Skill shortages

1. Skill shortages Olga Strietska-Ilina

2. Operational concepts • Skill shortages - an overarching term, stands for quantitative and qualitative shortages. • Labour shortage - quantitative lack of labour; e.g.shortage occupations. • Skills gap - qualitative characteristic. • Recruitment difficulties - an umbrella term.

3. Information on skill shortages in the EU At national level: • reach, • conceptually and methodologically useful, • non-comparable. At European level: • reviews of methods and approaches, • sector-based studies, • no major survey or forecast with comparable results, • EEO 2001 attempt, • current Skillsnet activities, • absence of reliable and comparable vacancy statistics.

4. Methods of measuring skill shortages Various qualitative and (semi-)quantitative approaches: • enterprise surveys (regular or ad-hoc); • analyses of advertisements, • mid/long-term forecasting (supply-demand mismatch by occupation and type/level of education), • measurement of adjustment behaviour at company level (self-observed or external), • analysis of trends, comparisons, benchmarking. Static/dynamic; short-term/long-term. Most complex approaches combine methods.

5. Reasons for skill shortages • Labour market tightness - small labour reserve; • Economic, social and institutional conditions; • Skills mismatch; • Deficiency in recruitment practices, work organisation, wage policies and working conditions (not always directly linked to skill shortages). Combination and interplay of different factors.

6. Major conceptual issues • Why the market does not solve the problem of skill shortages by market mechanisms? • Where is the borderline between labour shortage and skills gap? • Skill shortages and technological change and innovation: • Crowding out of the low-skilled from the labour market: does the tendency imply the changing character of occupations or overqualification? • Simplification or complexity of individual tasks? • Competitive business and product strategies and the demand for skills: high-wage skill intensive vs. low-wage/low-skill - equilibrium or trap? • Polarisation of jobs: Are intermediary occupations becoming casualties of technological change, or does the nature of the demand change and qualifications matter less?

7. Employment change by occupation in EU-25 in 2000-2005 (thous.)

8. Unemployment change by occupation of previous employment in EU-25 and EU-15 in 2000-2005 (thous.)

9. Employment change by sector (NACE) in EU-25 in 2000-2005 (thous.)

10. Employment by occupation and highest level of education attained (change 2000-2005 in thous.) in EU-25

11. Employment by age groups and economic activity (%, LFS Spring 2006)

12. Employment by age groups and occupation (%, LFS Spring 2006)

13. Labour shortages • Not yet understood as a European problem. • Repeating occupations: • healthcare professions (doctors, nurses, care for old/disabled people); • ICT specialists, • managers, marketing specialists, financial analysts, • scientists, engineers (mechanical, electrical, chemical), • teachers, • construction workers, carpenters, bricklayers, welders, electricians, heating and ventilation technicians, • hotel and catering professions (e.g. cooks, waiters), • truck drivers, • sales representatives, • cleaners, childminders etc. • Demographic challenge, labour shortages and within EU labour migration: cure or temporary treatment?

14. Which skills? • Technical skills specific to occupation/sector. • Others skill gaps - similar across sectors and countries: • ICT skills, • foreign languages, • team working, • interpersonal communication, • initiative, creativity, • entrepreneurship, • leadership and management, • presentation skills, • ability to learn, etc. • Personal characteristics: flexibility, motivation, loyalty, commitment, self-presentation (psychological, emotional and physical).

15. Changing meaning of skills and changing skill demand • Social and personal skills matter more than formal qualifications, technical and theoretical knowledge; • Companies recruit attitudes rather than competences. • Should E&T primarily focus on these requirements? • Are these skills trainable? • Is there deterioration of the role of initial education in the life of individuals?

16. Adverse consequences of skill shortages • At company level: higher wages, growing investment costs into current personnel, higher recruitment costs, lower productivity, lower quality, market losses, greater workload and pressure on the current personnel, lower competitiveness; • A higher concentration of skill shortages at regional / national levels may deteriorate the overall competitiveness of the region/economy; • Threat to investments in and development of knowledge-intensive and innovative industries (withdrawal to new markets outside the EU).

17. Recommendations • Improve the knowledge base on skill shortages in Europe: comparable vacancy statistics; comparable enterprise surveys; pan-European forecasting. • Further research into changing nature of the demand for skills and consequences for E&T. • European-wide problems need European level solutions: e.g. common migration policy approach. • Recognition that not all skill-shortage problems can be solved by the supply of skills (wage policy, social policy, employment protection, institutional efficiency, general market strategies).