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OECD Skills Strategy - Building the right skills and turning them into better jobs and lives
 

OECD Skills Strategy - Building the right skills and turning them into better jobs and lives

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Of course, everyone knows being skilled is an advantage: Skilled workers are more productive and therefore tend to earn more and have better employment prospects. Greater productivity, in turn, is the ...

Of course, everyone knows being skilled is an advantage: Skilled workers are more productive and therefore tend to earn more and have better employment prospects. Greater productivity, in turn, is the foundation for growth. Failure to ensure a good skills match has both short- term consequences (you see skills shortages) and becomes a longer-term drag on growth and equality of opportunities.

The trouble is that there is no automaticity in these relationships: skills do not automatically translate into higher incomes and higher productivity. Success with converting skills into jobs and growth depends on:
whether we have a good understanding of what those skills are that drive strong, sustainable and balanced economic outcomes;
whether the right mix of skills is being taught and learned in effective, equitable and efficient ways;
whether economies fully utilize their skill potential;
and whether governments can build strong coalitions with social partners to find sustainable approaches to who should pay for what, when and how.

find sustainable approaches to who should pay for what, when and where

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  • Of course, everyone knows being skilled is an advantage: Skilled workers are more productive and therefore tend to earn more and have better employment prospects. Greater productivity, in turn, is the foundation for growth. Failure to ensure a good skills match has both short- term consequences (you see skills shortages) and becomes a longer-term drag on growth and equality of opportunities. Thetrouble is that there is no automaticity in these relationships: skills do not automatically translate into higher incomes and higherproductivity. Success with converting skills into jobs and growth depends on:whether we have a good understanding of what those skills are that drive strong, sustainable and balanced economic outcomes; whether the right mix of skills is being taught and learned in effective, equitable and efficient ways; whether economies fully utilize their skill potential; and whether governments can build strong coalitions with social partners to find sustainable approaches to who should pay for what, when and how.
  • The first thing you see is a dramatic expansion of higher education.
  • The expansion of higher education has had significant implications on the global talent pool (here 36 countries with comparable data). Among the age group nearing retirement, there are 39 million with a tertiary qualification. Among the age group entering the labour-force, it is 81 million.
  • But while in the older age group every third person in global talent pool was in the United States, it is only every fifth in the younger age group. China’s share of this global talent pool has expanded from less 7% among the older age group to 18% among those who have just entered the labour market – just 2 percentage points below that of the U.S. In sum, the US still has one of most highly educated labour forces in the OECD area. With 41% of the adult population having attained a tertiary degree, the US ranks among the top five countries on this measure, and has over 10 percentage points more of its labour force with this level of education than the OECD average (30%). But much of this advantage stems from a high educational level among older age groups. The US, together with Germany and Israel, are the only countries where attainment levels among those about to leave the labour market (55-64 year-olds) are similar to those who have just entered the labour market (25-34 year-olds). This is why the picture looks very different among younger age groups. Among those 25-34 year-olds who have recently entered the labour market, the US ranks 15th among 34 OECD countries in tertiary attainment (EAG, Table A1.3a). Similarly, the rate of graduation from tertiary education has increased in the US from 42% in 2000 to 49% in 2009, but the pace of the expansion has been more rapid in other countries: on average across OECD countries, graduation rates have increased from 37% to 47%. Graduation rates from longer, theory-based programmes (tertiary-type A) and advanced research programmes in the US stand at the OECD average of 38% (EAG, Table A3.2).
  • I mentioned that formal qualifications cannot be equated with actual skills. Let me illustrate this point with a chart that shows the distribution of skills for people with different educational qualifications. Lets pick one country. First you see that adults who didn’t complete secondary schooling demonstrate a range of skills, the orange bar represents the middle half of the skill distribution. So not everyone who is a high-school dropoutis unskilled. As you would expect people with a high school degree tend to do better, but you see that there is significant overlap. And those who have a university degree come out on top.The picture is not that clear in all countries. Take another country. Here the performance of adults with school and university qualifications is rather similar. The picture gets most interesting when you contrast one country with another. Take a third country here. You see that high school graduates in the second country are about as highly skilled as the university graduates in the third. That illustrates the power of the OECD Adult Skills Survey in benchmarking the value of national academic and vocational qualifications across countries, something we have never been able to do before.
  • You can see a similar relationship between skills and social outcomes. If you lack foundation skills, you are more likely to be in poor health, you are less likely to volunteer, you will have less of an understanding of political issues facing your country.You are also less likely to trust institution and people and constantly think that others are taking advantage of you. You may ask why trust is so important but the bottom line is that there is no functioning democracy without trust in institutions and there is no functioning business relationship without trust in your partners and the rule of law. Afghanistan is an example for what financial capital can achieve in a country without a human capital base. You will also be less likely to reciprocate.Finally, those with poor skills show also low levels of political efficacy, that is, they tend to believe that politicians do what they want and that they themselves have no influence.
  • Producing skills isn’t just about delivering more of the same skills, because the demand for skills keeps changing. You can see this by the toxic mix of skill shortages and high levels of unemployment that is plaguing many OECD countries today: Even at the height of the crisis in 2009, more than 40% of employers in Australia, Japan, Mexico and Poland reported difficulties in finding people with the appropriate skills. Policy therefore needs to pay attention to producing an effective skill mix that ensures that the stock of skills matches demand and this is not just about initial education and workforce training, but also about the design of policies on workforce participation and immigration. The OECD Adult Skills Survey allows us to measure how the demand for skills is evolving, in terms of how skills are actually being used, and it tells us something about the drivers of changes in the demand for skills. It will also help to conceive skills policies within a framework that has both a short-term and a longer-term perspective. On the one hand, skills-formation must respond effectively to the immediate needs of individuals and firms. So in the aftermath of the crisis the focus is naturally on responding to the needs of unemployed young people and displaced workers through effective training and retraining and to support efforts aiming at recovery and sustainable jobs growth. On the other hand, skills policy must also have an eye to the future. To form the workforce of the future you need a vision of the evolution of the labour market and of the dispositions, knowledge and skills that will permit individuals to prosper in the future world of work. We also need to remain attuned to the varying demands and constraints that individuals face at different stages in their lives, and to the pathways that they follow through education and training into work.
  • Over recent decades there has been a steady change in the industrial and occupational structure of employment. There has been particularly strong growth in occupations requiring higher skills. And in some emerging countries these changes have been much more radical and will therefore require substantive modification in the skills supply over a very short period of time.
  • The kind of skills that are needed for success are rapidly evolving. As an example, this chart shows how the composition of the US work force has changed between 1970 and 2000. Work involving routine manual input, the jobs of the typical factory worker, was down significantly, that is the result of automation and outsourcing. Non-routine manual work, things we do with our hands, but in ways that are not so easily put into formal algorithms, was down too, albeit with much less change over recent years – and that is easy to understand because you cannot easily computerise the bus driver or outsource your hairdresser. All that is not surprising, but here is where the interesting story begins: Among the skill categories that you see here, routine cognitive input, that is cognitive work that you can easily put into the form of a script saw the sharpest decline in demand over the last couple of decades. So schools are now challenged on where they have traditionally put much of their focus, and what we tend value in multiple choice tests.The point is, that the skills that are easiest to teach and test are also the skills that are easiest to digitise, automatise and offshore. Where are the winners in this process? These are those who engage in expert thinking, up 8% - and complex communication, up almost 14%.
  • People might possess the right skills but for a number of reasons they might not be willing to offer them to the labour market.
  • Producing the best skills in the world is not much use if economies don’t deploy those skills optimally. Under-utilisation of skills – whether it’s because of mismatch between workers’ skills and those demanded by the job or because individuals are out of the labour market altogether – represents a waste of the resources that were invested in nurturing these skills. In addition, as you saw, failure to make active use of skills may lead to depreciation of existing skills. And in most countries, you have substantial proportions of the working-age population out of work and not using their skills productively. The crisis has only exacerbated the situation. And it is not just a matter of having a job or not: Skills mismatches have emerged in a number of countries where up to one-third of workers consider themselves over-skilled for their current job, and another 13% believe that they have some skills deficit. And even where the skills that people have got closely match those that are needed that is not always a good thing: A match between a low supply of skills and a low demand for skills can lead to a ‘low-skills equilibrium’, a problem that particularly affects rural areas and countries where mobility between regions is limited (Green and Martinez-Solano, 2011); local incomes and productivity suffer as a result (Froy, Giguère and Hofer, 2009).
  • Don’t be misled that these changes are somehow averaging out, you can’t just shift workers from one occupation to another. On the contrary, the challenges which those changes in occupational profiles pose for skills policies become clear when you take into account that different occupations require very different skill profiles. Its just very hard to transform an unemployed steelworker into a productive computer specialist.With PIAAC, we are now able to track those skill profiles within a comparative framework: Let me mark the average in white.The violet shade shows you that low-skilled service workers (like a servant in a restaurant) need a lot of motor skills but few computer skills. People producing goods need more of everything but the profile is quite similar. Low-skilled information workers (like clerks or bookkeepers) are using a pretty rounded skill profile, High-skilled information workers use an even wider range, and you see that literacy skills and oral communication are particularly important. For managers, planning their time and the time of others is particularly important. And when you move to high-skilled knowledge workers (like yourselves) you need more of everything but a lot better skills in oral communication, reading and computers. So as you move from producing goods to high-level knowledge work, you need to develop not just more but also different skills. With PIAAC, we now have an opportunity to map competitive advantages of countries.

OECD Skills Strategy - Building the right skills and turning them into better jobs and lives OECD Skills Strategy - Building the right skills and turning them into better jobs and lives Presentation Transcript

  • 11Better skills, better jobs, better lives OECD Skills Strategy Building the right skills and turning OECD Skills Strategy them into better jobs and lives
  • 22Better skills, better jobs, better lives Context Skills matter for individuals...  because skills have an increasing impact on labour market outcomes and social participation … and for economies  because failure to ensure a good skills match has both short- term consequences (skills shortages) and longer- term effects on economic growth and equality of opportunities … but better skills do not automatically translate into better outcomes OECD Skills Strategy  Success with converting skills into jobs, growth and social outcomes depends on whether – we know what those skills are that drive outcomes – the right mix of skills is being taught and learned in effective, equitable and efficient ways – labour-markets and societies fully utilise their skill potential – governments build effective skills systems and strong coalitions with the social partners to find sustainable approaches to who should pay for what, when and where
  • 33Better skills, better jobs, better lives Many systems have done well in getting more people to higher qualifications OECD Skills Strategy
  • 44 The composition of the global talent pool has changed… Countries’ share in the population with tertiary education, for 25-34 and 55-64 year-Better skills, better jobs, better lives old age groups, percentage (2009) 55-64-year-old population 25-34-year-old population OECD Skills Strategy About 39 million people About 81 million people who attained tertiary level who attained tertiary level
  • 55 The composition of the global talent pool has changed… Countries’ share in the population with tertiary education, for 25-34 and 55-64 year-Better skills, better jobs, better lives old age groups, percentage (2009) 55-64-year-old population 25-34-year-old population United United other, 14.5 States, 20.5 other, 12.9 States, 35.8 Korea, 1.6 Australia, 1.7 Korea, 5.7 Mexico, 1.8 Australia, 1.6 OECD Skills Strategy Italy, 1.9 Mexico, 3.9 Spain, 2.1 Italy, 2.0 Japan, 10.9 Brazil, 3.5 Spain, 3.5 France, 3.5 Canada, 4.2 Brazil, 4.5 United France, 4.1 China, 18.3 Kingdom, 5.3 Japan, 12.4 Canada, 3.1 Germany, 6.3 Germany, 3.1 China, 6.9 United Kingdom, 4.4
  • 66Better skills, better jobs, better lives ...but qualifications are not the same as skills... OECD Skills Strategy …because we continue to learn after obtaining a degree …and because we lose skills that we do not use
  • OECD Skills Strategy Better skills, better jobs, better lives 7 7 150 200 250 300 350 Skill scoreNot completed school Upper secondary UniversityNot completed school Upper secondary UniversityNot completed school Upper secondary University Measuring the value of qualifications Interquartile range in skill distribution by educational qualification
  • 88Better skills, better jobs, better lives Skills matter for individuals… …because skills have an increasing impact on labour market outcomes and social participation OECD Skills Strategy
  • 9 Low skills and economic outcomes9Better skills, better jobs, better lives Increased likelihood of failure (16-65 year olds) 3.5 In lowest two quintiles of personal 3.0 income Unemployed 2.5 OECD Skills Strategy 2.0 Received social assistance in last 1.5 year Did not receive 1.0 investment income in 0 1 2 3 4 last year Number of skills domains with low performance Odds are adjusted for age, gender and immigration status.
  • 10 Low skills and social outcomes10Better skills, better jobs, better lives Odds ratios Has fair to poor health 2.6 Does not volunteer for 2.4 charity or non-profit 2.2 organizations Poor understanding of 2.0 political issues facing country 1.8 Poor level of general trust OECD Skills Strategy 1.6 Higher propensity of 1.4 believing people try to take 1.2 of advantage of others Lower propensity to 1.0 reciprocate Level 5 Level 4 Level 3 Level 2 Level 1 Poor political efficacy Odds are adjusted for age, gender, pand immigration status.
  • 1313 Skills shortages and unemployment coexistBetter skills, better jobs, better lives Unemployment rates (2011) Share of employers reporting recruitment difficulties Poland Ireland Norway Spain South Africa United Kingdom Sweden Netherlands France Czech Republic Hungary China OECD Skills Strategy Austria Slovenia Italy Canada Belgium Germany Greece Mexico New Zealand Switzerland Turkey United States Australia Brazil India Japan 90 80 70 60 50 40 30 20 10 0 10 20 30
  • 14 Developing the relevant skills14Better skills, better jobs, better lives OECD Skills Strategy Identify drivers of current and future demand of skills Develop instruments to ensure quality and responsiveness of education provision to labour demand Optimise access to education and training throughout life for all Consider impact of international labour mobility on skill systems
  • 1515 Changes in employment shares by occupation 1960-2009, selected OECD countriesBetter skills, better jobs, better lives 20 15 10 5 0 -5 OECD Skills Strategy -10 -15 -20 -25 -30 Prof. and Tech. Admin. and Clerical Sales Service Farm Prod. and Manag. labour. Australia, Austria, Belgium, Canada, Chile, Denmark, Finland, France, Germany, Greece, Ireland , Italy, Japan, Korea, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and United States.
  • 1616 How the demand for skills has changed Economy-wide measures of routine and non-routine task input (US)Better skills, better jobs, better lives Mean task input as percentiles of the 1960 task distribution 65 Routine manual 60 Nonroutine manual 55 Routine cognitive OECD Skills Strategy 50 Nonroutine analytic 45 Nonroutine interactive 40 The dilemma for education and training: 1960 1970 1980 1990 2002 The skills that are easiest to teach and test are also the ones that are easiest to (Levy and Murnane) digitise, automate and outsource
  • 1717 Keeping learning beyond schoolBetter skills, better jobs, better lives Cross-sectional skill-age profiles for youths by education and work status Mean skill score 320 310 Youth in education 300 Youth in and work 290 education 280 270 260 Youth in work OECD Skills Strategy 250 240 230 Not in education, 220 not in work 16 17 18 19 20 21 22 23 24 25 Age Linear (In education only) Linear (In education and work) Linear (Work only) Linear (NEET)
  • 1818Better skills, better jobs, better lives Activating skills supply OECD Skills Strategy Encourage people to offer their skills to the labour market Discourage early retirement Staunch brain drain
  • 1919 Unused skills may be more likely to atrophyBetter skills, better jobs, better lives Skill score Skills by age 305 295 285 275 265 OECD Skills Strategy 255 245 235 225 15 25 35 45 55 65 No adjustment Age Adjusted for immigrant status and education Adjusted for immigrant status, education and reading engagement
  • OECD Skills Strategy Better skills, better jobs, better lives 20 20 0 10 30 40 60 70 90 20 50 80 100 Sweden Switzerland Norway Estonie New Zealand Denmark Germany Portugal Canada Netherlands Finland Japan Great Britain Spain Austria AustraliaCzech Republic United StatesSlovak Republic Slovenia France Luxemburg Ireland OECD average Belgium Israel Greece Chile Korea Poland Mexico Percentage of 25-64-year-olds active in the labour market, 2010 Labour force participation varies Hungary Italy Turkey
  • 2121Better skills, better jobs, better lives OECD Skills Strategy Putting skills to effective use Provide information to facilitate the matching of skills Tackle unemployment especially of young people Increase the demand for high level skills Foster entrepreneurship
  • 22 Skill use by occupational groups22Better skills, better jobs, better lives Problem solving 1.00 Computer use Teamwork 0.80 0.60 Internet use 0.40 Oral communication 0.20 0.00 -0.20 Basic numeracy -0.40 Influence others -0.60 -0.80 -1.00 Advanced numeracy Plan own time OECD Skills Strategy Write Plan others time Read document type texts Fine motor skills Read prose type texts Gross motor skills Total Service (low-skill) Goods Information (low-skill) Information (high-skill) Managers Knowledge (expert)
  • 23 Skill mismatch by occupational groups23Better skills, better jobs, better lives HIGH-SKILL MATCH 60% 50% 40% 30% 20% 10% MISMATCH-SKILL MISMATCH-SKILL 0% DEFICIT SURPLUS OECD Skills Strategy LOW-SKILL MATCH Goods Service (low-skill) Information (low-skill) Information (high-skill) Managers Knowledge (expert)
  • 2424Better skills, better jobs, better lives Evidence on the link between skill mismatch and earnings Skill mismatch and earnings are strongly related 3000 Monthly wages US$ 2500  2000 OECD Skills Strategy 1500 1000 30 35 40 45 50 55 60 65 Age HIGH-SKILL MATCH (high foundation skill, high use) SKILL DEFICIT (low foundation skill, high use) SKILL SURPLUS (high foundation skill, low use) LOW-SKILL MATCH (low foundation skill, low use)
  • OECD Skills Strategy Better skills, better jobs, better lives 25 25 The OECD Skills Strategy