Multi-Donor Trust Fund on Labor Markets, Job Creation and Economic Growth: Skills and Labor Markets in Ukraine
Skills and Labor Markets InUkraineWork in Progress and Policy DialogueIndhira SantosApril 29, 2013
Outline1. Key labor market challenges in Ukraine2. Overview of work program on skills and labormarkets3. The importance of skills gaps4. Measuring skills gaps in Ukraine5. Feedback into the policy dialogue
Key labor market challenges in Ukraine21. Employment rates at 60 percent and very low labor productivity Informality Lack of dynamism on the side of firms and low internal mobility Skills gaps2. Ageing and declining labor forceOn the skills side…1. Unreformed education system2. High levels of formal education, but the “wrong” skills? 100% literacy 80% gross enrollment rates in tertiary education3. A generational gap? Two transitions
Overview work program (1)21. Just-in time support to the labor market policy-relatedrequests from the Government Labor code reforms, informal employment, modernization of the laborinspection, active employment policies and youth employmentprograms2. In depth analytical work Report “In Search of Opportunities: How a More Mobile Workforce CanPropel Ukraine’s Prosperity” Case study on Ukraine for the World Bank Development Report 2013 onJobs
Overview work program (2)23. Skills Measurement Surveys Distribution of various skills in the labor force, as well as of the demandsfor those skills from different economic sectors Household Survey: ongoing Employer Survey: planned4. Systems Approach for Better Education Results (SABER) -Workforce Development (planned) Institutional benchmarking of vocational education and training
The importance of skills gaps (1)Skills are an important constraint for many firms in Europe, and particularly in Ukraine(Distribution of firms that consider skills as a major or very severe constraint, 2008)0123456789x < 10% 10% ≤ x <20%20% ≤ x <30%30% ≤ x <40%40% ≤ x <50%50% ≤ x <60%60% ≤ x <70% 70% ≤ x <80%80% ≤ x <90%NumberofcountriesEU10+1 and Turkey Western Balkans LI CIS MI CISAZEBIHKOSMKDSRBSVNARMGEOKGZALBBGRTURMean = 30.2TJKUZBCZEESTHRVLVAPOLSVKUKRMDALTUROMMNEHUNKAZRUS BLRNote: EU10+1 is the new member states of Eastern Europe and Croatia. LI is low-income, MI is middle income countries of the Community of Independent States (CIS).Source: World Bank (2011a).
The importance of skills gaps (2)Growing firms demand more skilled workers, who, in turn, contribute to growth(Percentage distribution growing and declining firms by human capital intensity, 2005)23.829.130.637.745.733.20%10%20%30%40%50%60%70%80%90%100%Expanding firms Non-exapanding firmsHigh skill intensityfirmsMedium skillintensity firmsLow skill intensityfirmsExpanding firms hiremore highly skilledlabor than firms thatare contractingContracting firms hiremore low-skilled laborthan firms that areexpandingNote: The skill intensity groups are defined as follows: Low = human capital index <= M – 0.5*SD. Medium = M – 0.5*SD < human capital index <= M + 0.5*SD. High = human capitalindex > M + 0.5*SD. Where human capital index is an average of the distribution of a firm’s workforce by educational levels (primary education=0, tertiary education = 3); M=Mean, SD = Standard DeviationSource: World Bank (2009a).
The importance of skills gaps (3)8Note: The figure shows which occupations have an excess or deficit supply of workers. The percentages reflect the net result aftercomparing registered unemployment and job vacancies by occupation. A positive value indicates that the unemployment share ishigher than the vacancy share, pointing to excess supply. A negative value indicates the vacancy share is higher than theunemployment share, pointing to unmet demand.Skills mismatch: too few craftsmen and too many low-skilled workers(Excess supply of labor over demand by occupation, 2006)-25-20-15-10-505101520 ManagersProfessionalsTechniciansAdministrativeSalesandserviceSkilledagriculturalCraftsmenMachineoperatorsandassemblersLaborerspercentagepoints
Measuring Skill Gaps in Ukraine• Previous work but many unanswered questions• Link to ongoing panel household survey– Partnership with Institute of Labor in Bonn (IZA) and the Kiev Institute ofSociology (KIIS)– Sustainable in time– Link to past information and labor market and skills accumulation history• Comparison with OECD PIACC– Country with high levels of literacy– Eastern Partnership• Partnership with private sector– Ernst and Young survey of firms: benchmarking– Sectoral approach
Feedback into the policy dialogue• Policy dialogue difficult• Maintain and create a cross-sectoral engagementwith little lending• Engaging all social partners, especially directly withthe private sector and trade unions