One of the goals of adult learning is to improve the labour market prospects of participants. To achieve this, it is important for adult learning systems to provide opportunities to acquire skills that are in demand in the labour market. But this is challenging in the context of constantly changing skill needs. This chapter provides some evidence on how well adult learning provision is aligned with labour market needs, and looks at the use of skill needs information in the design and targeting of adult learning The importance of investing in the right skills
Getting Skills Right: Future-Ready Adult Learning Systems
Getting Skills Right
Chapter 3. Alignment of adult learning provision with labour market needs
Abstract
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
3.1. The importance of investing in the right skills
Adults participate in education or training activities for a variety of reasons, but the vast majority of people want to gain labour market relevant skills to help them progress in their careers. Across the OECD countries included in the PIAAC survey, 73% of adults participating in formal adult training activities reported that their latest training spell was job-related. Similarly, non-formal adult education and training was job-related for 83% of participating adults, of whom 48% said that they participated to do their job better or improve their career prospects (Figure 3.1). Other important reasons include an obligation to participate (16%) and to increase knowledge or skills on a subject of interest (23%).
Figure 3.1. Reasons for participation in job-related non-formal adult education and training
Note: Average of OECD countries participating in PIAAC; non-formal job-related education and training only.
Source: PIAAC (2012, 2015).
To effectively support the career progression of individuals, not only should adult learning be job-related but also it needs to be aligned with labour market needs. This is especially true in the context of a rapidly changing demand for skills. Three key conditions are needed to achieve this alignment. First the content of adult learning programmes needs to be responsive to current, but also future, skill needs in the labour market. Secondly, incentives for participants and providers need to be set to guide the choice of courses towards skills in demand. Third, adult learning policies must respond to changing skill demands by specifically targeting those adults whose core skills have become or are likely to become obsolete and upskill or reskill them with in-demand skills.
To facilitate the alignment of adult learning policy with changing skill demands, it is of crucial importance that policy makers, individuals and employers have a good understanding of these changing skill needs, so that they can make informed decisions on adult learning investments.
3.2. Alignment with skill needs - results from the PAL dashboard
The PAL dashboard measures the alignment of the adult learning system with the skills needed in the labour market on four key dimensions: i) the degree of labour market imbalances; ii) the extent to which firms assess their skill needs; iii) the provision of training in response to skill needs; and iv) the participation in training of individuals with particular skill investment needs. The full set of indicators used to measure alignment with labour market needs within each of these dimensions is described in Table 3.1.
Table 3.1. Alignment of adult learning with skill needs – PAL indicators
Note: See Annex B for details on the data sources used for each indicator.
The PAL dashboard suggests that there are large differences between countries in terms of the overall alignment of adult learning with labour market needs (Figure 3.2). Across the different dimension of alignment, Denmark scores best among OECD countries, followed by Turkey and Norway. The weakest overall performance in alignment with labour market needs is observed in Japan, Latvia and Poland. The performance on the different indicators is described in the following subsections.
Figure 3.2. Results of the Alignment dimension
Note: The index ranges between 0 (least aligned) and 1 (most aligned). Chile, Korea and Switzerland were excluded due to missing data.
Source: See Annex B and C for details on data sources and methodology.
3.2.1. The state of labour market imbalances
The structural changes discussed in Chapter 1 alter the demand and supply for skills, which results in labour market imbalances when policies are not responsive to these changes. While these imbalances are unavoidable, especially in periods of transition, if permanent they can have significant costs for individuals, companies and society (OECD, 2016[1]). They are associated with negative labour market outcomes for individuals including lower job satisfaction, and hamper companies’ innovation and productivity as well as economic growth at large. Adult learning policy is a key lever to address skill imbalances, by giving individuals the opportunity to develop and strengthen the skills that are needed in the labour market. Whether or not a country has large labour market imbalances therefore gives an indication of how well adult learning systems are aligned with the skill needs in the labour market. Nonetheless, adult learning is not the only policy area that addresses skills imbalances, and the degree of imbalances will also reflect how responsive other policies, such as initial education and migration, are to changing skill needs.
Across OECD countries, 42% of employers state that they have difficulties filling jobs. One of the factors explaining these hiring difficulties is misalignment between the skills that workers hold and the skills required in the labour market. Hiring difficulties are greatest for companies in Japan, with 89% reporting that they have difficulties finding qualified staff (Figure 3.3). This is followed by Turkey (66%) and Greece (61%). At the other end of the spectrum are Ireland (18%), the Netherlands (24%), Spain (24%) and the United Kingdom (19%). This lack of skilled staff can constitute a major challenge for the development of companies. On average 40% of companies in countries for which data is available report that the lack of availability of staff with the right skills is a major obstacle to long-term investment decisions (Figure 3.3). Difficulties to find personnel are greatest in Latvia (67%) and the Czech Republic (66%), and smallest in Greece (18%) and Slovenia (21%).
Figure 3.3. Employer-reported labour market imbalances
Note: Missing data on hiring difficulties for Denmark, Estonia, Latvia, Lithuania and Luxembourg
Source: Manpower talent shortage survey (2018), EIBIS (2016)
Employers facing hiring difficulties may be forced to hire workers with an imperfect skill-set for the job. In fact, 35% of workers report that they do not have all the skills needed to do their current tasks and need more training according to data from the OECD Survey of Adult Skills (PIAAC). Japan (70%), Chile (66%), Estonia (47%) and Germany (47%) display the highest training needs and the Netherlands (18%), the United Kingdom (21%), Belgium (23%) and Turkey (23%) display the lowest. It should be noted that there is a weak correlation between the indicators of self-reported training need and recruitment difficulties, with possible explanations being that both are self-reported subjective measures, and that they each have a different reference population (the employed vs. those active in the labour market).
3.2.2. Assessing and responding to future skill needs
The assessment of skill needs is an important first step in avoiding and tackling skills imbalances. Firms that regularly take stock of their current and future skills needs are better prepared to plan their training and hiring activities. Across European OECD countries, on average 69% of firms assess their future skill and competence needs (Figure 3.4.). In Denmark, Hungary, Italy and the United Kingdom, more than 80% of firms report assessing their future skill needs, whereas this is the case for less than 50% of firms in Poland and Latvia. To address the identified needs, firms can adopt a variety of strategies, including training of existing or new employees to gain the needed skills. In European OECD countries, training seems to be a common response to skill needs: 82% of firms with at least ten employees train current employees or hire and train new employees when confronted with skill needs. Almost all firms in the United Kingdom (98%), Norway (97%) and Spain (96%) use training as a response to skill needs, while only around half of the companies do so in Estonia. Other common responses to existing skill needs, aside from training, include internal reorganisations to better use existing skills and the recruitment of new staff with the suitable skills.
Figure 3.4. Enterprises assessing their future skill needs and responding to identified needs through training
Note: Only refers to enterprises with at least ten employees. Assessing future skill needs refers to 2010 for Sweden.
Source: CVTS (2015).
Another important aspect of alignment at the firm level is the degree to which there is an overlap between the identified skill needs of the company and the training activities actually offered. When comparing the top three skills that enterprises report as important for the development of the firm to the three most important skills targeted in training activities, there is only a complete overlap for 13% of firms across OECD countries in Europe. A further 30% of firms have a fair amount of alignment between training and development priorities (i.e. two-out-of-three skills that are development priorities are also training priorities). The alignment between the identified skill needs and the focus of the implemented training is strongest in Estonia, Ireland and Norway, while it is much weaker in Spain and the United Kingdom (Figure 3.5).
Rather than responding to current or future skill needs, some firms just provide compulsory training opportunities, such as health and safety training. While this type of training is certainly useful and necessary, it should not substitute for training that allows adults to develop skills that help them progress in their careers. In firms with at least ten employees across OECD countries in Europe for which data are available, health and safety training accounts for 21% of training hours. This share is lowest in Denmark, Greece and Luxembourg, where it accounts for only 10% of all training. In the Czech Republic, Ireland and Italy, on the other hand, more than 30% of training hours are spent on compulsory health and safety programmes. These cross-country differences are likely to reflect different approaches to using training time, but also differences in the economic structure of countries.
Figure 3.5. Overlap between skills priorities and training activities
Note: Excludes firms with less than ten employees. Countries are ranked by their average degree of alignment. The degree of alignment is calculated as the overlap between the top three development priorities of firms and the top three training priorities (in terms of training hours). Each firm can score either zero (i.e. no overlap), low (i.e. one development priority is also a training priority), fair (i.e. two development priorities are also training priorities) or full alignment (i.e. complete overlap between development and training priorities).
Source: CVTS (2015).
3.2.3. Training for workers at risk
At the individual level, workers or job-seekers whose skills do not correspond with those required in the current or future labour market have some of the strongest training needs. However, as highlighted in Figure 3.6, workers in jobs with significant risk of automation participate less frequently in adult learning than other workers. This gap is observed even in countries with high overall participation rates (e.g. Scandinavian countries). The difference is biggest in Lithuania (27 percentage points), but it is substantial (12 percentage points) even in the countries with the smallest difference in participation rates (i.e. Turkey and the Czech Republic).
The same result holds for workers in easy-to-fill occupations (i.e. occupations for which the demand is lower than the supply): in the large majority of OECD countries, participation in job-related adult learning is lower for workers in easy-to-fill occupations – who presumably possess outdated skills – than for workers in hard-to-fill occupations – whose skills are in high demand. The only exceptions are Australia, Chile and the Czech Republic. The largest differences in training participation rates are in Belgium, Finland, Germany and Estonia.
Figure 3.6. Participation in job-related adult learning by risk of automation
Note: Significant risk is defined as having a risk of automation over 50%, low risk as having a risk of automation of at most 50%. Belgium refers to Flanders only, United Kingdom to England and Northern Ireland. Training refers to formal or non-formal job-related adult learning.
Source: Nedelkoska and Quintini (2018[2]) using PIAAC data (2012, 2015).
3.3. Policies to increase the alignment of skills demand and supply
The results from the PAL dashboard show improving the alignment of adult learning with skill needs in the labour market should be a priority in many OECD countries. To do so, it is essential that high-quality information on skill needs is available and feeds into adult learning policies. OECD (2016[1]) shows that countries use a range of tools to assess and anticipate their skill needs. However, the output from these skills assessment and anticipation (SAA) exercises is not always fully exploited or shared across several relevant policy areas, including education and training, employment and migration. Well-performing adult learning systems should use SAA information to: i) design adult learning policies and programmes, ii) put in place incentives that steer investment in adult learning towards programmes targeting in-demand skills, and iii) provide assistance for up- or re-skilling workers in sectors that are undergoing structural change.
3.3.1. Designing adult learning policies and programmes in line with labour market needs
In many OECD countries information from SAA exercises feeds into the strategic planning of adult education and training. The information serves as a guideline to develop strategies, objectives and targets to ensure that planned education and training activities are in line with labour market needs: in Spain, the Observatory of the PES continuously assesses the training needs in the labour market in cooperation with the Autonomous Communities and social partners,. This information is used as a basis for the elaboration of a multi-year framework for strategic planning of the entire vocational training system, including training programmes for adults. In Greece, information from SAA exercises on digital skill shortages fed into the National Digital Strategy 2016‑21. Similarly, analysis of digital skills demand and supply in Japan, mainly related to the fourth industrial revolution, contributed to its Growth Strategy 2017.
Many countries are also exploiting information on changing skill needs to set training standards. Social partners are in some cases involved in setting standards, especially in vocational education and training, as they generally have a good understanding of the skill requirements in the workplace. In Korea, the government, in cooperation with Industry Skills Councils, uses labour market information to develop national occupational standards. These standards are applied to vocational education and training qualifications to ensure that they meet the needs of the workplace. At the same time, employers are encouraged to use these same standards in their human resource management. In England, apprenticeships are used to recruit and develop the skills of workers.1 In the recently reformed apprenticeship system, groups of employers (called trailblazers) are responsible for setting apprenticeship standards within their sectors (OECD, 2017[3]). This system was introduced to ensure a better alignment of the content of apprenticeship programmes to the needs in the workplace.
One particular area in which countries are actively developing adult learning programmes is digital skills.2 These skills are expected to become increasingly important over the next years, and several countries are already experiencing digital skill shortages (OECD, 2017[4]). In many instances, digital skills are now considered to be a foundation skill, along with literacy and numeracy. In Luxembourg, a basic digital skills programme (Internet-Führerschäin) has been set up for adults with very low literacy skills to develop their knowledge and skills on how to use ICT in a conscious and responsible way. In the United Kingdom, theDigital Skills Partnership brings together government and national and local employers and charities in an effort to address digital skills gaps in a more collaborative way. From 2020 onwards low-skilled adults in the United Kingdom will have access to fully-funded digital skills programmes, in line with the already existing maths and English programmes. In Hungary, improving the digital skills of disadvantaged adults is one of the projects of the new national development plan (Széchenyi 2020). The goal of the project is to provide digital skills training opportunities to 260 000 low‑skilled adults from disadvantaged regions. Digital literacy programmes are also available in Argentina, providing adults with basic digital skills such as opening a mailbox, using social media, using search engines and consulting online job vacancies.
In some countries, steps have also been taken to actively encourage the development of more advanced and specialised digital skills. Training programmes in these areas are sometimes made available to a wide audience for free, or targeted at disadvantaged groups. When these training programmes are not free, financial incentives can be used to access them. In the Brussels capital region (Belgium), coding and web development programmes are available for unemployed youth, allowing them to obtain basic skills in this area within a period of six months. Similarly, in France, the Digital School label (Grandes écoles du numérique) was introduced for programmes that provide subsidised digital skills training in areas related to labour market demand. These programmes are mostly free and open to everyone, but priority is given to disadvantaged and underrepresented groups in the labour market (OECD, 2017[5]). In Mexico, 32 Digital Inclusion Centres (Puntos Mexico Conectado-Centros de Inclusión Digital) were set up across the country, providing basic digital skills programmes, but also training in robotics, mechanics and programming. Participation in digital skill programmes is encouraged in Turkey by extending the maximum duration of PES-coordinated on-the-job training to six months for digital skills programmes (instead of three months for most other programmes). The duration is additionally extended to nine months for youth participating in specific digital programmes that correspond to rapidly emerging skill needs, like cyber security and cloud computing.
3.3.2. Steering adult learning investment towards in-demand skills
Based on the information from SAA exercises, adult learning policies or initiatives can be implemented that specifically target the development of in-demand or shortage skills. Individuals can be steered towards investment in more in-demand fields by i) providing only those training programmes that are in line with skill needs, ii) providing financial or non-financial incentives to invest in-certain in-demand skills, and iii) giving information and guidance that stresses the importance of these skills.
Providing only training programmes that correspond to identified skill needs, effectively ensures that participants choose training programmes that address these skill needs. However, this strategy also restricts the flexibility for individuals and employers to respond to specific needs or preferences. The use of SAA information to determine the provision of training is common among public employment services, as their main goal is to help job-seekers transition into sustained employment. By restricting training option to skills that are in demand in the labour market, they try to ensure that training improves the labour market outcomes of participants, and as such avoid ineffective expenditure. In France, for example, the public employment service (PES) uses the information from an employer survey on recruitment activities and needs to decide on the amount and type of training courses to purchase from training providers (OECD, 2017[5]). In Portugal, regional branches of the PES analyse the skill needs in their region, including information on vacancies from the local PES offices, to determine the offer of vocational training within the network of Employment and Vocational Training Centres. In Chile, the PES uses information on labour demand, collected through interviews, surveys and roundtables, to align their training offer with labour market needs. The PES of Wallonia (Belgium) classifies its training offer into three categories of identified skill needs: i) occupations in high demand; ii) shortage occupations; and iii) occupations of the future. In the PES-financed Skills Development Programme in the province of Manitoba (Canada), the responsibility to identify in-demand occupations lies with the participants of the programme. Unemployed, under-employed, low-skilled and low-income individuals can participate in training, provided that they show that the training program they wish to attend will result in employment after completion. This requires prospective participants to research their field and speak with stakeholders in the industry to ensure the occupation is in high demand and employment opportunities are readily available.
The PES is not the only body exploiting SAA information to determine which training programmes to offer. In Denmark, for example, sector-specific continuing training and education committees use skill needs information to determine which training programmes to offer in adult vocational training centres. In Brazil, as part of the Pronatec programme, different ministries can submit requests to the Ministry of Education for creating specific training programmes that correspond to the identified needs. The Ministry of Education centralises these requests and coordinates the opening of funded training programmes with public and private training providers. The training opportunities under the Pronatec programme are therefore, in principle, restricted to areas of identified needs. However, (OECD, 2018[6]) finds that in practice the training offered under Pronatec generally does not correspond to skill needs, but mainly reflects the capacities and preferences of training providers. In the United States, under the Workforce Innovation and Opportunity Act (Part I) funds are distributed to and within states to support career guidance and training activities. Training services are generally limited to preparing individuals for in-demand sectors or occupations, as identified by States and local areas using current labour market information.
Even when the training offer does not entirely correspond to identified skill needs, adults can be guided in their choice of training options by targeting certain financial or non-financial incentives to training programmes that address skill needs in the labour market. The availability of financial incentives for individuals, such as vouchers or grants, can be limited to certain training programmes. Similarly, employers can receive financial support, such as subsidies or tax exemptions, when training their workers for certain in-demand skills (OECD, 2017[7]). In Estonia, registered job-seekers can access training opportunities through a system of training vouchers (Koolituskaart). These training vouchers have recently also been made available for certain groups of employees under specific conditions. In the case of low-wage older workers and low-skilled workers, the condition to use the training vouchers is that the training has to be related to ICT skills or skills identified as being in shortage by the Estonian Qualifications Authority. The Latvian training vouchers for the unemployed and job-seekers can only be used for a specified list of training programmes, set in accordance with results of labour market analysis to meet labour market needs. The vouchers can be used for vocational education programmes and non-formal training programmes. In Austria, a grant scheme (Fachkräftestipendium) is available for individuals participating in training related to PES-identified shortage occupations. This grant provides income support during the training participation, under the condition that the training programme lasts for at least three months and covers at least 20 training hours per week. In Flanders (Belgium), participation in full-time formal training programmes in shortage areas is fully subsidised for job-seekers (OKOT). The training usually lasts for one to three years, and participants are encouraged to combine training with part-time work after the first year. Estonian employers hiring job-seekers for certain occupations that are in shortage and of growing importance in the labour market can receive training grants (Recruitment Training Grant - Koolitustoetus töötajate värbamiseks) to partially compensate for the cost of training the new hires.
Rather than limiting incentives to in-demand skills, policy-makers can also choose to make them universally available, but allow for more generous incentives for individuals participating in training that develops in-demand skills. In Belgium, for example, the maximum number of days of training leave is higher when beneficiaries participate in training in shortage occupations.3 The training account system for job-seekers in Korea partially subsidises training cost, with the amount of the subsidy depending on the employment rate in the related occupation. Subsidies are therefore more generous for training related to areas with strong skill demand.
A softer way of steering individuals and employers towards the development of skills that are in high-demand in the labour market is through information and guidance. As one of the goals of career guidance services is to help job-seekers transition into sustainable employment, information on labour market needs is generally taken into account when providing these services. In many countries, career guidance websites provide information about skill needs. The Austrian PES provides detailed information about labour market needs on its Qualifications Barometer website (Qualifikationsbarometer). The Canadian Job Bank web portal allows users to consult registered vacancies, and obtain information about the employment prospects of specific occupations in specific regions. As indicated above, the New Zealand Occupation Outlook provides extensive information on labour supply and demand in over 100 occupations. In some countries, information sessions are organised to inform job-seekers about labour market needs. Public career guidance centres in Wallonia (Belgium) (Carrefours Emploi-Formation-Orientation), for example, organise information sessions on different occupations, which provide information about labour market needs and training requirements and opportunities.
Public awareness campaigns are mostly general in nature, promoting overall participation in adult learning or specific adult learning policies. In some countries, however, campaigns target certain skills priorities, such as areas of labour market shortages. In Flanders (Belgium) a public awareness campaign was launched in 2011 to promote education and training towards employment in the healthcare sector. Employment in the sector, which has been facing hiring difficulties, is promoted through traditional ads, but also on a dedicated website and on social media. On the website, individuals can register for an immersion session at a healthcare institution, allowing them to become familiar with the job content. In light of its teacher shortages, the state of California (United States) launched a state-wide campaign “Make the Switch: Become a Teacher” to promote the teaching profession for adults who have already started their career in other fields. The campaign consists of video testimonials of people who “made the switch” and a comprehensive website is available with information on training requirements.
3.3.3. Assisting workers in sectors undergoing structural change
To better align skills demand and supply, SAA information can be used to identify individuals with skills that do not correspond to the ones in demand in the labour market, and policies can be developed to specifically focus efforts on these vulnerable individuals. Incentives can be targeted, for example, at workers and firms in sectors that are facing declining demand, have a high risk of automation or face significant changes in how work is organised. To help these individuals obtain better career prospects, the services provided to them should ideally focus on the development of in-demand skills.
Some countries have put in place broad policy packages aimed at supporting workers that have recently been retrenched or have a high risk of job loss because of structural changes:
In Australia, Structural Adjustment Packages (SAPs) are provided to assist employees in areas where expectations of future employment opportunities for workers in the industry are low or where large scale closures may impact on the local labour market. Targeted employment assistance under SAPs can involve skills and training components for adult learners. A Stronger Transitions Package was introduced to support individuals in five regions impacted by structural change to transition to new jobs and prepare for the jobs of the future in 2018. The package includes a Pre-retrenchment Skills and Training Support measure, which can provide targeted services such as comprehensive skills assessments; job search preparation; resilience training; language, literacy and numeracy support; digital literacy training; financial management information; exploring self-employment options; health and wellbeing support, and industry awareness experiences.
In Austria, Outplacement Labour Foundation (Arbeitsstiftung) programmes were introduced by social partners to support workers in the case of structural changes through appropriate labour market policies. These Foundations can be formed by one or multiple employers, but also at the sector and regional level when specific regions or sectors are affected by major staff cuts. The programmes are co-financed by local labour market actors, including the PES and the affected employers. Funding is available to cover training costs, allowances for course-related additional costs, and active job-search assistance and career guidance costs.
Structural changes do not only affect the content of jobs and the type of skills that are in demand, but also the organisation of work. In recent years, new forms of work, such as platform work or gig jobs, have emerged. While these new forms of work create opportunities, they also pose challenges. As these jobs are becoming increasingly important, adults could benefit from information on how to access these opportunities and the challenges related to these types of jobs. In California (United States) a pilot programme “Self-Employment Pathways in the Gig Economy” is being implemented in community colleges. Classes cover topics such as the pros and cons of the various platforms, creating and optimising an online profile, and professional strategies for finding and performing jobs. Similarly, but outside of the college system, the San Francisco Office of Economic and Workforce Development partnered with Samaschool (a non-profit organisation) to launch a pilot program (Bridge to Employment) that provides support to aspiring gig economy workers. The goal is to help individuals take advantage of work opportunities in the gig economy to gain experience, develop skills, and earn additional income. The programme includes a series of free interactive training modules and videos on varying topics unique to independent work, and provides in-person assistance programs at San Francisco workforce centres to help workers go through the modules with peers and an instructor.
In general, it seems that relatively few countries have adult learning initiatives in place that directly target workers in jobs that have a high risk of undergoing significant change (OECD, Forthcoming[8]). Preparing these individuals for the changes that are likely to happen in the next years is crucial to facilitate their transition into new tasks, jobs or forms of work. Strong basic and transversal skills are essential for people to respond to changing skill needs, and many countries have policies in place to develop these skills. However, further efforts could be made to make these programmes more widely available and promote them among the most vulnerable workers. Strong SAA information is imperative for these individuals to make informed training choices and for governments to design effective policies that help them up-skill or reskill for the jobs of the future.
References
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Notes
← 2. Digital skills are defined as skills needed to use digital tools and technologies. These can range from basic digital skills, needed for the use of everyday digital tools and technologies, to advanced digital skills required to work with specialised digital tools and technologies.
← 3. It should be noted that the education and training leave in Belgium is currently in a process of reform. The responsibility for the leave has been regionalised in 2014, and it is likely that the regions will introduce changes to the current system. In Flanders, for example, the leave allowance will be changed and linked to labour market relevant training. The reform should come into effect in the 2019/2020 academic year.