Mutual Learning Programme

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1 Mutual Learning Programme DG Employment, Social Affairs and Inclusion Peer Country Comments Paper - Czech Republic Still long way to go to establish sustainable LM forecasting system, but initial conditions significantly improving and encouraging efforts and steps already in place Peer Review on Methods for forecasting skills needs for the economy' Dublin (Ireland), June 2016 Written by Marek Gavenda May 2016

2 EUROPEAN COMMISSION Directorate-General for Employment, Social Affairs and Inclusion Unit A1 Contact: Emilio Castrillejo Web site: European Commission B-1049 Brussels

3 EUROPEAN COMMISSION Mutual Learning Programme DG Employment, Social Affairs and Inclusion Directorate-General for Employment, Social Affairs and Inclusion Peer Review on Methods for forecasting skills needs for the economy' Dublin (Ireland), June 2016 May, 2016

4 Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE The information contained in this publication does not necessarily reflect the official position of the European Commission This document has received financial support from the European Union Programme for Employment and Social Innovation "EaSI" ( ). For further information please consult: European Union, 2016 Reproduction is authorised provided the source is acknowledged.

5 Table of Contents 1 Background to national approaches for skills forecasting Assessment of the policy measure Assessment of the success factors and transferability of the Host Country example Questions... 5 Annex 1: Example of relevant practice... 6 Annex 2: Summary table... 7

6 1 Background to national approaches for skills forecasting This paper has been prepared for a Peer Review within the framework of the Mutual Learning Programme. It provides information on Czech Republic s comments on the policy example of the Host Country for the Peer Review. For information on the policy example, please refer to the Host Country Discussion Paper. The economy of the Czech Republic is mostly dependent on industrial sectors (accounting for about 47 per cent of the national economic output and employing about a third of the working population). More than a half of the industrial production is exported (mostly to EU countries, especially Germany). The economy has recently benefited (at least for the last two years) from a rapid recovery. The unemployment rate (April 2016 data) is currently the lowest in the EU (4.1 per cent according to Eurostat or 5.7 per cent according to the Czech Ministry of Labour and Social Affairs methodology), with 415,000 registered as unemployed registered. On the other hand, there are currently 124,000 vacancies registered at the Employment Services (Urad prace UP) and employers very often face problems in terms of filling open vacancies with a sufficient number of qualified staff (mainly in technical occupations and specialist), but also for the lower skilled workforce. The mismatches in the supply and demand for labour (from both a quantitative and qualitative point of view) is not a new issue, but has occurred in the past. The supply side, in terms of those registered as unemployed, is negatively affected mostly by the qualification obtained, health conditions, social benefit issues, over debt applicants (for them it is due to legal regulations more advantageous to remain unemployed) and also by so called natural unemployment. The supply side from new graduates point of view is mostly quantitative (there is not a sufficient number of graduates with a relevant qualification). For example, the number of university/college students doubled in period, whilst in the same period the number of students in technically focused universities/colleges has increased by just 11 per cent. In the industrial sector alone, some 100,000 qualified staff is currently demanded by Czech companies. Compared to 2015, this is an increase of 15 per cent in terms of new vacancies. The highest demand is in the industry, transport and logistics sectors, mainly metal and machinery workers, welders, electrical and electronic trades workers, stationary plant and machine operators, assemblers, drivers, machinery engineers, designers, technologists, IT specialist and quality assurance staff. The Czech government via the Ministry of Industry and Trade (Ministerstvo prumyslu a obchodu) produced the National Initiative Industry 4.0 (Narodni iniciativa prumysl 4.0) in September It addresses (in general terms) issues such as research, new labour qualification needs, issues to be tackled in education as well as a framework for an action plan (covering six major challenges, for example Labour Force Development Action Plan or Amendments in Initial and Further Education System). The Czech government will soon discuss the information document Analysis labour market of supply and demand (Analyza nabidky a poptavky na trhu prace) carried out by the Ministry of Labour and Social Affairs. Besides a comprehensive description of current situation, there is also a proposal for further actions. One of these measures is to increase the qualification concordance of qualification needs at the labour market (zvyseni kvalifikacniho souladu na trhu prace), which covers issues like career guidance, re-training, skill forecasting and cooperation between stakeholders at the labour market. The issue of setting the effective initial education, further education and re-training as well as career guidance are therefore key factors to adopt flexible reaction on skills needs in the future. Labour market and skills needs monitoring and forecasting should provide recognised data evidence to adopt appropriate actions. May,

7 2 Assessment of the policy measure Unlike Ireland, the Czech Republic does not have a long history in setting the structure of data providers, analysts and final users of LM data. The discussion for setting a unified LM intelligence and forecasting system in the Czech Republic started in about 2000 and the first structured proposal is dated 2003 (published by NVF in the study System of projecting the qualification needs in the Czech republic Proposal for establishing the functional system for national and regional level (System prognozovani potreby kvalifikaci v Ceske republice Navrh na vybudovani funkcniho systemu pro narodni a regionalni uroven) ). Although several attempts to establish the structure have been made in the past, these have not led to recognised and broadly acceptable settings. Skills supply and demand mismatches continue to be widely discussed at both the national and regional (14 NUTS 3 or 8 NUTS 2 regions) level in the Czech Republic. Such discussion has also included reference to sustainable input and output data and information (data sets, format and periodicity), forecasting / projections and subsequently the policy actions (education policies, retraining of unemployed, long-term training etc.). In some specific cases these challenges have been successfully and promptly solved (e.g. co-operation between schools and employers, short-term training courses etc.), but problem still prevails. For example, there is still no unified and broadly acceptable methodology for long-term analysis and forecasting of future skills. So far, the relevant data provisions, their interpretation and analyses as well as forecasting are quite narrow and have only had a limited impact on policy makers. At the national level some of these approaches are available (however their quality varies and are often time limited) but there is not an acceptable system established yet. The quality of data and forecasting at regional level is extremely low as well as their practical utilisation. There are several providers of labour market data, analyses and forecasting. Whilst these provide some interesting outputs, there is limited compatibility of outcomes and providers use different approaches, datasets and delivery formats. These projects are often time limited and are not sustainable in terms of further revisions. Examples include National Training Fund (Narodni vzdelavaci fond - NVF), Research Institute for Labour and Social Affairs (Vyzkumny ustav prace a socialnich veci VUPSV), National Institute for Education (Narodni ustav pro vzdelavani NUV) and some others. Stakeholders agree that there is a significant need for regional labour market data and forecasting, at least for following reasons: the interregional migration and commuting to work outside the permanent residence is (except for Prague and Central Bohemia region) very low although the Czech Republic is a medium size country, there are significant sectoral differences and occupational needs among regions regional public administration bodies, i.e. Regional Authority (Krajsky urad KU) are responsible for setting the secondary and vocational education schemes and through that competence they influence the capacity, quantity and quality of secondary level graduates Regular regional labour market forecast and intelligence are carried out by regional branches of Employment Services (Urad prace UP), although these analyses are only short term (usually 6 month forecast) based on interviews with local employers. In some regions, independent LM analyses and forecasting are conducted (usually driven by demand of Regional Authority), but they often use very different approaches not supported by unified methodology. Latest available output in the field of LM analyses and forecasting at national level was the project Anticipation of Qualification Needs (Predvidani kvalifikacnich potreb PREKVAP), which was carried out by the Ministry of Labour and Social Affairs (Ministerstvo prace a socialnich veci MPSV), in The final study describes the May,

8 current situation and estimated projections until 2025 for 40 occupational groups and 25 sectors. It also proposes the structure for setting the system for monitoring and projections of the labour market. Based upon the results from the above mentioned project and also from discussion with key players, the Ministry of Labour and Social Affairs is now designing a project called KOMPAS, which should establish a sustainable structure for LM data collection, storing and forecasting at both national and regional levels. The project is expected to be launched during Most of the hard input data for modelling and predictions in the Czech Republic is based on the Labour Force Survey LFS (Vyberove setreni pracovnich sil VSPS), which have significant limitations (conducted by Czech Statistical Office quarterly on the sample of 0.6 per cent of Czech households i.e. approx. 24,000 households covering some 55,000 respondents, out of which 47,000 are aged 15+ years). Some other data sources or providers have been identified as useful and more relevant, but are not being exploited for various reasons so far. In terms of employment, there are quite relevant data on employment in sectors at the national level (however lower credibility for regions), but the distribution by occupation, qualification or age are less reliable and based fully on the LFS. Job creation or vacancies are measured through Employment Services data, but these do not give the overall picture (employers are not committed to provide such data to the Employment Services). The supply part (projected graduates by type) is sufficiently covered by Regional Authorities or the Ministry of Education, but this applies mostly for secondary and vocational graduates. The data for university /college graduates are publicly available only by type of school or faculty and has very limited information in terms of the field of education. In the Irish forecasting system, the National Skills Database plays a key role. In the Czech Republic, a National System of Occupations (Narodni system povolani NSP) was developed covering about 1,300 occupations. It defines working duties, qualification level and hard and soft skills required. However, this system is poorly linked to any other databases and would need further development and updating. In Ireland, the use of interviews, surveys, etc. are significant data source either as a data input or for approving / corrections of forecasting model. In the Czech Republic the importance of these qualitative related data was unfortunately omitted (with an exception of regular short-term regional branches Employment Services surveys). Surveys are being conducted on an ad-hoc basis (usually intended to prove the supply / demand gap), their structure and outcomes varies and are not implemented into an input database. However, the surveys and related approaches should be incorporated into the project KOMPAS. The Irish forecasting system provides clear, agreed and concise outputs delivering key findings useful to policy makers (development, education, training, industries). In the Czech Republic so far outcomes from various forecasting projects have been presented in long reports which are difficult for the targeted audience or users to digest (education policy makers on both national and regional levels, training and re-training system, employers, career advisors etc.). Although some of these studies bring relevant and useful data and findings, they have had a minimum impact on further development in terms of preparation of suitable labour force skills. Also, there is a very low knowledge of users where to find relevant data and mistrust about the credibility and accuracy of delivered outcomes. May,

9 3 Assessment of the success factors and transferability of the Host Country example If we look at skills forecasting as a product, then it is clear, that each product must have customers, have to be delivered in a quality required by its customers, continuously developed and improved and successfully performed. LM analyses, data sharing and forecasting are mostly a public sector responsibility, and because it is not a product from a fully commercial point of view, its creation, development and delivery requires different approaches. TIER 1 customers of LM forecasting include mainly a public agencies and authorities responsible for education, skills development and strategic planning policies. Results from their subsequent activities (sufficient labour force prepared in required quantity and quality based on forecasting) are then sold to TIER 2 customers, which are employers (both private and public). Although this looks quite simple, it requires hard work, motivated staff and a focused approach. From the host country discussion paper it is clear that this recognition is commonly shared among key stakeholders and users. There have been several efforts in the Czech Republic to establish LM forecasting in the past, but many of these attempts have failed to deliver reasonable outputs. However, as the skills mismatch and gaps have prevailed (and is currently emphasised by the economic recovery - e.g. industry in the Czech Republic currently has problems filling about 100,000 vacancies), the setting of credible forecasting system is in focus. The public sector (namely, the Ministry of Labour and Social Affairs) is responsible for establishing the LM system via project KOMPAS (to be launched this year). It also invites other relevant public authorities to co-operate and seriously discusses the issue with key players and employers. As described in the host country discussion paper, the LM forecasting system requires strong co-operation and shared responsibilities among a variety of bodies. The same will apply in the Czech Republic to ensure the final product is successful. It will also need experienced coordinating staff with relevant knowledge and insight, as well as project management focus to fulfil goals and expectations. The process must be customer driven. It is necessary to point out that although LM data analysing and forecasting are crucial outcomes, it is extremely important, that these outcomes have motivated users, which must find their way how to benefit from them. All LM projections, anticipations and data have to be subsequently transformed into policies, relevant interventions, appropriate projects and programmes intended to reduce skills gaps and to prepare experienced and qualified workforce for the future needs. May,

10 4 Questions Is there a fixed annual budget allocated for having the whole process performed successfully estimate per annum? Are projections and forecasting revised i.e. how precise forecasting was successful compared to actual data? Was the system in Ireland developed fully independently or based on some good practice from abroad? Do you in any way co-operate with the initiative European Network on Regional Labour Market Monitoring and if so, did you find this co-operation useful? May,

11 Annex 1: Example of relevant practice Name of the practice: Analysis and projection of supply and demand in technical occupations in Moravia- Silesia Region (Czech Republic) Year of implementation: 2013 Coordinating authority: Moravian-Silesian Employment Pact (comprising the Regional Authority, the Employment Service, the Chamber of Commerce and the education sector) Objectives: To provide a projection for technical staff until 2020 (quantitative only) in the Moravian-Silesian region based on existing data inputs. To describe weaknesses of the current status quo and data limitations Main activities: Estimation of employment in industrial sectors in the region Estimation of expansion and replacement demand Calculation of future supply of labour force Results so far: The study was successfully completed and estimated that an additional 25,000 workers would be needed by 2020 for the regional industry sector. The study also proposed a number of key factors to improve the forecasting methods proposed. May,

12 Annex 2: Summary table Background to national approaches for skills forecasting in the Peer Country Economy mostly industrial production focused, export oriented, with the lowest unemployment rate in the EU Employers facing challenges (long term) to fill vacancies especially in technical and IT branches 415,000 registered unemployed contrary to 120,000 vacancies (April 2016) structural and legal limitation for employment National Initiative Industry 4.0 carried out (incl. broadly described future skills needs) Labour market and skills needs monitoring and forecasting identified as one of the government priorities Assessment of the policy measure Several attempts to provide LM and skills forecasting in the past, but carried out independently with different methodologies and output formats, not coordinated, often failing to address beneficiaries and project based Regional dimension required due to structure of economy A new project called KOMPAS to be launched this year coordinated by the Ministry of Labour and Social Affairs with an aim to establish long term forecasting system both on national and regional level So far very limited impact on the national and regional education systems There is a need to reach agreement on the structure of required datasets, to ensure that expected outcomes and formats fill the need of users and to ensure the sustainability of the system Assessment of success factors and transferability A need to generally accept the importance of LM and skills forecasting among key players and users A need to clearly coordinate the setting of the forecasting system, co-ordination among data suppliers and project management focus A need for successful delivery of forecasting outcomes to beneficiaries and subsequently to transform them into relevant policies and interventions Questions Is there a fixed annual budget allocated for having the whole process performed successfully estimate per annum? Are projections and forecasting revised i.e. how precise forecasting was successful compared to actual data? Was the system in Ireland developed fully independently or based on some good practice from abroad? Do you in any way co-operate with the initiative European Network on Regional Labour Market Monitoring and if so, did you find this co-operation useful? May,

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