We must teach tomorrow’s skills today

OECD Observer Business brief


"A real problem for the world economy is the location mismatch between available jobs and employees. Skills mismatch in an employment landscape is mainly an outcome of structural rigidities in labour markets, but it is also influenced by cyclical gaps between demand and supply. Job creation is fundamental, but all aspects of the skills mismatch must be addressed."


The New Industrial Revolution affects the workforce in several ways. Ongoing innovation in renewable energy, nanotech, biotechnology, and most of all in information and communication technology will change labour markets worldwide. Especially medium-skilled workers run the risk of being replaced by computers doing their job more efficiently. This trend creates two challenges: employees performing tasks that are easily automated need to find work with tasks bringing other added value. And secondly, it propels people into a global competitive job market.

The Randstad/SEO report Into the Gap (2012) illustrated that jobs traditionally associated with the middle class (assembly line workers, data processors, foremen and supervisors) are beginning to disappear, either through relocation or automation. Employees must either move up the ladder, joining the group of “knowledge workers”, which will continue to grow in demand (engineers, doctors, attorneys, teachers, scientists, professors, executives, consultants), or settle for lower-skilled, low-wage service jobs, thereby pushing the less educated out of the labour market.

In many areas employment is picking up, but employers still say they cannot fill their vacancies because even highly qualified candidates have the wrong skills for the jobs available. The current education systems, employers argue, teach yesterday’s skills to tomorrow’s graduates. Many are concerned that applicants lack “soft skills”, such as interpersonal, communication and analytical problem-solving abilities. This clearly indicates that jobs in growing sectors, such as health, education and other services, require a different set of skills than those acquired by those unemployed people who had worked in sectors with declining employment, such as agriculture and manufacturing.

In developed economies, investment in STEM disciplines (science, technology, engineering and mathematics) is increasingly seen as a means to boost innovation and economic growth. The importance of education in STEM disciplines is recognised in both the US and Europe, but the debate gets particularly heated when it intersects with immigration. Europe is in a similar position as the US, but has much more rigid immigration policies, causing Europe to attract fewer high-skilled workers than not only the US, but also Canada and Australia. Only 3% of scientists in the EU come from non-EU countries, whereas in the US 16% of scientists come from abroad. Internal mobility in the EU has also been stagnating. In 2014 only 2.7% of all Europeans lived in another member state.

A global labour market has already emerged, but we lack the institutions to make it work effectively. The real problem for the world economy is not just a global shortage of STEM skills, but even more so, the location mismatch between available jobs and employees. Talented people don’t relocate easily to where the available jobs are. Several US and European firms have moved their R&D operations offshore over the last two decades, which diminishes the number of STEM jobs in both the US and Europe. Demand has not dropped, but has shifted to countries such as China and India. Together with the Institute for the Study of Labor (IZA, www.iza.org), Randstad is currently researching the global “jobs to people, people to jobs” mobility and expects to publish the findings in 2016.

Skills mismatch in an employment landscape is mainly an outcome of structural rigidities in labour markets, but it is also influenced by cyclical gaps between demand and supply. Job creation is fundamental, but all aspects of the skills mismatch must be addressed. All stakeholders should work together to address the issue. Free trade agreements, for example, could include provisions for student and labour mobility. There is clearly a need for labour market policy to be approached much more actively, with unjustified restrictions being lifted and relevant intervention stepped up.

If our approach does not change, we may only prolong the jobs crisis as people are denied the opportunities they need to develop the skills they require for the Information Age.

Visit www.randstad.com 


©OECD Yearbook 2015


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