

Blaming educational underachievement on teachers is dangerous

Qualified teachers must be at the heart of any educational reform. There is no doubt that the quality of teachers is an important in-school factor determining learning outcomes. However, it’s not the only one. There are also many factors, like the quality of school leadership, the quality of the curriculum and last but not least teacher collaboration.

Blaming educational underachievement on teachers is aiming at the wrong target. It distracts attention from other equally and likewise important school areas in need of improvement. Personnel management of teachers, based on an inappropriate evaluation systems is likely to undermine the morale and commitment of teachers, to discourage them from working with those with particular learning needs and causing many to leave the profession. At the same time, it will prevent others from entering the profession. (more…)

BBC debates the skills gap

Click on the image to go to the BBC World Debate home page

By the end of next year, around 15 million new jobs will be needed to get OECD countries back to pre-crisis levels of unemployment. That’s the “jobs gap” .

Paradoxically, there’s also a “skills gap” – a shortage of qualified people to fill job vacancies. According to David Arkless of  Manpower Inc., companies in Europe have around three million unfilled vacancies. Why? Despite high unemployment, they still can’t find the right people.

Arkless was speaking on the BBC’s World Debate, which was recorded on Wednesday at the OECD in Paris to coincide with the release of the Organisation’s annual report on jobs and unemployment.

The debate offered a fascinating insight into the skills shortage at a moment when the issue is being eclipsed by unemployment. But as OECD Secretary-General Angel Gurría pointed out, “thinking about skills now is an act of foresight”. If we wait to act until economies recover, it will be too late.

Education and training as an investment in the future will be key. But, as Sharan Burrow, head of the international labour body ITUC, warned, this could be at risk as governments seek to cut back on spending. “If we don’t invest in education, we’ll be having this same debate in 10 years,” she said.

Just days before the release of the OECD’s annual survey of international migration, the panel also discussed whether countries should ease migration for skilled workers. Manpower’s Arkless pointed out that, in many cases, “the people who can fill jobs are in the wrong place with the wrong skills”. So, does it make sense to let them move more freely to the right place? In theory, yes. But in practice, as presenter Nik Gowing pointed out, that can face real political obstacles: “How do you persuade politicians to argue for skilled immigration in a time of unemployment?” he asked his panellists.

To hear what they had to say, tune in this weekend to The World Debate on BBC World at these times.

Useful links

OECD work on employment, on education  and migration

OECD Insights: From Crisis to Recovery

OECD Insights: International Migration

OECD Forum 2010: Matching skills to jobs

One impression you could get at this year’s Forum is that participants have trouble sticking to the subject. Looked at another way, it’s the fact that issues can’t be tackled in isolation, and that each session is closely connected to the others.

For instance, at this morning’s media briefing from TUAC, the Trade Union Advisory Committee to the OECD, Richard Trumka president of the AFL-CIO argued that, apart from the financial market aspects, the underlying reason for the crisis was a drop in aggregate demand. This would be a familiar position for at least one of the participants in the earlier discussion on the future of capitalism, Robert Skidelsky, “Keynes’s great biographer” to quote a book review by Joseph Stiglitz.   

TUAC also talked about growing inequality, as documented in the OECD’s Growing Unequal study, and the fact that workers at the lower end of the income distribution had to borrow excessively to pay for homes and immediate consumption. As a result, they paid for the crisis four times over, losing their homes, losing their jobs, losing the value of their pensions, and then having to pay higher taxes to pay for the stimulus packages and the ensuing sovereign debt.

The unions warned that a “stampede” towards fiscal consolidation would only make matters worse by reducing aggregate demand even further, whereas what is needed is an income-led recovery. But how should governments go about creating the conditions for this?

 TUAC’s answer was also proposed in the session on matching skills and jobs: invest in innovation, R&D. A downturn is the time for upskilling, a time to redefine jobs and retrain workers to take advantage of them.

As Barbara Ischinger, head of the OECD’s Education Directorate pointed out, education and training systems need to prepare learners not only for rapid change, but for jobs that haven’t even been created yet, using technologies that are still to be invented, to solve problems that cannot be foreseen.

Useful links

The educationtoday blog has guest posts from participants in this session.

Barbara Ischinger discusses New thinking, working and tools for the 21st century

Bob Harris, of Education International and Chair of TUAC’s Working Group on Education, Training & Employment analyses the impact of Exit strategies on public services and democracy

John Hope Bryant, Vice Chairman of the U.S. President’s Advisory Council on Financial Literacy until January 2010 Chairman and CEO of Operation HOPE proposes Education and financial literacy as a business case