Global Perspectives of innovative employment and job creation initiatives: Australia and United States


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Presentation by Randall Eberts, President, W.E. Upjohn Institute for Employment Research, United States.

Presentation done at the Working Communities International Congress 2013: Uniting to improve social and economic participation (Sydney, Australia) on 20-21 June 2013.

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Global Perspectives of innovative employment and job creation initiatives: Australia and United States

  1. 1. GLOBAL PERSPECTIVES OF INNOVATIVE EMPLOYMENT AND JOB CREATION INITIATIVES: AUSTRALIA AND UNITED STATES 20 June 2013 Randall Eberts, President, W.E. Upjohn Institute for Employment Research United States Working Communities International Conference 20-21 June 2013 Sydney, Australia
  2. 2. Outline • OECD cross-country study of the contribution of local labor market policy to job creation • Purpose is to examine practices across countries that are likely to boost quality employment • Focus on one of four thematic areas: aligning policies and programs to local economic development • More specifically, offer examples of ways workforce agencies, educational and training institutions, and businesses have partnered to meet business needs • Background: – Prevalence and consequences of skills shortage and mismatch – Importance of knowledge/skills/training to workers, firms, and regions – Importance of local flexibility and autonomy balanced by local staff capacity • Examples of successful partnerships • Lessons 2
  3. 3. 3 • Employers complain they can’t find enough qualified workers • Workers complain their jobs do not require the skills for which they were trained • Without qualified workers, employers can’t fill job openings and thus can’t create jobs • Critical challenges: • Understanding the skills needs of employers • Increasing the skills employers need • Using workers skills more effectively • Improving the match between the supply of and demand for skills Skills Shortage and Mismatch
  4. 4. Australia and US share the same difficulty in filling job openings 0 10 20 30 40 50 60 70 80 90 Japan Brazil Australia US India NewZealand Taiwan Argentina MEXICO Germany Turkey Austria Singapore Poland Sweden HongKong GlobalAverage Hungary Colombia France Canada China Italy UK Spain Ireland 4 Source: 2012 Talent Shortage Survey Research Results, Manpower
  5. 5. Australia and US share in the types of jobs that are difficult to fill Australia 1. Skilled trades workers 2. Engineers 3. Sales Representatives 4. Accounting and Finance 5. IT staff 6. Management/Executives 7. Technicians 8. Drivers 9. Mechanics 10. Chefs/cooks US 1. Skilled trades workers 2. Engineers 3. IT staff 4. Sales representatives 5. Accounting and finance 6. Drivers 7. Mechanics 8. Nurses 9. Machinists/machine operators 10. Teachers 5 Source: 2012 Talent Shortage Survey Research Results, Manpower
  6. 6. 6 In U.S., larger the skills gap, the lower the job creation Real Consequences of Skills Gap Each dot is a US metro area; data provided by Rothwell, 2012
  7. 7. 7 Larger the skills gap, the higher the unemployment rate Real Consequences of Skills Gap Each dot is a US metro area; data provided by Rothwell, 2012
  8. 8. 8 Regional Benefits of skill attainment • Increase in skills lifts aggregate wages in a region – A 1% point increase of college graduates in a region’s workforce increases wages by 1.3% (Moretti, 2004) – Affects the wages of high school dropouts (1.9%) more than the wages of other college graduates (0.4%) • Knowledge is a major contributor to productivity growth – Accounts for upwards of 10% of productivity growth (BLS) – A 1% point increase in share of college graduates increases the number of patents by 0.9% (Glaeser, 2003) – Reflects the ability of skilled workers to produce and use technology – An increase of 1% in university research increases corporate patents by 0.6% (Jaffe, 1989) • Positive relationship between university R&D and the number of firm startups in the same metro area (Bania, Eberts, Fogarty, 1993) • Skills may be a crucial part of the reinvention process of cities and regions (Glaeser, 2003) – Particularly important for regions with declining industries, such as agriculture
  9. 9. Disconnect between Education and Business • McKinsey study illustrates the disconnect between workers (youth), employers, and educational providers • Differences in perception of job readiness – In US 87% of educators believe new graduates are adequately prepared for entry-level jobs – Only 49% of employers believe they are prepared • Lack of communication – One-third of employers say they never connect with education providers – More than a third of education providers report that they are unable to estimate the job-placement rates of their graduates – Fewer than half of youth said they understood the job prospects of the discipline they studied in school 9 McKinsey Center for Government: “Education to Employment, Designing a System that Works, ” 2012.
  10. 10. Key Finding: Engage business • Crucial to success at improving outcomes: “education providers and employers step actively into each other’s worlds, interacting intensively, often on a near-daily basis.” – For example, employers may help shape the curriculum and offer their employees as faculty, while providers can provide workplace-simulation environments for learning • Key thematic area of the OECD study: aligning policies and programs to economic development. • Lessons from the US and Australia studies: need to create proper environment with real incentives for all parties to engage – Need to overcome institutional impediments and initial costs – Need to establish continuum from education to employment – Need proper data – Need to focus within sectors – Need to share costs – Engagement must occur where jobs and education take place 10
  11. 11. U.S. Public Employment and Training Federal Agency Mandatory Programmes Federal Fiscal Year 2013 Appropriation ($ millions) Participants (4 quarters ending June 2012) Appropriation per participant Department of Labor WIA Adult 770 6 979 125 $110 WIA Dislocated Worker 1 232 1 138 379 1 082 WIA Youth 824 239 605 3 439 Employment Services (Wagner-Peyser) 721 19 081 905 38 Trade Adjustment Assistance 1 100 144 659 7 604 Veteran’s Employment and Training Programme 264 142 000 1 859 Unemployment Insurance 3 236 9 171 467 353 Job Corps 1 703 97 474 17 471 Senior Community Service Employment Programme 448 76 864 5 828 Employment and Training for migrant and seasonal worker 84 19 700 4 264 Employment and training for Native Americans 47 38 822 1 211 total 10 429 37 130 000
  12. 12. Partner Relationships WIB Individuals 12 K-12 CC/TS Econ Dev Businesses Labor Education Commerce Labor Education Commerce National State Local Customers Intermediaries Services Services Funds
  13. 13. Partnership held together by aligning strategic plans and accountability measures • Public workforce system (WIA) is a partnership among federal and state agencies and local entities • Federal Legislation requires the Governor of each state to submit a five-year plan to USDOL • The plan has three key components: – State Workforce Strategic Plan: Includes the high-level vision, goals, economic and workforce analysis, strategies and outcomes that the Governor and strategic partners collaboratively identify for the State’s future – State Operational Plan: Clarifies how specific workforce programs for targeted populations will operationalize, administer, and implement systems and structures to achieve vision, strategies, and goals identified by the Strategic Plan – Assurances: State assures the U.S. Department of Labor that it is complying with applicable law • All entities subject to performance measures and targets 13
  14. 14. Partner Relationships WIB Individuals 14 K-12 CC/TS Econ Dev Businesses Labor Education Commerce Labor Education Commerce National State Local Customers Intermediaries Services Services Funds Local Partnerships
  15. 15. • Similarities – Contract out JSA to private providers – Local providers – Performance outcomes – Initial screening and identification of needs • JSCI for Australia; WPRS for US – Reemployment Assessment Plans – Strategic plans – Local and state economic development efforts Models of Integration: US and Australia
  16. 16. Australia United States National agency contracts JSA Local WIBs contract JSA and training Payment based mostly on performance outcome Payment based mostly on formula, with financial incentives for making/missing targets National VocEd qualifications Local and/or industry qualifications Demand-driven training: industry, unions, professional associations at national level define outcomes required from training Demand-driven training: employers and local community colleges at local level develop training curriculum More national skills standards, national training products Few national skills standards; mostly state and local standards 16 mandated programs co-located at One- Stop Career Centers Local Employment Coordinator: identifies needs and match with employers, education and training facilities Local WIBs offer opportunity to be catalyst for integrating economic development and workforce development at local level Models: Differences
  17. 17. • Decentralized approach to workforce development in US provides governance mechanism that enables local areas to adjust programs and services to meet business needs – Allows appropriate flexibility and autonomy in the management and delivery of services – Governance structure of local WIBs provides a forum for partnerships and integration at the local level – Key stakeholders, majority of which are local businesses, are members of the Local WIBs – LWIBs can act as a catalyst for bringing together key stakeholders U.S. findings
  18. 18. • WIA serves both job seekers and businesses • Business leaders comprise a majority of the LWIB • In California and Michigan, community colleges work closely with businesses in designing training curricula • At times, industry experts are used to staff training courses • Many LWIAs identify strategic sectors and implement strategies to meet needs of businesses within sectors • Strong evidence-based approach to identifying business needs, designing curricula, and developing strategic plans • Employers can compete for public funds to train their incumbent workers Engage business
  19. 19. • LWIBs actively pursue and maintain partnerships among key regional stakeholders – LWIBs in Southeast Michigan is a partner of WIN, a 9-county consortium that includes 7 LWIBs, 8 community colleges, and numerous economic development organizations – Six LWIBs have formed a formal partnership through a MOU that establishes joint processes that enable the LWIBs to support regional initiatives – In Sacramento, four LWIBs developed integrated plans for the broader metro region and strong personal relationships and trust among partner leaders have held the partnership together • Evidence-based decision making and performance outcome metrics have also been the glue to bond strong partnerships Form Partnerships
  20. 20. • While many of the appropriate policies and programmatic structures are in place, the system does not have the capacity to serve all those who need assistance • Staff capacity is also a concern, both in numbers and in qualifications • Effective partnerships depend upon local leadership, and this varies across regions – Proper incentives and mechanisms are needed to encourage collaboration and leadership from higher levels of government • Few if any resources for establishing partnership infrastructure, such as financial assistance for data-sharing and administrative costs Shortfalls