Report

Skills Gap – Skills utilisation should be identified as a priority

The OECD has recently affirmed the importance of increased productivity and continued economic growth as means of providing the best opportunity to raise the prosperity and well-being of people. Skills represent the great equalizer and provide a critical route out of poverty and inequality for many individuals. However, traditional approaches to skills have focused on supply as a means of boosting overall local economic development. Skills utilisation approaches represent a new way of thinking about public policies, moving away from traditional supply side approaches to focus on how to better work with employers to raise the quality of jobs at the local level and provide employees with more autonomy to create innovation in the workplace.

This joint OECD-ILO report provides a comparative analysis of programme examples focusing on improving skills use in the workplace across eight countries. The case studies provide insights into the practical ways in which employers interact with government services and policies at the local level.

Key lessons and recommendations

Skills utilisation should be identified as a priority across policies in addition to being the focus of targeted local interventions

Issues related to skills use are not systematically identified as a policy priority. Policy makers at the local, regional and national levels should articulate skills use as a strategic policy priority and consider what types of incentives are required to better engage employers in examining how they could more effectively use the skills of their employees. The case studies from Singapore, Vietnam, and Peru highlight the ability to use financing models (e.g. grants and tax credits) to incentivise the increased use of skills in the workplace.

Leadership by employers and high levels of employer and worker engagement is required

For change to occur in workplaces, employers must have significant buy-in and investment in the benefits of prioritising and developing human resources. While public interventions can help to incentivise actions by employers, workforce development must be a functional part of an enterprise’s business model in order to be sustainable in the medium- to long-term.

The most successful changes that occur at the enterprise level are often industry-led, particularly by employer groups or chambers of commerce. Workers and their representatives are also valuable partners in efforts to raise labour productivity and skills utilisation in the workplace. The case study from Australia in this publication highlights the importance of leadership from employer representative bodies to ensure that workforce development activities are systematically embedded across an entire industry rather than a single employer.

Specialised, technical expertise is needed to get employer buy-in and affect change

Better skills use requires a number of intertwined local- and business-level considerations that are often outside the traditional portfolio of public policies, therefore it can be helpful to work with an anchor institution or brokers at the local level that have specialised technical expertise to offer to employers on work organisation, job design, human resource development practices. Such organisations include vocational education and training institutions, sector councils, human resources consulting firms and other business associations. Unions are also natural partners in improving the quality of employment at the local level. The case studies from the United Kingdom and the United States demonstrate the importance of have specialised technical expertise to affect workplace and management changes.

Initiatives should be strategically targeted to SMEs in order to maximise effectiveness and efficiency

Public programmes should be strategic in their efforts to effect change at the workplace level, but trade-offs may exist between effectiveness and efficiency. Public procurement can be used to help firms think over the long-term, requiring a certain level of working conditions and a certain commitment to training. SMEs, particularly those in low-wage sectors, have the most to gain from the shift to higher value-added production but they also often lack the capacity to fully engage in the holistic work required to achieve this goal. The specific needs of SMEs may require specialised targeted supports to ensure that they can benefit from setting up partnerships for the sharing of innovations and new technologies. The case study from Korea demonstrates the potential of using supply chain management practices to support SMEs in developing workforce innovation programmes.

Multi-faceted interventions are needed – both at the level of workplaces and local economies

The degree to which skills are used effectively is a function of a wide variety of factors both internal and external to the workplace. Consequently, successful interventions must consider bundles of management practices as well as the links between product market strategies and skills. Integrated approaches that consider training, employment and economic development priorities can also help to improve the business case for investing in the skills and potential of workers. For local employment services, this may include changing performance management systems to look at both the quality and quantity of job matches. For training providers, this means working more closely with employers to move away from just boosting the supply of skills. For economic development agencies, this means also focusing on the quality of jobs when attracting inward investments. Lastly for innovation policies, this means not just focusing on large R&D opportunities but also incremental innovations that can be achieved in the workplace.

Chosen excerpts by Job Market Monitor. Read the whole story at Better Use of Skills in the Workplace. Why It Matters for Productivity and Local Jobs Skills for Employment

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