SKILLS GAPS AND THE PATH TO SUCCESSFUL SKILLS DEVELOPMENT

Transcription

1 SKILLS GAPS AND THE PATH TO SUCCESSFUL SKILLS DEVELOPMENT EMERGING FINDINGS FROM SKILLS MEASUREMENT SURVEYS IN EUROPE AND CENTRAL ASIA Johannes Koettl, Sara Johansson de Silva, and Olga Kupets Investing in Skills Vienna, June 15-16, 2015

2 Background Job market relevant skills are becoming an important bottleneck to private sector growth Especially in some ECA countries (more advanced reformers) But just as important to consider for less advanced countries Demand for new economy skills is increasing For well targeted policy it is vital to understand what skills gap exists and why Education levels labor market relevant skills Lack of information on skills and the performance of education and training systems The quality of skills that are formed from early childhood, through education and training systems, and on and off the job in adult life is what matters The STEP surveys launched to provide extensive information on the supply and demand for skills availability of generic skills in the population (household level surveys) demand for skills among firms (firm level surveys) This study synthesizes the emerging findings of several STEP surveys: Household surveys for Armenia, Georgia, FYR Macedonia, and Ukraine Employer surveys for Armenia, Georgia, and Ukraine (FYR MK in the field) 2

3 STEP surveys Household surveys Urban households Working age (age 15-64) Random sample STEP Background survey + reading assessment (incl. extended assessment in Armenia, Georgia, and Ukraine) country Armenia Georgia Macedonia Ukraine Sample size 2,992 2,996 4,009 2,389 Year of survey Employer surveys Selected sectors and small samples Results not representative of the whole economy Pre-defined list of skills in the questionnaire country Armenia Georgia Ukraine Sample size Year of survey

4 A framework for successful skills development... 4

5 ...and the dark clouds preventing it? 5

6 Understanding the skills gap Is there a skills gap? What does it look like? 6

7 Is there a skills gap? Yes: - Firms report a skills gap Firms want to hire workers low labor demand is not the sole cause of poor labor market outcomes But they have trouble finding workers, both white and blue Mostly because applicants do not have the required skills -Workers feel overqualified for their jobs In particular those with vocational (short-cycle) training at tertiary levels 7

8 A high share of firms have tried to hire in the past. And, at least in Ukraine and Armenia, they had problems finding workers Percentage of firms with hiring experience Percentage of firms with hiring experience reporting problems in hiring Blue 44,0 44,3 56,4 Blue 27,0 37,8 44, Ukraine Georgia Armenia Ukraine Georgia Armenia 8

9 Armenia Georgia Ukraine... The main reason being lack of relevant skills Percentage of firms with hiring experience and problems in hiring by obstacle to hiring Blue Blue Blue Applicants lacked required skills Did not like working conditions Expected higher wages No or few applicants 9

10 Many workers face a mismatch between actual job requirements and their own education levels % workers who are classified as overeducated, undereducated, and well matched according to indirect self-assessment 7,4 6,3 6,4 5, ,6 60,6 72,9 65, ,1 33,1 20,7 29,1 0 Armenia Georgia Macedonia Ukraine Overeducated Well matched Undereducated 10

11 What is the nature of the mismatch? What employers say they want Strong job related skills A mix of technical and soft skills Conscientiousness Most important gaps Job-specific technical skills Problem solving Openness to experience Blue Job-specific technical skills Soft skills: ability to work independently, time management, team work 11

12 Other foreign language English Creative and critical thinking Time management Leadership Communication Ability to work independently Literacy Team work Problem solving Numeracy Job-specific technical skills English Other foreign language Leadership Creative and critical thinking Problem solving Numeracy Literacy Time management Ability to work independently Team work Communication Job-specific technical 3,5 Job specific technical skills and foundational skills are essential, but soft skills also matter workers Importance of different skills for employers (index, 0-5) 3,5 Blue workers 3,0 2,5 2,0 1,5 1,0 0,5 0,0 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Armenia Georgia Ukraine Armenia Georgia Ukraine 12

13 Extraversion Agreeableness Emotional stability Openness to experience Conscientiousness Openness to experience Extraversion Agreeableness Emotional stability Conscientiousness 4,0 Conscientiousness is highly valued for white and blue jobs Importance of different personality traits for employers (index, 0-4) workers 4,0 Blue workers 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Armenia Georgia Ukraine Armenia Georgia Ukraine 13

14 Skills considered by employers as important are often lacking among young workers Percentage of firms considering skills to be lacking among young workers with a university degree or post-secondary diploma Armenia Georgia 1. Conscientiousness 2. Openness to experience 1. Conscientiousness 2. Openness to experience 1. Job-specific technical skills 2. Numeracy 3. Problem solving 4. Team work 5. Literacy Lack quite often Lack often and very often 1. Job-specific technical skills 2. Numeracy 3. Literacy 4. Problem solving 5. Communication Lack quite often Lack often and very often Note: Percentage of firms with recent experience of hiring young workers (up to 30 years old) 14

15 Consequences of the skills gap How does it affect workers, firms, and the economy? 15

16 Skills somewhat matter for earnings of youth as well as prime age and older workers years Percentage contribution to the explained variance (R-squared) in hourly wages Armenia Georgia Macedonia Ukraine years Armenia Georgia Macedonia Ukraine years Armenia Georgia Macedonia Ukraine Generic skills at work Use of information-processing skills at work Non-cognitive skills Job characteristics Demographic characteristics Experience Years of education Generic skills at work Use of information-processing skills at work Non-cognitive skills Job characteristics Demographic characteristics Experience Years of education Generic skills at work Use of information-processing skills at work Non-cognitive skills Job characteristics Demographic characteristics Experience Years of education Note: Results obtained using regression-based decomposition according to the Fields's approach (Fields, 2004) where the dependent variable is the log of hourly wages. The height of each bar represents the total R-squared for that regression. The sub-components of each bar show the contribution of each factor (or set of regressors) to the R-squared. 16

17 Firms that could provide better jobs are more constrained by skills than others Collar Blue Collar Collar Percentage of firms reporting problems with hiring workers due to skills Blue Collar Collar Blue Collar Collar Blue Collar Collar Blue Collar Collar Blue Collar Armenia Georgia Ukraine Armenia Georgia Ukraine Innovative Traditional Foreign Domestic 17

18 Overcoming the skills gap Factors driving the skills gap and how to (begin to) address them 18

19 Why is there a skills gap? Education systems are underperforming Say employers And workers Firms do not provide sufficient training Although more modern firms provide more training than others But overall firm based training benefits a limited set of workers (investment in skills development is cumulative) Also: little contact between firms and education system 19

20 ...DOES NOT produce enough people with:...does NOT produce enough people with: Employers: the education and training systems do not provide enough people with practical skills Percentage of firms considering that the education system General education system TVET system GOOD ATTITUDE AND SELF- DISCIPLINE GOOD ATTITUDE AND SELF- DISCIPLINE PRACTICAL SKILLS PRACTICAL SKILLS UP TO DATE knowledge of methods, materials, and technology UP TO DATE knowledge of methods, materials, and technology KINDS of skills needed KINDS of skills needed LEVEL of skills needed LEVEL of skills needed...does meet the skill needs of employers adequately...does meet the skill needs of employers adequately Ukraine Georgia Armenia Ukraine Georgia Armenia 20

21 Workers do not find their education very useful for their jobs, particularly after short-cycle education Percentage of employed considering their education useful for their work (by education level) Tertiary general (long-cycle, ISCED 5A/6) Tertiary vocational (short-cycle, ISCED 5B) Ukraine 51,3 Ukraine 44,1 Macedonia 59,2 Macedonia 40,5 Georgia 59,2 Georgia 33,8 Armenia 70,6 Armenia 49,0 0% 20% 40% 60% 80% 100% Not useful at all Somewhat useful Very useful 0% 20% 40% 60% 80% 100% Not useful at all Somewhat useful Very useful 21

22 Innovative and skill-constrained firms provide more training 0 Armenia Armenia Blue Percentage of firms providing internal or external training Georgia Innovative Georgia Blue Traditional Ukraine Ukraine Blue Armenia Armenia Blue Georgia Georgia Blue Ukraine Experienced skills gap when hiring No skills gap for hiring Ukraine Blue 22

23 Contacts between firms and educational institutions are limited and not focused on enhancing relevance of education and training 25 Percentage of firms having regular contacts with educational or training institutions 100 Purpose of contacting education and training institutions Armenia Georgia Ukraine Blue 0 Blue Blue Armenia Georgia Ukraine Blue Recruitment of staff Participation in testing of students Providing feedback to the institution for curriculum development For further training of firm's existing employees Providing internships and apprenticeships for students 23

24 Strengthening systems: Can learn from best practice countries SABER diagnostics of work force development OVERALL 1. Direction 2. Demand-led 3. Coordination OVERALL 4. Funding 5. Standards 6. Pathways OVERALL 7. Excellence 8. Relevance 9. Accountability 4.0 Advanced SABER diagnostics: ratings 3.5 Established 3.0 Emerging Latent Armenia Georgia FYR MK Ukraine 0.0 STRATEGIC FRAMEWORK SYSTEM OVERSIGHT SERVICE DELIVERY 24

25 Next steps What can policy do? 25

26 What have we learned? Employers do no train much and have few contacts with education system Overcoming coordination failure among employers Workers who feel under/overeducated Better information for youth, their parents, and workers Education systems that neither serve employers nor students and workers A more responsive education system in a leadership role Labor markets somewhat reward skills, but still employers complain about lack of skills New policies and interventions in the labor market 26

27 Revisiting the framework for successful skills development 27

28 What can policy do? Back to the framework Successful skills development Employers: Do they train and coordinate? Education systems: Are they responsive to changing needs? Workers: Do they invest in skills? Labor markets: Do they reward skills? Training Leading reform dialogue Get information on what skills pay off Skills-based hiring Coordination Reform institutions and staffing Get help when deciding about skills investments Pay for performance Adapt to changing demands Invest in generic and technical skills from early in life Fair firing 28