You were on the Expert Group on New Skills for New Jobs. What can governments do to plug the skills gap?
Yes indeed, I was a member of the Expert Group which worked throughout last year to produce the report 'New Skills for New Jobs: Action Now'. The group had several discussions which were highly stimulating - I believe for all participants, but certainly for myself. The report which resulted from this work contains a number of recommendations on how to build stronger bridges between the world of work and education and training.
I think it is admirable that the European Commission in the context of the EU's future 2020 strategy for growth and jobs is actively looking for experts' advice and for new solutions to this rather old problem.
In fact, to plug the skills gap, as you have put it, we need everybody to take action, not just governments. Without active participation of employers, workers, public institutions, schools, training providers and local authorities, the change will not occur – especially under the fiscal constraints which governments face in the context of recovery from the crisis.
The role of governments is primarily to provide the right incentives for all players to bring in the change. These could be tax, legal, systemic, information and other incentives which have to motivate every actor to undertake or provide more and better training.
Without well-developed, forward-looking labour market intelligence, efficient job matching and relevant skills development are hard to score. But without ongoing social dialogue, the change in skills demand becomes a moving target impossible to hit. Having said that, it is also important to realise that skills development alone will not bring growth and jobs.
So what exactly should be done?
Governments need to develop an environment conducive to the creation of opportunities for skills use, motivating smart investments in both supply of relevant skills and demand for them. This cannot be achieved without rethinking governance, without institutional engineering and policy coordination.
Skills policy could become an active agent of change but only if linked to employment, industrial, social and other policies. Last but not least, the role of governments is indispensable in investments in basic skills and transversal competencies from early childhood, such as entrepreneurship, leadership, teamwork, problem-solving, interpersonal communication, ICT use, foreign languages and so on.
These are building blocks for further skills development and, from the point of view of an individual, a type of employment security mechanism which could help [you to] change jobs throughout life, switching between occupations, sectors, regions, and perhaps countries or even continents.
What role should employers play in retraining workers?
The role of employers is not limited to training provision, but more importantly it includes active encouragement of workplace learning. Motivation of workers to take up training goes beyond subsidising such training. It may include the provision of paid time-off for training, recognition of acquired skills, including career progression, and recognition of new competencies in wages.
I suppose under the condition of a permanent change in the world of work – which is linked to technological change and innovation, globalisation, environmental challenges and the fast-ageing European workforce – a workplace should become more of a training place. In turn, a training place – be it a school, a university or a private training provider – should become more of a place where one could practice skills, not only obtain new knowledge.
The role of employers in both cases is vital. Active engagement of employers in training at vocational schools and training institutions could help bring practical up-to-date knowledge to training places. Providing broader opportunities for apprenticeships, internships and other types of job placements could help too.
Business groups have complained repeatedly about the skills shortage. Could they do more to solve the problem themselves?
Company managers often complain about skills gaps among the workforce and about quality of skills among job applicants. Complaining is good – it is a valuable labour market signal for the world of education – but certainly not enough.
It's not only about retraining workers but bridging the gap between the world of work and education and training, where employers need to become more active.
Sometimes training providers and skills development authorities have a hard time trying to engage employers in a systematic dialogue on skills and qualifications, which is so badly needed to keep up with ongoing changes in skills requirements. Such systematic social dialogue may include collective agreements at national, sectoral and enterprise levels.
The Expert Group actually put a recommendation on making validation of prior learning and practical experience as well as co-investment in training an enforceable element of collective agreements and work contracts.
Large corporations invest in training and retraining their staff, but how can SMEs keep their employees' skills up to date?
Indeed, SMEs nominally invest less in training of their workforce, or at least training which is recorded as 'training'. Obviously it is more difficult for SMEs and especially micro and small enterprises to free budgets and staff for formal training.
SMEs encounter much higher marginal costs for the off-the-job and other forms of formal training as compared to large enterprises. Just compare the cost of designing a tailor-made course for one or two employees in a company with ten employees, whereas in a large enterprise such costs will be offset by the number of trainees, which could easily number in the hundreds.
Similarly the cost of sending out a core employee in a micro-enterprise for training may mean closing down the office for the course duration. Yet personnel in such companies do need training in entrepreneurship, business management, marketing and other types of training, which could contribute to their multiskilling. In a small company it is often the case that an accountant is also a financial manager and a marketing specialist all in one.
So do larger companies have a better appreciation of staff training schemes?
It is one of the big myths that owners of small enterprises do not appreciate the value of learning. Just as in all enterprises, the need for skills upgrading is linked to business strategies and changes in work organisation.
But the way SMEs deal with this need is different. They rely mostly on on-the-job training, learning by doing, mentoring, job rotation, participation in workshops and seminars and other forms of informal and non-formal learning. The sector of training providers needs to learn this lesson: compelling employers to train could only be achieved by flexible forms of training delivery integrated with career guidance.
A lot of learning also happens without intending to develop skills but this does not reduce the added value. What is important, however, is that outcomes of such learning – new skills and competencies – could be recognised in the enterprise and in the economy as a whole.
This is where public policy and/or industry-led incentives could be particularly useful, stimulating demand for skills by providing information on training opportunities, linking this to labour market information and career guidance as well as to mechanisms of recognition of prior learning.
Finally, one should not underestimate the role of training provision through value chains, clusters and public-private networks in enhancing SMEs' productivity, innovation and competitiveness.
There has been a growth in temporary and contract workers. What impact will this have on employers' willingness to invest in training?
It is true that enterprises increasingly and more often outsource, relying on external know-how. Temporary services or contracting out specific products in such cases are not equal to temporary work, as human capital simply rests with an external provider.
It is true, however, that temporary work agencies have become an important segment of labour force supply. Strong social dialogue and collective bargaining in the temporary agency work sector are therefore extremely important when it comes to enhancing working conditions of temporary workers, including access to training.
Good practice examples include compulsory training contributions of temporary work agencies either by law or collective labour agreements, setting up bi-partite training funds to provide financial support for training, assisting in the development of training policies and other types of support for temporary work agencies and their workers. Some temporary or private employment agencies who specialise in specific occupational fields may offer, as part of their services to their roster of workers, training to enhance their skills and marketability.
What about employees with fixed-term contracts?
When it comes to employees with limited contract duration, much depends on the enterprise's human resource development policy: such contracts do not necessarily prevent employers from investing in training. Poaching talent has often been seen as an obstacle for investing in training, independent of contract type. Limited contract duration may reinforce such concerns.
Employers sometimes conclude an agreement with an employee which includes special conditions for training provision, such as a certain period of work after training, or reimbursement of part or all costs in case of premature resignation.
In any case, learning and training should be increasingly understood as a shared responsibility between employers, workers and governments, and thus reflected in collective agreements and public policy with co-investment in training.
Individuals also need to take the initiative and responsibility to learn into their own hands. The role of individual learning accounts, learning vouchers and other forms of support targeting individuals need to be fully explored and linked to competent career guidance.
Is it better to hire outside expertise rather than train a company's own staff?
If employers find that their business requires a particular skill that they do not possess amongst the permanent workforce of the company, and this skill requirement is relatively short term, then hiring a temporary worker would be an obvious solution.
However, if this skill requirement is visualised as more permanent for the business, the best long-term solution is to either train existing staff to fill the need or engage in recruiting a skilled worker on a regular appointment basis. In this case, using a temporary or fixed term contract to fill a short-term void while engaging in the above mentioned longer term solutions might be an alternative.
In general, has the crisis accelerated the shift away from secure employment towards temporary and contract work? And, if so, what are the implications of this?
The crisis certainly brought the shift away from secure employment. In fact when it comes to temporary and contract workers, they were the first and the hardest hit by the economic crisis.
But rising unemployment is only one of dimensions of the current job crisis. Others include partial unemployment, increased incidence of shortened work hours and involuntary part-time employment, short-term contracts, the shift into informal employment – and all this alongside declining wages.
From the point of view of preserving human capital on the labour market, insecure employment is a lesser evil compared to complete withdrawal from the labour market. Experience from previous crises demonstrates that long-term unemployment leads to deterioration of skills and employability. A prolonged job search leads to discouragement of job applicants and diminishes the likelihood of their return to the labour market.
How will the crisis affect the skills mix in the long term?
Throughout 2009 participation rates in most advanced countries of the world dropped. Vulnerable groups, youth and older workers are particularly affected. A prolonged period out of employment may permanently compromise future employability.
Once the economy revitalises, this may result in a mismatch between supply and demand for skills, especially in the EU, where the situation may be worsened by shrinking supply of labour due to current demographic trends.
Insecure employment, however, puts at risk millions of jobs worldwide if governments withdraw their support for job retention and if economic recovery does not gain the necessary strength.
Growing insecurity of working conditions under recession derives from the insecurity of businesses themselves. Enterprises are reluctant to offer secure employment conditions under shaky economic prospects. This may result in a downward effect on labour standards and wages, if complex and joint public-private measures are not in place.
What kinds of measures do you suggest?
The ILO Global Jobs Pact proposes some such measures focusing on employment and social protection supported by social dialogue to improve the acceptance and design of such measures, whereas training provision comes very strong as an integral component of other measures.
As a result of the economic recession, jobs in some sectors will be permanently lost, but new jobs and business opportunities will emerge in other sectors. Ensuring timely skills availability for the new jobs and for changing labour market requirements is crucial in the economic recovery.