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

Click to browse the book

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

An age of opportunity?

Click to read the report

As Alphonse Allais pointed out, having money is a great help in coping with poverty. And there’s plenty of data to show that investing in basics like health and education pays dividends.

UNICEF’s 2011 State of the World’s Children Report shows progress across a whole range of indicators, including under-five mortality rates, access to clean water, and vaccinations.

The second decade of life has received less attention though, and without sustained efforts, the gains made in early childhood can be wiped out.

The 2011 report gives statistics showing that in Brazil for instance, the lives of 26,000 babies aged 12 months and under were saved over 1998-2008 thanks to various programmes.

Over the same period, 81,000 15-19 year-olds were murdered.

Global net attendance  for secondary school is roughly one third lower than for  primary school. Worldwide, one third of all new HIV cases  involve people aged 15–24. And in the developing  world, excluding China, 1 in every 3 girls gets married  before the age of 18.

The report also quotes figures suggesting that around 1 adolescent in 5 suffers from a mental health or behavioural problem.

Other, less dramatic, statistics reveal widespread problems. With 81 million young people out of work globally in 2009, youth unemployment remains a concern almost everywhere. An increasingly technological labour market requires skills that many young people don’t have, and in many countries, large teenage populations are a unique demographic asset that is often overlooked.

Yet, the report argues, investing in adolescent education and training can produce a large and productive workforce, helping the young people themselves, and can contribute significantly to the growth of national economies.

However, in Off to a Good Start? Jobs for Youth the OECD says that young people are more than twice as likely to be unemployed as the average worker, yet few governments are taking proactive steps to boost youth employment.

Useful links

OECD work on education and training

OECD work on employment

OECD work on health

In search of the ‘lost generation’

Economies may be recovering, but one problem looks set to linger – unemployment . The situation is especially severe for young people (15-to-24-year-olds). Currently, there are nearly 15 million unemployed young people in OECD countries, about four million more than at the end of 2007. (Explore the numbers at the OECD Factblog.)

As the recovery gathers pace, unemployment should begin to ease. But there’s a real concern that this recession will still create a “lost generation” of young people who, as a result of being unemployed in their teens and early twenties, face a lifetime of diminished job prospects.

What’s to be done? A paper just released by the OECD explores some possible solutions. These could include providing young people with a wider range of training and education opportunities, both academic and vocational, as well as offering those who leave school early with a “second chance” to get some skills. It could also mean making changes to employment protection rules that can trap young people in short-term, dead-end jobs.

Useful links

OECD Insights: From Crisis to Recovery – Employment and the Crisis

OECD work on employment

OECD Employment Outlook

Out of school and into debt

This post was contributed by Laura Nasr, senior at Mt. Holyoke College (US) who will be part of our new feature column written by university students.

Unemployment in OECD countries is twice as high for youth as it is for all age groups combined — in 2008, 12.4% versus 6%.

With this in mind, college graduates, faced with record student debt and few job prospects, may decide to go to graduate school to wait out the bad economy.

Those who don’t go to graduate school may be either unemployed or underemployed. Either way, the effect is the same: young adults won’t make a comfortable wage until later in life. Certainly it won’t benefit the economy if a large segment of the population can’t afford to spend.

Even those graduates who find jobs may be crippled by record-high amounts of student debt: in 1999, the last year for which comprehensive data is available, average student debt for students in the United States was $19,400, which was about two thirds of per capita income for that year.

Debt in such high amounts affects the choices—spending and otherwise—that a person will make for years to come.

The economic impact of the recession has been discussed in great depth—as it should be—but it is necessary to consider the human effects as well.  (more…)