Mutual Learning Programme

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1 Mutual Learning Programme DG Employment, Social Affairs and Inclusion Peer Country Comments Paper - Croatia Can skills forecasting be the answer to high youth unemployment? Peer Review on Methods for forecasting skills needs for the economy Dublin (Ireland), June 2016 Written by Marija Pavkov 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... 6 Annex 1: Example of relevant practice... 7 Annex 2: Summary table... 8

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 Croatia 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. In Croatia, although there are no activities related to long-term skills forecasting and labour market needs, there are well established approaches for determining short-term labour market needs for certain occupations, mainly managed by the Croatian Employment Service (CES). Recent CES analysis of labour market needs 1 based on a survey of employers, shows that there is a shortage of skills supply in professions in the fields of medicine, mathematics, electrical engineering, mechanical engineering and computer science, and English and German language teachers, whereas in most of the 21 counties a higher supply of young people with qualifications in the economic and legal sector was identified, compared to demand. This is a clear message that a skills mismatch is present in Croatia, due to which young people cannot find appropriate longterm jobs in the professions they were educated and trained in. The issue of skills forecasting was recognised at national level as a significantly important driver for the country s economic recovery in 2010, when the Croatian Government declared the Regulation on monitoring, analysing and forecasting labour market needs for particular occupations, and the development and taking into account of recommendations concerning education enrollment policy 2. In addition to that, the Science, Education and Technology Strategy foresees the need for the development of a methodology for predicting the need of the society for competencies for future occupations; and includes the aim of the development of models and tools for forecasting future needs for knowledge, skills and qualifications in line with the development goals of the society, as well as predicted demographic and migration changes. In the previous two decades, there was a lack of political will to make education a strategic goal 4 and, as a result, the education sector was given insufficient attention and investments in the sector were rather low. However, in more recent years, partnerships between the Ministry of Labour and Pension System (MLPS), Ministry of Science, Education and Sports (MSES), and the CES were created in response to the needs of the labour market in terms of a qualified labour force. Developments in relation to the Croatian Qualification Framework (CROQF), leading to the creation of Sectoral Councils and methodologies for the creation of occupational and qualification standards are closely related to both the education sector and the labour market. In light of the current developments in setting up and defining the CROQF, including the relevant legal framework, Croatia is undertaking significant steps towards the creation of the system which will define occupational standards, qualification standards, sectoral profiles and other tools and methods which will significantly contribute to the development of longterm skills forecasting approaches and methods in the near future. 1 Croatian Employment Service (2015) Survey of employers (Anketa poslodavaca), 2 Uredba Vlade RH o praćenju, analizi i predviđanju potreba tržišta rada za pojedinim zvanjima, te izradi i uzimanju u obzir preporuka za obrazovnu upisnu politiku (2010), NN 93/2010, National Gazette 93/ Science, Education and Technology Strategy (2014), National Gazette 124/2014 (NN 124/2014), 4 Izvješće o stanju obrazovanja u Republici Hrvatskoj (Report about the state of the education in the Republic of Croatia) (2014), nastavnici.org, May,

7 2 Assessment of the policy measure The Host Country (Ireland) has a longer tradition (since the 1990s) in skills forecasting than Croatia; Croatia does not have a system of labour market information on occupational trends. 5 Therefore, it is difficult to clearly specify and anticipate which occupations will be needed on the labour market in the future. Only recently, in April 2016, was the first ever national projection on skills needed on the labour market presented to the public ( ) 6. The research was undertaken by the Institute of Economics, under the European Social Fund (ESF) project 7 managed by the MSES. The model used for the projections was the E3ME model developed by Cambridge Econometrics for the Cedefop skill supply and demand forecasts project 8. However, it is not yet clear whether this approach will become a common practice on the national level. Based on the aforementioned Regulation, the CES undertakes analysis and qualitative interpretation of the labour market needs for specific qualifications. The analysis is carried out on the basis of relevant statistical data and indicators on the employment rate of unemployed persons according to educational programmes and levels, data from the survey of employers and by taking into account the strategies and plans for economic development at regional and local level. As the result of the analyses, the CES makes recommendations for educational enrolment and scholarship policy, which have a qualitative character because the recommendations contain information on whether to increase or decrease (without specific figures) the number of enrolled students and the number of scholarships for students in certain educational programmes. Recommendations are made at the level of regional and local labour markets in order to reduce the structural mismatch between labour supply and demand 9. The recommendations concerning education enrolment policy are distributed, through local and regional CES offices, to the educational institutions, bodies of local and regional governments, sectoral councils, and the MSES, which should consider them when proposing and determining enrolment quota for the admission of students to secondary and higher education each school year. Along with the CES, the Sectoral Councils and the National Council of Human Resources Development will have a significant role in ensuring the development of national human capital in line with labour market needs, as defined by the CROQF Act in Each Sectoral council has a president and 10 members who are appointed for a four-year period. A Sectoral council is composed of: one representative of ministries responsible for a respective sector; one representative of the Croatian Employment Service; one representative of the agency responsible for science and higher education, agency responsible for vocational education and adult education or agency responsible for education and teacher training; eight sectoral experts appointed after a public call, taking into account proportional representation of the educational sector and unions representing the education sector, on one hand, and unions representing the economic sector, employers associations and other civil society organisations which are active in the sector covered by the respective council, on the other hand. One of the significant results of the National Council s work until now is the development of the Recommendations on the sector-oriented approach to defining enrolment quotas for 5 Bejakovic P., Mrnjavac Z. (2014) Skill mismatches and Anticipation of the Future Labour Market Need: Case of Croatia, Zagreb International Review of Economics & Business, Vol. 17, No. 1, pp , ESF project Support to CROQF sector councils and other stakeholders in the process of implementation of the CROQF Official Gazette 62/2014 (NN 62/2014) May,

8 secondary and higher education 11. It is recommended that MSES, in cooperation with MLPS, develop a methodology for the determination of enrolment quotas to secondary and higher education. The methodology should be based on a relevant analytical basis and consider: the Recommendations on education enrolment policy and scholarship policy, which are prepared annually by the CES; economic development; national and regional strategies and policies; and the demographic trends. The methodology should also take into account the macro econometric or another appropriate model to analyse the future needs of the economy and labour market (surplus occupations, occupations in demand, future occupations) and to analyse the need for new models of education (for innovation, for entrepreneurship, for sustainable development). The existence of the Skills and Labour Market Unit which provides research support to the Expert Group on Future Skills Needs in Ireland is a good approach in assigning the responsibility for skills forecasting to two entities. On the contrary, in Croatia, as described above, there are and will be more actors involved in the process. Although currently the main short-term forecasting is managed by CES, along with the developments within the CROQF system, there will be many more actors and stakeholders involved in long-term occupational and skills forecasting. As described previously, sectoral councils, the National Council on Human Resources Development, MSES and the MLPS are the stakeholders which will be involved in aligning labour market needs with the education sector. This is a significant step forward in providing mediumterm skills supply to the labour market. However, this approach might not sufficiently take into account the macroeconomic parameters. The Irish model does take these parameters into account, as the occupational employment model is built as an extension to the ESRI macroeconomic model used to produce medium term forecasts for the main macroeconomic indicators for the Irish economy. Compared to the Irish occupational employment model and projections, the Croatian short-term forecasting in terms of recommendations on student enrollment quotas is based on yearly forecasts. Therefore, the estimates on the expansion demand across the occupation spectrum have not been put in place yet. As part of the developments of the CROQF, the MLPS developed a methodology for construction and interpretation of the sector profile 12. The sector profile will serve for the assessment of supply and demand for sectoral skills. The main function of the profile of the sector is to analyse the ways certain qualifications and learning outcomes have been applied within the world of work; to assess the short- and long-term trends in demand for occupations that are associated with certain qualifications and to demonstrate a qualitative expert assessment of future trends on the labour market. Above all, the sector profile should serve to demonstrate the supply and demand of sectoral occupations and qualifications on the macro level, as well as the analysis of trends in employment, unemployment and educational supply measured by the number of participants of educational programmes by region and according to groups of occupation, or the CROQF levels. The demand is measured as the employment and vacancies (or employment) by occupation, whereas the supply is measured as the number of unemployed by occupations and young people coming into the labour market from the sectoral programmes after education. The supply is also supported by the potential sources of inactive persons who are included in the labour market when demand rises 13. In 2015, the Ministry established the CROQF-related web portal 14 with the aim to provide information on sectoral profiles for all stakeholders, promoters and beneficiaries of the CROQF mechanisms and the system. Amongst the broad information presented on the Ministry of Labour and Pension System (2015) Methodology for construction and interpretation of the sector profile (Metodologija za izradu i tumacenje profila sektora) 13 ibid 14 May,

9 portal, there is an overview of monthly changes in employment, unemployment, the unemployment rate and employment rate for each sector. These valuable datasets can be used for the development of future skills forecasting methodologies. The web portal could be regarded as a good framework with information which could be used to create a database similar to the Irish National Skills Database, which compiles and makes publicly accessible a wide range of skills-related data by occupation. May,

10 3 Assessment of the success factors and transferability of the Host Country example As mentioned previously, the concentration of skills forecasting responsibility within two national bodies is a good approach because the methodologies and approaches developed, together with data gathered and analysed, are concentrated and agglomerated at one place. In Croatia, due to the developments within the CROQF framework, there will be many more stakeholders and actors involved in the development of skills forecasting in different ways, according to responsibilities defined by the legal framework. There is a risk that information and data might not be concentrated in one place in the future (they have been previously assigned mainly to the CES) and therefore thought should be given to identifying one responsible institution for skills forecasting. What however seems to be a good approach is that all methodologies developed within the CROQF framework have to be applied by all stakeholders and the wider community (Guidelines for construction of occupational standards 15, Guidelines for construction of qualification standards 16, Methodology for construction and interpretation of the sector profile 17 ). Croatia could learn from the methods used for occupational employment projections in Ireland because there has been no regular practice developed and applied for long-term projections based on macroeconomic models 18. In addition, Croatia could also learn from the Irish experience in the development of the National Skills Strategy in 2025 and its Enterprise 2025 strategy which is based on the occupational employment forecasts, because Croatia has not yet developed such a strategy. In the case of Croatia, structural unemployment occurs more amongst young people without work experience, which is a clear message that the education system does not sufficiently and adequately prepare young people for the labour market, resulting in high unemployment of young people (45.5% in 2014) 19. Moreover, the longterm unemployment may lead to the reduction of the acquired skills and competences which means that it is often necessary to further invest in education or training (e.g. by means of adult education, either formal or non-formal) to reach the previous level of skills, competences and knowledge or to acquire new skills and competencies needed on the labour market. Therefore, it would be necessary for Croatia to develop a national skills strategy which would provide a clear orientation to young people when making a decision on which educational programme to enroll for. 15 Ministry of Labour and Pension System (2015) Guidelines for construction of occupational standards (Smjernice za izradu standard zanimanja), 16 Ministry of Science, Education and Sports (2015) Guidelines for construction of qualification standards (Upute za izradu standard kvalifikacija), 17 Ministry of Labour and Pension System (2015) Methodology for construction and interpretation of the sector profile (Metodologija za izradu i tumacenje profila sektora) 18 Please note that first skills forecasting projections based on the macroeconomic model were presented in April 2016 as described in section two of this report 19 May,

11 4 Questions Are the Irish Further Education and Training Authority (SOLAS) and the Expert Group on Future Skills Needs (EGFSN) the only stakeholders involved in the skills forecasting process or are there other actors involved? If other actors are involved what is their role in the process? For how many years, i.e. in what periods of time, are the skills forecasted (e.g. 5-year, 10-year periods)? How is the data from the occupation employment projections used to feed into the National Skills Strategy? How often is the occupational employment projection produced (last one was in 2014)? How are the results disseminated to other stakeholders? May,

12 Annex 1: Example of relevant practice Name of the practice: Recommendations concerning education enrolment policy and scholarship policy Year of implementation: 2010 Coordinating authority: Croatian Employment Service (CES) Objectives: By implementing the methodology developed by CES called Plan and monitoring methodologies, analysis and forecasting labour market needs for particular occupations, and recommendations for the admission policy, perform the analysis of labour market needs for specific qualifications Main activities: The CES undertakes analysis and forecasts labour market needs for specific qualifications. The analysis is carried out on the basis of relevant statistical data and indicators on employment rate of unemployed persons according to the educational programmes and levels, data from the survey of employers and by taking into account the strategies and plans for economic development at regional and local level. As a result of the analyses, the CES makes recommendations concerning education enrolment policy and scholarship policy, which have a qualitative character because the recommendations contain information on whether to increase or decrease (without giving specific figures) the number of enrolled students and scholarships for students in certain educational programmes. Recommendations are made at the level of regional and local labour markets in order to reduce the structural mismatch between labour supply and labour demand. Results so far: Publication of annual recommendations since 2011, available through the CES website ( May,

13 Annex 2: Summary table Background to national approaches for skills forecasting in the Peer Country Well established short-term approaches in forecasting labour market needs for certain qualifications Currently, the main responsibility for short-term approaches is assigned to the Croatian Employment Service There are no long-term skills forecasting approaches Assessment of the policy measure The Host Country has a longer tradition (since the 1990s) in skills forecasting than Croatia Application of the macroeconomic model for the development of the occupational employment model has not yet been done in Croatia Compared to the Irish occupational employment model and projections, the Croatian short-term forecasting in terms of recommendations on student enrolment quotas is based on yearly forecasts The estimates on the expansion demand across the occupation spectrum have not been put in place yet Assessment of success factors and transferability Development of the National Skills Strategy by the Host Country could be a good approach for Croatia as well Croatia needs to make a national decision about which institution or national body will be responsible for short-term and long-term skills forecasting The approach of developing occupational employment projections could be transferred to Croatian stakeholders Questions Are the Irish Further Education and Training Authority (SOLAS) and the Expert Group on Future Skills Needs (EGFSN) the only stakeholders involved in the skills forecasting process or are there other actors involved? If other actors are involved what is their role in the process? For how many years, i.e. in what periods of time, are the skills forecasted (e.g. 5-year, 10-year periods)? How is the data from the occupation employment projections used to feed into the National Skills Strategy? How often is the occupational employment projection produced (last one was in 2014)? How are the results disseminated to other stakeholders? May,

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