OECD Skills Strategy: The pathway of choice

Policymakers need solutions to help their economies move forward in today’s world. The OECD Skills Strategy, launched at the 2012 Ministerial Council Meeting in May, may prove fundamental. Here’s why. 

Skills have become the global currency of 21st century economies. Without proper investment in skills, people languish on the margins of society, technological progress does not translate into economic growth, and countries can no longer compete in an increasingly knowledge-based global society.

One estimate puts the long-term economic value of raising student performance in the OECD area by just half a school year at US$115 trillion over the working life of the generation born this year. But this “currency” depreciates as the requirements of labour markets evolve and individuals lose the skills they do not use.

The toxic mix of unemployed graduates, on the one hand, and employers unable to find the skills they need, on the other, sends a clear message: that skills do not automatically translate into higher incomes and high productivity. If we want to succeed at turning skills into better jobs and better lives, we have to understand more about those skills that transform lives and drive economies.

We must then ensure that those skills are taught and learned effectively over the course of people’s lives. And we must provide an environment in which employers fully use the available talent.

This is everyone’s business. Governments, employers, employees, and learners need to establish sustainable arrangements as to who pays for what, when and how. This is where the OECD Skills Strategy comes in. It helps countries identify the strengths and weaknesses of their national skills pool and their systems, benchmark them internationally, and develop policies for improvement.

What do we mean by developing the right skills? The crisis has reminded us that there can be drastic, sudden and unexpected changes in our economies. A generation ago students could expect that what they learned from their teachers would last a lifetime. Today, educators and training professionals have to prepare people for more rapid change than ever before, for jobs that have not yet been created, to use technologies that have not yet been invented, and to resolve problems that we don’t yet know will arise.

More than ever, a culture of lifelong learning must be fostered that can engage learners in overcoming the unforeseen challenges of tomorrow, not to mention those of today. To do this, governments must gather and use better intelligence about changing skill demand. They must work more closely with the business sector in designing and delivering curricula and training programmes. Skills development is simply much more effective if the world of learning and the world of work are linked together. Learning in the workplace allows young people to reach beyond state-conceived classrooms and develop the “hard” skills that working on modern equipment brings, and the “soft” skills of real-world experience. Hands-on workplace training can also help to motivate disengaged young people and involve them more in the education system, as well as creating a smoother transition to the labour market. By working alongside businesses, governments can ensure there is sufficient local flexibility in designing and managing training programmes, while seeing to it that their tax systems do not discourage investment in learning.

But even people who have strong skills sometimes do not bring them fully to bear in the economy. People with disabilities or chronic health problems, for example, are more likely to be inactive. So too are women and older people. And we know from research–but also from experience–that unused skills deteriorate. So what are the answers? First, we must identify inactive individuals more clearly and understand the reasons for their inactivity. We may then have to create financial incentives that make work pay and dismantle the barriers to participation in the labour force, such as the absence of childcare for many women, or resolve issues surrounding leave, part-time work and workplace facilities. And finally, we must find ways to encourage older people to stay on longer in their careers, not so much to reduce the welfare costs of early retirement, important as this is, but so that others–people, businesses and the economy at large–can benefit more fully from their experience and knowledge.

Nevertheless, even if the right skills are developed and people are willing to work, that still does not guarantee results. Take unemployment. One in four young people are jobless in France, Italy and the US. In Spain and some Northern African countries 40% or more young people have no jobs. For a young person looking for a job this is a terrible prospect and a tragic waste of skills.

What’s more, a bad start in professional life leaves scars that can last ten years or more, affecting career prospects, pay levels and job security. Tackling unemployment and helping young people to gain a foothold in the labour market and into jobs that utilise their skills, must be a priority. The Skills Strategy shows that there are ways to achieve this, starting with firms themselves. Research finds that those firms that are good at deploying accepted best-practice management techniques are more innovative and perform significantly better, in economic terms, than those that are not. In well-managed firms, skills of employees are used more productively and this also boosts job satisfaction. Policy must encourage employers to align their business strategies with human-resource practices and skills development in their workforce.

A second way is to improve the information we have about the skills needed and those available. Quality career guidance should be a critical feature of public policy. Competent personnel who have the latest labour-market information at their fingertips can steer individuals to the learning programmes that would be best for their prospective careers. Coherent and easy-to-interpret qualifications help employers understand which skills are held by potential employees, thereby facilitating recruitment and matching. Competency-based qualifications provide employers with a sense of what a future employee can perform on the job and enable individuals who have work experience to secure credentials that reflect the skills they may have acquired on the job.

Firms in many countries could introduce more flexible working arrangements too. Our lives have become more complicated. Jobs for life are largely a thing of the past. Family and professional lives are increasingly interwoven and have to be managed in parallel. Work places have to adapt to these changes and offer much more flexibility to avoid excluding individuals from active professional life.

More also needs to be done to stimulate the creation of more high-skilled and high value-added jobs. Labour markets are not static, and policies can “shape” demand, rather than merely respond to it. By fostering competition and the spirit of enterprise that goes with it, policymakers can promote not just vibrant and productive economic activities, but more rewarding jobs as well. Such an environment also produces more entrepreneurs too–the people who create jobs. And we know that entrepreneurship skills can be learned and fostered through a dynamic education system.

Which brings us back to skills: our education and training institutions can play an important role in creating higher-skilled jobs by helping their students to identify opportunities, turn them into successful ventures, and recognise and respond to difficulties and obstacles that may emerge. That is what the OECD Skills Strategy is for. It is not an easy agenda, but it is one on which the future or our economies and societies depends.

See: 

OECD (2012), Better Skills. Better Jobs. Better Lives: A Strategic Approach to Skills Policies, Paris.

www.oecd.org/education/SkillsStrategy

See also: 

OECD Observer (2011), "Spotlight: Higher education", Q4 2011.

©OECD Observer No 290-291, Q1-Q2 2012




Economic data

GDP : +0.5%, Q4 2014
Employment rate: 65.9%, Q4 2014
Annual inflation : 0.60% Mar 2015
Trade : -3.0% exp, -3.7 imp, Q4 2014
Unemployment : 6.993% Feb 2015
More moderate expansion ahead? Composite leading indicators
Updated: 12 May 2015

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