Shifting Focus from Qualifications to Skill Upgrades

TEXT: Daniel Nippard – 24. September 2019

In the previous edition of Mosaic, Daniel Nippard, project director of MarketMakers, in Bosnia & Herzegovina, interviewed the OECD's Stijn Broecke on the future of employment. In this follow-up, he interviews Glenda Quintini, senior economist at OECD, on the future of skills and the strategies necessary to keep people competitive and in high demand.

Daniel: Thank you for joining us, Glenda! Could you start with sharing your general view about the future of national skills strategies? Which elements are rising in importance and which are shrinking?

Glenda: I think one of the big trends is to shift away from an approach that is centered around an individuals' previous qualifications or field of study and towards what people can do and what their skills are. If you take the simple example of someone who needs to make the transition from being a car mechanic to being a boat mechanic – it might initially look like the person needs to re-qualify. However, when you look at existing competencies and only at what is different about the skill requirements for the boat mechanic when compared with the car mechanic, and then offer training to only account for the differences, the transition will speed-up. For an adult, the conversion time will be shorter, which is very important as you don't want to send them back on a multi-year course.

Daniel: So, building skills strategies around existing competencies rather than solely the pursuit of qualifications will be a bigger feature?

Glenda: In looking at competencies, rather than an individuals' qualifications, degrees, or where they have worked in the past, you can have skills policies and also provide training that are incremental – offering only what people additionally need to know. Otherwise, you would always be asking people to re-train entirely and this can take a long time. There is a trend of public employment services now doing this, particularly in Europe, where they are moving towards matching people to vacancies based largely on skills. Employers are being encouraged to describe their vacancies not in terms of position, title, qualifications, or experience, but what the person doing the job needs to know in order to do it. On the side of the prospective employee or unemployed person, the conversation with the public employment services is also about what they know.

Daniel: Do you therefore think there will be a diminished importance of bachelor degrees – of three or four-year university courses – within national skills strategies? How important will qualifications be in a future where there is a greater choice for adult education and short-course or transition-focused re-training?

Glenda: No, I don't think there will be a choice between the two. There is a tendency in labor markets for the skills requirements (of a particular role) to get higher over time. And to acquire those skills, you need a good base – for example, a university-based qualification. There is not much doubt about that. What we are seeing in terms of competences – and the OECD's review of competences in high- and low-demand in different countries – is shortages in high-level cognitive skills and high-level social skills, which you may be better able to acquire if you attend a university degree.

Furthermore, what we think will happen in the future is that people will be very unlikely to stay in the same job, or even two jobs, through their working lives. They will move more often and have more career changes. So, even if they have a good base to start with, they will need to reskill or upskill frequently during their working lives. The best way of supporting people through these changes is not necessarily to send them back to formal education, but rather to design shorter courses that aim to aid particular transitions. The key barrier that limits people participating in adult learning is 'lack of time' – either because of work or because of personal responsibilities. In this sense, shorter courses, particularly those that are modular, where modules can be added over time to result in a certificate or qualification, can be very helpful. This is, however, not a substitute for good or university education.

Daniel: How can we help young people to choose the study options that best equip them with the skills required today and in the future on the labor market? Relatedly, what can we do for the young people that have been badly advised or have chosen badly and find themselves having recently left formal education with skills that are in low demand (or high supply) on the labor market?

Glenda: There has to be a lot of work on career guidance, both for adults and for youth. Career guidance for youth is more common, but still generally badly done, and it often does not make use of good quality labor market information regarding the prospects of different professions. It is important that we are able to help young people make better educational decisions to start with. If they make a bad decision and consequently find it difficult to enter employment, then we have to look at the skills they already possess and support them to transition as we would with adults.

Similarly, VET qualifications that used to be an excellent passport into the labor market (and still are in many countries) are now facing a more uncertain future. VET courses tend to have less general teaching and a narrower focus on professional skills, which can mean that graduates of these courses fare less well if they lose their job. As middle-skilled jobs tend to account for less and less of total employment, VET graduates who used to hold these mid-level jobs tend to go to lower-skilled jobs as they often do not have the general knowledge needed to retrain for higher-skilled jobs.

Daniel: Are you aware of any country whose policy it is to provide high levels of support to young people prior to entering higher education? How can we avoid these 'bubbles' on the unemployment register whereby thousands of people graduate year-on-year with the same low-demand skillsets?

Glenda: I think all countries are struggling with this. There are some career guidance services that have been around for a long period and these have tended to improve in quality over time. Denmark and New Zealand have very good online platforms that inform young people of different careers, where these jobs are located, and what they need to do to enter these professions. In some cases, they offer information about the different training institutions, which you can view by outcomes – for example, by the proportion of their graduates finding work. So, more and more countries are starting to deal with these issues by providing information online. In countries like Belgium and the Netherlands, and more so for adults, voucher schemes have been set-up to offer skills audits and assessments of an individual's prospects. They tend to be targeted at older workers rather than towards young people at an earlier stage in their careers, but these voucher schemes do represent an additional way to advise and encourage people by offering them free guidance.

Daniel: With respect to youth and adult transitions and re-skilling, what responsibilities and roles should reside with the individual, the employer, and the state?

Glenda: The services that I've just mentioned often come from the public sector and public employment services. They can only work if they are based on good data and therefore reliable data collection. Information on how skills needs are changing, what is required on the labor market, etc., need to be routinely collected through initiatives that involve all relevant stakeholders, including central and local authorities, employers, and unions. In addition to helping identify skills needs in their sector, employers need to be involved in the provision of training. When training is provided by and coordinated by employers, it is generally related to labor market needs. On the funding side, as employers reap some of the benefits of training, it is reasonable that they contribute towards the costs of training or providing it.

Daniel: It is difficult to dispute the theory that employers should be among the best placed to offer relevant, pragmatic training. Effectively, you are removing a 'third party' training provider and reducing the chances that content with less real-world application sneaks into the curricula. But the question is whether employers can offer training that has a worth to the sector and/or other industries, rather than training that is highly company-specific.

Glenda: Yes, I agree. That is always an issue and remains an issue. Employers train employees in areas mostly needed within their companies. That's why we need to consider how training is financed. Some countries have introduced so-called 'individual learning accounts' that can be used by employees, at their decision, for their own training. It means that their training doesn't have to be closely related to their current job. This is the case of the Compte Personnel de Formation in France whereby the funding partly comes from a levy paid by employers, but individuals are empowered to make their own training choices. So, this is one of the ways in which countries have tried to broaden the types of training provided.

Daniel: And what is the role of the individuals in preparing themselves for the future needs of the labor market?

Glenda: It's very a la mode to say that individuals should take responsibility of their own training decisions to empower themselves. The whole idea of individual learning accounts is precisely that – I'm sure you've heard about the scheme they have in France. It can certainly work for some individuals, but not all. In the end, in adult transitions, the high-skilled that enter schemes like this do better. If you look at the trend for adult training generally, in some countries, between 70-80% of high-skilled adults participate in training each year; whereas in the same countries, it the number is closer to 20% for the low-skilled adults. Individual learning accounts will not necessarily resolve this disparity. For low-skilled workers, the problem is that individual learning account schemes require them to take decisions that they don't necessarily want to take by themselves. In France, there is a lot of thought going into accompanying the scheme with a guidance service so that the individual receives support in making their decisions. The schemes can help the self-employed and also people on temporary contracts to access training, but one of the big challenges remains the low-skilled. And on this indicator, it is not clear whether individual learning accounts are going to outperform traditional employment services.

Daniel: The individual learning accounts are designed to allow people more freedom to choose a direction following their interests or need to build upon skills they already possess. But without an insight on the future of work and the future of skills needed, it is not necessarily that these people will make the best call for themselves. Such schemes need to be complemented with other services and embedded in a context that makes the most out of the freedom on offer.

Glenda: Yes, in terms of making the right the decision, you are right. But there is also the empowerment aspect to consider. In recent street surveys that sought opinions from the public on the individual learning accounts, a common response was that people did not want to be making decisions alone in front of a computer. This is not just because of a lack of information, but because the experience can be quite isolating. You see, some of these people have been unemployed for a long time. They may have limited social networks. So, one of the main criticisms of the scheme and its platform was that you couldn't talk to an actual person. Empowerment is always good, but you also need guidance.

Daniel: The innovations that we've talked about so far have mostly been examples from high-income, highly-developed economies. What about countries that may be on a tighter budget? What might be considered among the most efficient uses of public funds for youth and adult transitions?

Glenda: Whilst it is true that one of the biggest barriers to adult re-training is time, this tends to apply for people who wanted to participate in training in the first place. For those who were not considering training, understanding as to why one might need to acquire new skills and having the motivation to re-train were also important barriers affecting participation. Countries could choose to run information and awareness campaigns to influence attitudes and behaviors in the direction of acquiring new skills, and this is generally not as costly as attempting to provide training for every adult in the labor force. It is very hard to measure how much these campaigns contribute to an increase in learning participation., However Portugal has seen an increase in participation in parallel to all of their information campaigns – particularly in the utilization of their centers for the recognition of prior learning.

This recognition of prior learning is a second answer to your question. Many adults have skills, but they don't have a certificate. They might spend 20 years in the labor market and are great at what they do, but they don't have a qualification or a degree. If they leave their current job and need to find another one, then they appear as under-qualified and can't prove to the next prospective employer that they possess the competencies that they have. In the past, such schemes were costly and difficult to use, and those who needed to use these services could not access them. But this is less the case now. Portugal, France, and many other countries are progressing such schemes and are looking at ways to improve their systems for the recognition of prior learning.

Another way is to encourage employers and individuals to both contribute to the costs of re-training, or leveraging finances from other sources. Tax credits are used in some countries, though are somewhat difficult to target – to individuals, and also in terms of the training's utility on the labor market. The application of levies on employers – existing in many countries, for example in Italy, France, and Ireland – involves employers contributing a certain percentage of their wage bills to a common fund, which is then used to provide training. There is often some mutualization in the sense that the money is not necessarily used by the same employers that contributed.

In general, the spreading of burdens across those who stand to gain and those who can pay should be factored-in, especially for countries on a tighter budget.

Daniel: Glenda, thank you for taking the time to share your thoughts with us on the topic. It's very much appreciated.

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