Tools & Tips

Skills Forecasting – One way to identify future imbalances between labour supply and demand

In a context of dynamic and complex labour markets, matching the right workers and skills with the right jobs becomes increasingly dif cult. Skills forecasting is one way to identify future imbalances between labour supply and demand. Sometimes called ‘labour market forecasting’ or ‘employment forecasts’, this methodology aims to make predictions about future imbalances in supply and demand by producing a comprehensive picture of future labour market developments in terms of economic sectors, occupations, quali cations and skills.

Typically, a forecast exercise tries to answer three questions:

  • ƒWhere will the jobs of the future be concentrated in the country (or sector or region)?
  • ƒ What are the implications of this for skills needs, as measured by occupation and quali cation?
  • ƒ How does this compare with developments in the supply of skills?

A forecast acts as an early warning mechanism to help to alleviate potential labour market imbalances and support different labour market actors to make informed decisions. Its key assumption is that the patterns of performance and behaviour in the economy
and labour market will re ect past trends and that there will be no major disruptions to the economy. Its reliability is thus dependent on the concept that the past is a good predictor for future developments, and the forecasting team’s skills to adjust and interpret past developments into likely future scenarios.

Although no-one has a crystal ball that can predict the future with precision, many trends are robust and can be used to inform all involved about the world they are likely to face. Starting with certain assumptions based on the available experience, knowledge and judgment, estimates can be projected into the coming years using different methods and approaches. However, a forecast cannot predict radical disruptions or sharp deviations from the past. Therefore, the results should not be considered a precise view of what will happen. Rather, they indicate a likely future, given a continuation of past patterns of behaviour and performance.

Chosen excerpts by Job Market Monitor. Read the whole story at ETF – Skills forecasts: matching the right workers and skills with the right jobs


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