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International Workshop
     Skills Development for SMEs and Entrepreneurship
         Danish Business Authority - OECD LEED Programme
               Copenhagen, November 28th 2012


                 Sergio Destefanis
                    destefanis@unisa.it
            (Università di Salerno and CSEF, Italy)



Local levels of skills and local initiatives to promote
   skills development in Italy’s small businesses
Outline of the presentation

- Italy's structural situation (Dualism, Decline, size)
- Mapping the skills policy framework in Italy
- Some new evidence from 2 OECD-LEED projects
  Skills for Competitiveness: the diagnostic tool
  Local Job Creation: a dashboard
- Problems and Best Practices
- Emerging policy issues
Italy's structure:
the well-known dualism influences skills demand;
       these are the hi-tech local districts
Italy's structure: the Decline
GDP per hour worked, selected European countries:
   1997-2010 (average annual rate of change)

 3 ,5
    3
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    2
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    1
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Italy's structure: growing share of temporary workers
Italy's structure: High share of (very) small firms, of self-employment
                    % e m p lo y m e n t in fir m s < 2 0 e m p lo y e e s in m a jo r E u r o p e a n c o u n tr ie s
                                                         UK           IT A       FRA             G ER             DNK
                    m a n u fa c tu rin g                8 ,3         3 0 ,3        17            1 1 ,3           1 6 ,1
                    b u sin e s s s e rv ic e s           --          4 6 ,3      1 2 ,1          3 3 ,8           3 3 ,4
                    S o u r c e : B a r te ls m a n n e t a l. (O E C D E D w p 3 4 8 , 2 0 0 3 )

    V a lu e -a d d e d , w o r k e r s a n d n . o f c o m p a n ie s in m a jo r E u r o p e a n c o u n tr ie s -Y e a r 2 0 0 4 (p e r c e n ta g e
                                                            UK            IT A          FRA              GER             SPA
    N . F ir m s                                           1 3 ,1         3 2 ,1         1 9 ,1          1 4 ,6          2 1 ,1
    N . E m p lo y e e s                                   2 2 ,4         1 8 ,2         1 7 ,7          2 5 ,7            16
    VA                                                     2 5 ,5           15             19            2 8 ,3          1 2 ,1
                    S e lf-e m p lo y e d in m a jo r E u r o p e a n c o u n tr ie s - Y e a r 2 0 0 4 (p e r c e n ta g e s )
                                                       U K             IT A            FR A            G ER              SPA
                    m a n u fa c tu rin g              3 ,4            1 6 ,6           2 ,2             2 ,2             5 ,5
                    b u sin e s s s e rv ic e s       1 0 ,8           4 3 ,8             4             1 3 ,9           1 9 ,3
                    T o ta l                           7 ,6            3 3 ,2           5 ,1             8 ,3            1 7 ,4

                    S o u r c e : I s ta t e la b o r a tio n s o n E u r o s ta t S tr u c tu r a l B u s in e s s S ta tis tic s
Mapping the skills policy framework in Italy (1)

National and, especially, regional policy makers have only
recently begun to focus on skills in Italy, with varying degrees of
success.
Resources and attention are devoted to developing skills supply
(training) and demand (R&D, innovation), rather than promoting
a supply-demand balance. Indeed, the 2010 Labour Plan from
the Ministry of Labour announced that Italy, more than other
countries, presents a marked mismatch between labour demand
and supply. Then went on blaming the “total inadequacy of the
training system” for this state of affairs above anything else.
The lack of a robust socio-economic infrastructure able to bring
together workers and firms is also evoked but is seen as a lower
contributing factor.
Mapping the skills policy framework in Italy (2)
Ederer (2006): Human Capital Endowment is strongly determined by on-
        the-job and adult learning, both are relatively low in Italy
Mapping the skills policy framework in Italy (3)
         skills supply (vocational training):
strong territorial differentiation in the workings of training levies
Mapping the skills policy framework in Italy (3)
skills supply (apprenticeship training): similar territorial differentiation
Mapping the skills policy framework in Italy (4)
Skills demand (R&D, innovation)

Aid focuses on small firms, less developed regions (?), environment-
related investments, R&D activities, applied research.

There are good funding opportunities for research commissioned to
private and public entities, initiatives to promote the temporary in-
house assignment of researchers and technicians, acquisition of
patents.

Yet, the available evidence (Gabriele et al., 2006; Brancati, 2010;
Martini & Trivellato, 2011) suggests that this kind of aid has no
positive impact on profitability, technical change or productivity. The
lack of effective selection procedures has often been blamed for this
outcome.
Mapping the skills policy framework in Italy (5)
   Supply-demand balance & skills matching (PES):
relatively few resources are devoted to them in Italy.
The OECD-LEED Projects

Skills for Competitiveness &
Local Job Creation:
for methodology and other features, please refer to:

http://econpapers.repec.org/paper/oeccfeaaa/2012_2f9-en.htm
http://econpapers.repec.org/paper/oeccfeaaa/2012_2f4-en.htm
http://econpapers.repec.org/paper/oeccfeaaa/2012_2f17-en.htm
Sk for C: the “OECD diagnostic tool”
Multinomial Logit evidence for Italian provinces (TL3), years 2001 and 2009.
       What determines a province's location in a given quadrant?




   SKILL SHORTAGE:                   HIGH-SKILL EQ.:
   Strong 2-ary sector               Strong 3-ary sector
   Large population                  Large population
                                     “Attractive University”
                                     Lower share of temps




   LOW-SKILL EQ.:
   baseline                          SKILL SURPLUS:
                                     “Attractive University”
Sk for C: taking stock of problems
There is still relatively little awareness about skills
  utilisation in Italy. The growth of temporary work
  did not improve this state of affairs.
Firms' small size makes R&D + innovation, policy, and
  inter-firm, co-ordination, diffusion of information,
  more difficult. The famed distretti did not solve
  these problems.
Skills policy ineffectiveness is enhanced by lack of
  effective selection procedures in aid provision, and
  by lengthiness of bureaucratic procedures.
LJC: taking stock of problems
The Agenzia del Lavoro from Trento is doing fine, but
- more needs to be done about skills utilisation (even
  in this rich and relatively dynamic area, virtually
  nobody cares about high-performance work
  practices).
- Better communication and co-ordination among
   public entities, ex-post evaluation and forward
   planning of policies, should be put in place.
Best practices #1
The Distretto Calzaturiero del Brenta.
A long-standing reality, characterised by ACRIB (a local
    employers' association) and by Politecnico Calzaturiero (a
    very important private school of arts and crafts).
Highly successful product innovation, enacted by a network of
    fairly small firms.
it tied firms from the provinces of Venezia and Padova in one
    single organisation, opened the way for co-operative
    mechanisms uniting employers and workers, and for the
    establishment of an innovative Territorial Council (Consulta
    Territoriale).
Best practices #2
The 2011 Development Pact (Patto per lo
 Sviluppo...) from Treviso province.
This is a young reality, also exemplifying what is happening in
    other areas (especially in Italy's North-east).
It is characterised by territorial joint (NOT firm-level) wage
    bargaining and from a co-operative employers-worker
    approach to employment and development.
Best practices #3
The Borsino delle professioni (Stock Exchange
 of Occupations).
Employment agencies in Veneto and Trento's province provide a
  dynamic tool following the evolution of the labour market,
  facilitating supply - demand matching and simplifying bureaucratic
  procedures.
Firms and potential workers lodge on-line their job vacancies and
   CVs. The Borsino offers monthly information on local labor market
   trends and developments detailed by occupational profile.
In the near future the agencies are planning to use this service to
   assist career choice and job-search guidance.
Best practices #4
Dual Apprenticeship
A dual system of apprenticeship combines workplace practice with
   vocational education in training schools. It exists in several countries,
   notably Germany, Austria and Switzerland. Apprentices are trained in a
   company 3-5 days a week. The other part of the dual system involves off-
   the-job education at a vocational school.
This system appears to have worked well across European countries.
   Interestingly, a similar system is enacted in Trento's neighbouring
   province, Bolzano, possibily being one contributing factor to its current
   low rates of youth unemployment.
A potential disadvantage of starting dual training too early is that young
   people may fail to pick up the generic transferable skills which will help
   them in being mobile later in their careers. Support for employment
   progression from Labour Agency should also be provided.
Emerging policy issues (1)
In Italy, successful traing and higher skills utilisation
   needs co-operative worker-employer approach with
   strong role of local employers' associations. A current
  reform of industrial relations is going somehow in this
  direction.
More decentralisation could help in achieving a closer
 relationship between local public authorities and
 local development. However, if social capital is
 scarce, giving a freer rein to local public authorities
 may be conducive to more rent-seeking rather than
 to more proactive behaviour. North-South divide???
Emerging policy issues (2)
The public sector can in any case fulfil an important role in
  providing more information at a territorially disaggregated
  level. There is in Italy a lack of local data on skills supply and
  demand of skills. The Borsino IS very useful.
Reconciliation of a more flexible and decentralised public sector
  with some control over rent-seeking practices could be
  attempted by finding a new and stronger role for public
  employment service at the local level. The current reform of
  labour-market policies MAY be useful (introducing much more
  pervasive unemployment insurance and making job centres
  responsible for it).

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I c - destefanis local skills development in italy

  • 1. International Workshop Skills Development for SMEs and Entrepreneurship Danish Business Authority - OECD LEED Programme Copenhagen, November 28th 2012 Sergio Destefanis destefanis@unisa.it (Università di Salerno and CSEF, Italy) Local levels of skills and local initiatives to promote skills development in Italy’s small businesses
  • 2. Outline of the presentation - Italy's structural situation (Dualism, Decline, size) - Mapping the skills policy framework in Italy - Some new evidence from 2 OECD-LEED projects Skills for Competitiveness: the diagnostic tool Local Job Creation: a dashboard - Problems and Best Practices - Emerging policy issues
  • 3. Italy's structure: the well-known dualism influences skills demand; these are the hi-tech local districts
  • 4. Italy's structure: the Decline GDP per hour worked, selected European countries: 1997-2010 (average annual rate of change) 3 ,5 3 2 ,5 2 1 ,5 1 0 ,5 0 ly a in d ce ia d en a rk y um s la n la n It a s tr an m nd an ed Sp lg i do nm Ir e F in Au rm rla Fr Sw Be ng De Ge th e Ki Ne d it e Un
  • 5. Italy's structure: growing share of temporary workers
  • 6. Italy's structure: High share of (very) small firms, of self-employment % e m p lo y m e n t in fir m s < 2 0 e m p lo y e e s in m a jo r E u r o p e a n c o u n tr ie s UK IT A FRA G ER DNK m a n u fa c tu rin g 8 ,3 3 0 ,3 17 1 1 ,3 1 6 ,1 b u sin e s s s e rv ic e s -- 4 6 ,3 1 2 ,1 3 3 ,8 3 3 ,4 S o u r c e : B a r te ls m a n n e t a l. (O E C D E D w p 3 4 8 , 2 0 0 3 ) V a lu e -a d d e d , w o r k e r s a n d n . o f c o m p a n ie s in m a jo r E u r o p e a n c o u n tr ie s -Y e a r 2 0 0 4 (p e r c e n ta g e UK IT A FRA GER SPA N . F ir m s 1 3 ,1 3 2 ,1 1 9 ,1 1 4 ,6 2 1 ,1 N . E m p lo y e e s 2 2 ,4 1 8 ,2 1 7 ,7 2 5 ,7 16 VA 2 5 ,5 15 19 2 8 ,3 1 2 ,1 S e lf-e m p lo y e d in m a jo r E u r o p e a n c o u n tr ie s - Y e a r 2 0 0 4 (p e r c e n ta g e s ) U K IT A FR A G ER SPA m a n u fa c tu rin g 3 ,4 1 6 ,6 2 ,2 2 ,2 5 ,5 b u sin e s s s e rv ic e s 1 0 ,8 4 3 ,8 4 1 3 ,9 1 9 ,3 T o ta l 7 ,6 3 3 ,2 5 ,1 8 ,3 1 7 ,4 S o u r c e : I s ta t e la b o r a tio n s o n E u r o s ta t S tr u c tu r a l B u s in e s s S ta tis tic s
  • 7. Mapping the skills policy framework in Italy (1) National and, especially, regional policy makers have only recently begun to focus on skills in Italy, with varying degrees of success. Resources and attention are devoted to developing skills supply (training) and demand (R&D, innovation), rather than promoting a supply-demand balance. Indeed, the 2010 Labour Plan from the Ministry of Labour announced that Italy, more than other countries, presents a marked mismatch between labour demand and supply. Then went on blaming the “total inadequacy of the training system” for this state of affairs above anything else. The lack of a robust socio-economic infrastructure able to bring together workers and firms is also evoked but is seen as a lower contributing factor.
  • 8. Mapping the skills policy framework in Italy (2) Ederer (2006): Human Capital Endowment is strongly determined by on- the-job and adult learning, both are relatively low in Italy
  • 9. Mapping the skills policy framework in Italy (3) skills supply (vocational training): strong territorial differentiation in the workings of training levies
  • 10. Mapping the skills policy framework in Italy (3) skills supply (apprenticeship training): similar territorial differentiation
  • 11. Mapping the skills policy framework in Italy (4) Skills demand (R&D, innovation) Aid focuses on small firms, less developed regions (?), environment- related investments, R&D activities, applied research. There are good funding opportunities for research commissioned to private and public entities, initiatives to promote the temporary in- house assignment of researchers and technicians, acquisition of patents. Yet, the available evidence (Gabriele et al., 2006; Brancati, 2010; Martini & Trivellato, 2011) suggests that this kind of aid has no positive impact on profitability, technical change or productivity. The lack of effective selection procedures has often been blamed for this outcome.
  • 12. Mapping the skills policy framework in Italy (5) Supply-demand balance & skills matching (PES): relatively few resources are devoted to them in Italy.
  • 13. The OECD-LEED Projects Skills for Competitiveness & Local Job Creation: for methodology and other features, please refer to: http://econpapers.repec.org/paper/oeccfeaaa/2012_2f9-en.htm http://econpapers.repec.org/paper/oeccfeaaa/2012_2f4-en.htm http://econpapers.repec.org/paper/oeccfeaaa/2012_2f17-en.htm
  • 14. Sk for C: the “OECD diagnostic tool” Multinomial Logit evidence for Italian provinces (TL3), years 2001 and 2009. What determines a province's location in a given quadrant? SKILL SHORTAGE: HIGH-SKILL EQ.: Strong 2-ary sector Strong 3-ary sector Large population Large population “Attractive University” Lower share of temps LOW-SKILL EQ.: baseline SKILL SURPLUS: “Attractive University”
  • 15. Sk for C: taking stock of problems There is still relatively little awareness about skills utilisation in Italy. The growth of temporary work did not improve this state of affairs. Firms' small size makes R&D + innovation, policy, and inter-firm, co-ordination, diffusion of information, more difficult. The famed distretti did not solve these problems. Skills policy ineffectiveness is enhanced by lack of effective selection procedures in aid provision, and by lengthiness of bureaucratic procedures.
  • 16. LJC: taking stock of problems The Agenzia del Lavoro from Trento is doing fine, but - more needs to be done about skills utilisation (even in this rich and relatively dynamic area, virtually nobody cares about high-performance work practices). - Better communication and co-ordination among public entities, ex-post evaluation and forward planning of policies, should be put in place.
  • 17. Best practices #1 The Distretto Calzaturiero del Brenta. A long-standing reality, characterised by ACRIB (a local employers' association) and by Politecnico Calzaturiero (a very important private school of arts and crafts). Highly successful product innovation, enacted by a network of fairly small firms. it tied firms from the provinces of Venezia and Padova in one single organisation, opened the way for co-operative mechanisms uniting employers and workers, and for the establishment of an innovative Territorial Council (Consulta Territoriale).
  • 18. Best practices #2 The 2011 Development Pact (Patto per lo Sviluppo...) from Treviso province. This is a young reality, also exemplifying what is happening in other areas (especially in Italy's North-east). It is characterised by territorial joint (NOT firm-level) wage bargaining and from a co-operative employers-worker approach to employment and development.
  • 19. Best practices #3 The Borsino delle professioni (Stock Exchange of Occupations). Employment agencies in Veneto and Trento's province provide a dynamic tool following the evolution of the labour market, facilitating supply - demand matching and simplifying bureaucratic procedures. Firms and potential workers lodge on-line their job vacancies and CVs. The Borsino offers monthly information on local labor market trends and developments detailed by occupational profile. In the near future the agencies are planning to use this service to assist career choice and job-search guidance.
  • 20. Best practices #4 Dual Apprenticeship A dual system of apprenticeship combines workplace practice with vocational education in training schools. It exists in several countries, notably Germany, Austria and Switzerland. Apprentices are trained in a company 3-5 days a week. The other part of the dual system involves off- the-job education at a vocational school. This system appears to have worked well across European countries. Interestingly, a similar system is enacted in Trento's neighbouring province, Bolzano, possibily being one contributing factor to its current low rates of youth unemployment. A potential disadvantage of starting dual training too early is that young people may fail to pick up the generic transferable skills which will help them in being mobile later in their careers. Support for employment progression from Labour Agency should also be provided.
  • 21. Emerging policy issues (1) In Italy, successful traing and higher skills utilisation needs co-operative worker-employer approach with strong role of local employers' associations. A current reform of industrial relations is going somehow in this direction. More decentralisation could help in achieving a closer relationship between local public authorities and local development. However, if social capital is scarce, giving a freer rein to local public authorities may be conducive to more rent-seeking rather than to more proactive behaviour. North-South divide???
  • 22. Emerging policy issues (2) The public sector can in any case fulfil an important role in providing more information at a territorially disaggregated level. There is in Italy a lack of local data on skills supply and demand of skills. The Borsino IS very useful. Reconciliation of a more flexible and decentralised public sector with some control over rent-seeking practices could be attempted by finding a new and stronger role for public employment service at the local level. The current reform of labour-market policies MAY be useful (introducing much more pervasive unemployment insurance and making job centres responsible for it).